All businesses, no matter their size or what industry they serve, have one thing in common: they are legally bound by laws and regulations. A business requires internal unity to ensure that its employees are aware of what is expected of them. Corporate compliance is simply a necessity of doing business these days, but the term ‘corporate compliance’ can be a little misleading. The term itself makes it sound like only incredibly large mega-corporations have a need for sound internal policies. However, small and medium sized businesses have an equally valid need for a compliance structure to mitigate legal risks and liabilities.
What Is Corporate Compliance?
Corporate compliance is basically a business’s internal structure of policies, rules, and procedures that are designed to prevent legal violations. Not only do they help prevent employees from committing violations intentionally or by omission, but in the event of a breach of law your liability can even be reduced. These standards help to prevent employees’ and agents’ encroachment of the following:
- Health and safety standards
- Ethical standards
If you fail to cover your bases in these areas, you are leaving your business vulnerable to critical legal problems that can cause serious setbacks. An ounce of prevention is worth a pound of cure, and making sure everyone is on the same page regarding corporate compliance can save you a lot of time and money.
Benefits of Corporate Compliance
There are many benefits of compliance plans, and they can severely reduce your liability. If you are fined, simply having a credible compliance program can drastically reduce the amount of your fine. A few benefits of compliance plans include:
- Reduced liability
- A credible appearance to the government
- Lower chance of being audited by regulatory agencies
- Risk mitigation
- Creating an ethical work community
- Encourages employee honesty
- Potential to lower the Federal Sentencing Guideline’s assessment of your criminal culpability score by up to half
- Prevention of criminal acts
- Educates employees about rules, regulations, and procedures critical to the operation of your business
The Dangers of Not Having a Compliance Plan
If your business lacks a corporate compliance plan and is found to be liable for criminal acts or the failure to adhere to regulations, your business is in for a world of hurt. What’s worse is that after an investigation or a settlement, you will still likely be required to create a compliance plan anyway. This is less favorable and undesirable because the compliance system you will be required to create is often more stringent than if you had created a compliance plan on your own in the first place. There is no way around it, sooner or later you will be required to meet legal guidelines. You have nothing to gain by procrastinating, and during the period that you lack a compliance plan you leave yourself open legal issues with devastating consequences. It is well worth the time to identify the legal and regulatory threats to your business.