Six Compliance Tips for Aspiring Entrepreneurs

Last Updated at: November 23, 2020
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In May, 2020, the Karnataka Government started a helpline for entrepreneurs to address their challenges during the lockdown period. In this noble initiative, the Govt. is partnering with  Global Alliance for Mass Entrepreneurship (GAME), a non-profit organization operating under Junior Achievement India Services. 

 

‘Small wins are a way towards success”

How many times have we all missed that deadline and regretted later? The risks, efforts, and deadlines are escalated to a whole new level when we talk about business compliances, making all timely compliances nothing short of small victories.

Since every business entity functions in a society regulated by the state, there are various rules, laws, codes, directions, and orders that your entrepreneurial venture will be subjected to. It is not surprising to note that the state earns a significant part of its revenue through penalties, late fee, fines and other charges for non-compliance of its laws, making timely compliance an inevitable part of financial and commercial prudence.

Knowing what laws apply to your business

Knowing what laws apply to your business is the starting point for all compliance management. These can range from basic regulatory acts like the Companies Act; Labour & Welfare legislations such as Minimum Wages Act, Factories Act etc; Taxation laws like GST and the Income Tax Act; Intellectual Property Laws (Copyright, Patents, Trademark Act), Consumer Protection Act and Industry specific laws.

Who’s responsible

It is also important to know that the responsibility for compliance lies with the business owner, and thus it wouldn’t be a fair defence to plead ignorance of law as the state naturally assumes that an entity having a right to operate in the society would also be aware of its duties and obligations making it essential for you to keep yourself apprised of developments on this front.

Ask a Free Legal advice

How to assess your costs

While assessing your compliance and its associated costs, think of your operations and the different elements that go into making your final product. So, if you’re anywhere in the food-industry spectrum, think of not just your health and safety reporting but also of operations, management, HR which should give you a fair estimate of the number of people and whether you trigger labor laws.

Educate Yourself

Educating yourself can go a long way in ensuring you don’t let money leak unnecessarily. Following your industry related news – whether through newspapers, blogs, social media will help you mitigate your compliance risk and also plan your activities better.

Engage a Professional

Although a compliance manager may be expensive for a company to afford in its initial stages, it is likely to be well worth the cost. As an organization grows larger and the scale of operations increases, the associated compliance costs also rise. Engaging a professional, such as a company secretary who’d be specifically trained to manage legal pre-requisites, filings and other documentary work will be beneficial not just for regular compliance but can also be an imperative asset in case of preparing records of filing and bringing other evidence to notice, in the event of an inquiry/investigation/lawsuit against your business.

Develop a strategy

A common perception about compliance management is that it is limited to ensuring that you don’t miss out on last dates and save you from harsh penalties. However, the scope of compliance is not as narrow. A business that is always punctual in meeting its obligations is looked at as more trustworthy by customers and also enjoys a better reputation. Strategizing your compliance requirements would entail not just timely filings but also assessing your structure and understanding effective costs better while also making the audit-process smoother. From purchasing inputs to output and after-sales, there is compliance needed at every level of business activity and awareness of protocols ensures you adopt not just the best practices but also minimize potential losses.

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Six Compliance Tips for Aspiring Entrepreneurs

1086
In May, 2020, the Karnataka Government started a helpline for entrepreneurs to address their challenges during the lockdown period. In this noble initiative, the Govt. is partnering with  Global Alliance for Mass Entrepreneurship (GAME), a non-profit organization operating under Junior Achievement India Services. 

 

‘Small wins are a way towards success”

How many times have we all missed that deadline and regretted later? The risks, efforts, and deadlines are escalated to a whole new level when we talk about business compliances, making all timely compliances nothing short of small victories.

Since every business entity functions in a society regulated by the state, there are various rules, laws, codes, directions, and orders that your entrepreneurial venture will be subjected to. It is not surprising to note that the state earns a significant part of its revenue through penalties, late fee, fines and other charges for non-compliance of its laws, making timely compliance an inevitable part of financial and commercial prudence.

Knowing what laws apply to your business

Knowing what laws apply to your business is the starting point for all compliance management. These can range from basic regulatory acts like the Companies Act; Labour & Welfare legislations such as Minimum Wages Act, Factories Act etc; Taxation laws like GST and the Income Tax Act; Intellectual Property Laws (Copyright, Patents, Trademark Act), Consumer Protection Act and Industry specific laws.

Who’s responsible

It is also important to know that the responsibility for compliance lies with the business owner, and thus it wouldn’t be a fair defence to plead ignorance of law as the state naturally assumes that an entity having a right to operate in the society would also be aware of its duties and obligations making it essential for you to keep yourself apprised of developments on this front.

Ask a Free Legal advice

How to assess your costs

While assessing your compliance and its associated costs, think of your operations and the different elements that go into making your final product. So, if you’re anywhere in the food-industry spectrum, think of not just your health and safety reporting but also of operations, management, HR which should give you a fair estimate of the number of people and whether you trigger labor laws.

Educate Yourself

Educating yourself can go a long way in ensuring you don’t let money leak unnecessarily. Following your industry related news – whether through newspapers, blogs, social media will help you mitigate your compliance risk and also plan your activities better.

Engage a Professional

Although a compliance manager may be expensive for a company to afford in its initial stages, it is likely to be well worth the cost. As an organization grows larger and the scale of operations increases, the associated compliance costs also rise. Engaging a professional, such as a company secretary who’d be specifically trained to manage legal pre-requisites, filings and other documentary work will be beneficial not just for regular compliance but can also be an imperative asset in case of preparing records of filing and bringing other evidence to notice, in the event of an inquiry/investigation/lawsuit against your business.

Develop a strategy

A common perception about compliance management is that it is limited to ensuring that you don’t miss out on last dates and save you from harsh penalties. However, the scope of compliance is not as narrow. A business that is always punctual in meeting its obligations is looked at as more trustworthy by customers and also enjoys a better reputation. Strategizing your compliance requirements would entail not just timely filings but also assessing your structure and understanding effective costs better while also making the audit-process smoother. From purchasing inputs to output and after-sales, there is compliance needed at every level of business activity and awareness of protocols ensures you adopt not just the best practices but also minimize potential losses.

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Avani Mishra is a graduate in law from the National Law Institute University, Bhopal. She qualified the Company Secretary course with an All India Rank 1 and is a recipient of the President’s Gold Medal for her academic distinctions. She also holds a B.Com degree with a specialization in Corporate Affairs and Administration.