The Importance Of Business Legal Compliance

Why is legal compliance necessary for every business? Is it for the sole purpose of following rules?

There’s a lot you need to consider for your business to be successful. Most businesses see rules and regulations as a hurdle to success… But in reality, companies – and especially startups – can’t survive without them. They help define how a business should operate, and keep everything in order.

Can you imagine a world where rules didn’t exist? It would be complete anarchy!

As a business owner, there’s only so much you can handle. Learning all the different rules and regulations to keep your business both legitimate and profitable would be too time-consuming. One mistake in a legal document can cost you your entire business.

That’s where registered business agents and legal experts come in. These professionals will handle all your essential documentation and statutory filings, giving you more time to focus on your business.

What is legal compliance?

Legal compliance is defined as a business abiding by regulations and legal requirements. These include local and national laws, provincial legislation, company policies, and standards. In business jargon, it simply means obeying the rules.

While you can argue that the idea is pretty straightforward, getting everything right is not.

Keeping within legal parameters encompasses a range of factors, including: forming your company, post-incorporation, EIN, foreign qualification, certificate of good standing, entity type conversion, company renewal and revival, dissolution and cancellation, certificate of amendment – and more.

Here are four reasons why business legal compliance is a must for every business:

1. Make businesses more competitive

Every business wants to be competitive. If your business plans to expand to other states, that means even more legal requirements need to be met. Rules and regulations help level the playing field between established companies and startup businesses.

A legal compliance team can help a company stay competitive by:

• Improving a company’s reputation
• Making business processes more efficient
• Improving customer and employee relationships

2. Prevent crime

The most evident outcome of business compliance is to prevent crime that leads to fines or worse, business closure.

Government agencies take business compliance very seriously. In fact, Yahoo received a $35M fine from the Securities and Exchange Commission (SEC) due to a cybersecurity breach, affecting 500 million of its users.

You may start to ask yourself, could business legal compliance professionals have prevented this issue?

Of course!

Compliance experts utilize the latest technology to detect potential problems with a third party. With the technology in place, business owners can make informed decisions and take calculated risks.

3. Reduce the cost of legal expenses

No business wants to pay a fine that could have easily been avoided. The consequences of legal actions and settlements can cost a company dearly. Through business legal compliance, your business will save on any avoidable legal expenses.

Even if your business can afford to pay a hefty fine, you’ll compromise your brand’s credibility, leading to a decline in sales.

Your clients will lose trust in your business and the damage may cost you more than the fine.

It’s impossible to predict how much financial harm it can do. The best choice is to play it safe and take preventative action.

Hiring professionals for legal compliance services may come at a price. Ultimately, though, it’s a service that will save your company a lot in the long run.

4. Streamline your business

When you tap the services of legal compliance experts, they’ll help enhance the structure of your business.

Simply put, everything becomes more organized. You’ll have a better hiring process, improve day-to-day management, and ultimately save money.

When a business is consistently compliant, customer and employee satisfaction improves.

A 2020 report from Deloitte found that:

“Organizations will integrate compliance programs from across their enterprise to drive efficiencies, synergies, and harmonization.”

Final thoughts

The most challenging aspect of starting a business is learning how to operate under a wide array of rules and regulations. How your company operates, hiring policies, and auditing are just the tip of the iceberg when talking about business compliance.

Various restrictions apply regardless of whether you’re operating from an online store or a physical location.

If you’re a startup without a legal compliance team, you expose your business to a multitude of risks.

Complying with laws in any given state may sound easy to do, but executing it consistently is a different story.

Remember, good standing with state authorities and a positive public reputation are essential for your business long-term.

With a compliance program in place, you can:

• Compete on a level playing field
• Prevent crime and lawsuits
• Avoid unnecessary legal expenses
• Streamline your work processes

Author bio:

Derick Quinanola is a dedicated digital marketer and regular writer for registered business agents Registate. He is based in the Philippines but has a global mindset and continues to find innovative methods to help businesses thrive in an increasingly digitized economy.