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Aspiring Entrepreneurs : It’s a known fact that every startup is haunted with though complying with various regulations. One of the mistakes entrepreneurs or founders of an early-stage startup who are new to the business ecosystem does not understand the compliance requirement or the importance of it, simply because most entrepreneurs are from a tech background and they are not aware of the existing laws. The risks involved in missing any of the compliance requirements are too high to be ignored, and this may even affect a startup’s viability and attractiveness to a potential investor.

It’s a known fact that every startup is haunted with though complying with various regulations. In the latest report by World Bank on Ease of Doing Business, India for the first time had for the first time moved into the top 100 on the back of sustained business reforms over the past several years. However, India still has a long way to go when it comes to ease of doing business.

As the startups start growing, it becomes necessary to comply with rules and regulations depending on the nature and size of the business. So entrepreneurs need to know the laws and regulations which they must to comply with.


♣ Understand the laws that apply to your business

Knowing what laws apply to your business is the starting point for all compliance management. These can range from essential regulatory acts like the Companies Act; Various licenses like Trade License, Shops License and Food License etc; Labour & Welfare legislations such as Minimum Wages Act, Factories Act, Provident Fund, and Employees’ State Insurance etc; Taxation laws like GST and the Income Tax Act; Intellectual Property Laws (Copyright, Patents, Trademark Act), Consumer Protection Act and Industry specific laws.

♣ The responsibility rests with the owner

It is essential to understand the burden of 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. For example, recently a transporter had been fined with a penalty of Rs 1.32 crore by the commercial tax department of the state because the company failed to file the details of the truck in the e-way bill due to technical glitches.

♣ Ascertaining your costs

While assessing your compliance and its associated costs, the entire value chain has to be taken into consideration, i.e., you have to think of your operations and the different elements that go into making your final product. So, if you’re in the food-industry spectrum, you should consider not just your health and safety reporting but also of operations, management, HR, marketing, and logistics, etc., which should give you a fair estimate of the number of people and whether you trigger labor laws.


♣ Educate Yourself

Keeping updated with the industry news and compliance requirements to stay ahead and ensuring your business is compliant. Following your industry related news, whether it is through newspapers, blogs or social media will help you mitigate the compliance risk and also plan your activities better.

♣ Hiring an expert

Hiring a compliance manager may be expensive but a company can’t do without a compliance manager for too long. Because as an organization grows bigger and the scale of operations increases, the associated compliance costs also rise, and it may become counterproductive, as the cost of non-compliance will become more.

Engaging a legal professional service, or a company secretary, who had been specifically trained to manage legal prerequisites, 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

We shouldn’t have a limited view of compliance management, i.e., that of ensuring you don’t miss out on last dates and saving your company from penalties but that would be a siloed way of looking at compliance. A business that is always punctual in meeting its obligations is viewed as more trustworthy by the customers and also enjoys a better reputation among its stakeholders. Strategising your compliance requirements would entail not just timely filings but also assessing your structure and understanding costs better and making things effective 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.

Author Bio:

I am Surbhi, in my twenties and based in Hyderabad, India, with interests across industries. Writing for me, I believe, relieves stress, helps me concentrate better, and let me reinvent myself. Over the past decade, I have written for big publications such as Elephant Journal, yoganonymous, Beauty and grooming Tips etc. Since completing my higher education, I am exploring more in business-related topics particularly those related to legal procedures of start-ups. Diversity across various categories helps broadens my vision and makes me learn more about my writing.


 

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