What is business compliance? This is a term used in the United States and other countries to describe any business activity that complies with certain regulations. Business compliance as a service refers to an organization obeying all the laws and regulations on how they operate their business, their employees, and their treatment toward their customers. The idea behind business compliance is to make sure that companies act lawfully within the jurisdiction they are working in. In other words, business compliance ensures that companies operate according to the law.
When a business is being complied with, there are many things that can occur.
There are internal requirements and external requirements that must be met as well in order for the business to operate properly. For example, if an individual or an entity holds a federal license, but does not meet all of the regulations that are necessary to maintain that license, then it will likely be revoked. This includes licensing for banks and other financial institutions.
Businesses also have annual compliance requirements that must be met as well. Examples of these could include IRS tax laws, OSHA safety standards, or HR policies and training manuals. All of these policies and manuals would fall under the internal requirements category.
Franchise taxes and annual statements are considering the external requirements. Both of these categories must be met for a business to receive its federal or state tax identification number. A franchise tax shows how much in income a business is making from its various franchise agreements. An annual statement, on the other hand, provides information on the total assets, revenues, and liabilities of a corporation.
An important aspect of business structure compliance comes from the annual report. An annual report is prepared and filed by the officers of the corporation. It is designed to provide all of the information to an individual shareholder or owner who may come into possession of company records. The annual report is due on the first day of every December. If a business has been established before December of the year, the annual report can be filed with the corporation on the first day of the next January.
Along with the annual reports, there are also the filing of the corporate seal with the state or the country. The filing of the seal can be done at any time but is most often done with the first due date. Corporations and LLCs cannot be filed with the state without having the proper seals filed with them.
For corporations, there are several ongoing requirements that must be met. First, a corporate veil is required for a corporation. Veil means that the identity of the owners of the corporation is not publicly known, but cannot be determined to be misleading by anyone. The corporate veil protects the identity of the company and allows it to function as it was intended.
Next, there are franchise taxes. Franchise taxes must be paid on all sales
of goods and services to customers, or income from rent, stocks, or dividends paid out to shareholders. A franchise tax assessor determines the amount of these franchise taxes at the beginning of each calendar year. However, there are many franchise tax calculators available online that allow an individual to determine the amounts based on income, sales tax liabilities, and many other factors. All of these and other requirements must be met before a business can begin operation.
Licenses and permits are requirements that all corporations and LLCs must have in order to operate. All cities and counties mandate that businesses register with them before they will issue business permits. These permits grant the rights to operate to all citizens but are oftentimes specific to a certain business type and location. Obtaining these permits is time consuming and often requires numerous applications. Individuals should check with the jurisdiction to find out what the process entailed before submitting an application.
- After obtaining required permits and licenses, individuals should also begin preparation of their annual report filing.
- A good standing business profile is required to obtain most permits.
- Additionally, it is very important to keep accurate records.
After all, an individual who does not maintain accurate documentation may have his or her permit or license revoked. A business that is consistently and complete in their reporting requirements will be much better able to avoid fines, penalties, and liens that occur over non-compliance.
The last thing to do after obtaining required permits and licenses is to submit them to the appropriate government agencies. There are two main means of submitting documents: filing and sending via mail. Filing can be done electronically, but many individuals prefer to file paper forms. It is important to ensure that these filing options are secure and efficient before submitting them. Government agencies will send individuals any necessary documents that they need in order to ensure that their businesses are compliant with all external compliance requirements.