One of the most important ways Facilities Management supports core business activities is to ensure that the organisation remains compliant with the law. In order to highlight the significance of this role, take a moment to consider the potential consequences of getting it wrong. Show
FinesPerhaps the first and most obvious consequence is the possibility of the organisation being fined for non-compliance. Fines for the most serious safety breaches are now routinely in the hundreds of thousands of pounds. Coupled with the need to pay not only your own legal costs but also those of the prosecution, non-compliance with legislation is a costly exercise. ImprisonmentIndividuals can be imprisoned for breaches of health and safety law, with sentences of up to six months in the Magistrates’ Courts and up to two years in the Crown Courts. Even individuals that avoid a custodial sentence will have to live with the stigma of a criminal conviction, which could restrict their ability to work in certain industry sectors or travel abroad. Remember, both employers AND employees can be prosecuted under criminal law, sometimes simultaneously. Loss of ReputationAny organisation which fails to comply with legislation runs the risk of a loss of reputation and with it the loss of customers. Increasingly, companies look carefully at the safety record of potential business partners and requests for details of any safety convictions have become standard on tender questionnaires. The damage caused to an organisation’s reputation by a criminal conviction could last longer than the initial financial outlay. Loss of Current or Potential StaffIf you were applying for a job with a company whom you found had been prosecuted under Health & safety legislation, or who been found to have broken employment or human rights law, would you think twice? You probably would not want to work for an organisation which had a poor record in these areas and so your expertise and knowledge would be lost to the company. Down time and Loss of ProductivityBreaches of certain laws often result in an organisation having to cease production until the errors have been rectified. This loss of production will inevitably result in a loss of income which, in a worst case scenario, could result in the company going out of business. You may now be able to see how important it is that an organisation remains compliant with all legislation. With the emphasis on health and safety that comes with facilities management, coupled with other areas such as employment and human rights laws, the Facilities Manager plays a key role in enabling the organisation to remain compliant. “Business compliance” is a phrase that makes many an entrepreneur cringe. But despite the lack of affection for those two words, business owners MUST take them seriously. The possible consequences for noncompliance range from “mild inconvenience” to “devastating disaster.” Most critical is that noncompliance by Limited Liability Companies and Corporations can lead to “piercing the corporate veil,” which puts business owners’ personal assets at risk. (More on that later!) Before I get into the penalties for noncompliance, let’s first take a moment to discuss what it is exactly. What is Noncompliance in Business?Nearly every business has rules, regulations, and standards to uphold to operate lawfully. The requirements exist to protect the company, employees, stakeholders, and customers. Compliance obligations vary according to the industry, location of the business, business activities, and entity type. Noncompliance refers to when a business fails to fulfill its compliance requirements. Depending on the business, corporate compliance may entail obeying safety guidelines, ensuring customer privacy (e.g., health care practices and HIPAA), properly handling payment of wages and salaries to employees, paying taxes, maintaining proper licensing, holding shareholder meetings, and complying with all other local, state and federal laws. Businesses in highly regulated Industries like the examples below, face more and stricter compliance requirements than companies in other industries:
In this article, we’re going to discuss noncompliance mainly as it relates to business entity types since it’s impossible to cover every industry and business activity. Business Compliance Requirements by Entity TypeBusiness structure affects the filings, reports, and other formalities a company must carry out to legally conduct business. Every state has its own rules, and counties and local municipalities may have regulations, as well. To give you a general idea of what different business structures have to do to stay compliant, I’m going to list compliance formalities by entity type: Sole Proprietorship and PartnershipsSole proprietorships and partnerships are considered the same entity as their owners (both legally and from a tax perspective). So, there are no corporate compliance formalities to maintain them. However, that doesn’t mean that entrepreneurs operating as sole proprietorships or partnerships don’t have rules to follow to run their businesses legally! Some of the things that individuals running their businesses as sole props and partnerships must do include:
Limited Liability Companies (LLC)A Limited Liability Company is considered a separate legal entity from its owner(s) (called members). The LLC structure gives members some protection against the legal and financial debts of the business. However, from a tax perspective, an LLC and its owner(s) are treated as the same entity. In other words, taxes flow through to owners’ personal income tax forms. Some of the compliance requirements LLCs must usually fulfill include:
CorporationsA Corporation (C Corporation or C Corp) is a separate legal and separate tax-paying entity from its owners (called shareholders). With more stakeholders and a higher degree of liability protection for owners and directors, Corporations have stricter compliance requirements than other business entities. Below are examples of what C Corps may need to do to satisfy their compliance obligations:
S CorporationsAn S Corporation is not a type of business entity but rather a special tax election that eligible LLCs and Corporations may choose. Generally, S Corporation requirements follow what the underlying entity (LLC or Corporation) must fulfill. Consequences of NoncomplianceNow that we’ve discussed some of the typical compliance requirements, let’s get into what could happen when businesses do not follow the rules. The severity of penalties vary, and they often depend on the seriousness of violations. For any business, noncompliance can cause big problems! Here are some of the possible consequences of noncompliance:
How to Stay CompliantFor some businesses, the compliance requirements may be numerous and complex. Entrepreneurs must understand their obligations so that they don’t suffer the consequences we covered above—especially the increased legal risks associated with piercing the corporate veil. To accomplish that, I recommend seeking professional legal and accounting expertise. Also, consider using CorpNet’s Compliance Portal. Different states have different deadlines. With CorpNet’s Compliance Portal, you can track your business filing requirements in all of the states where you conduct business. Something else that can help you immensely is to designate CorpNet as your registered agent to receive all critical government and legal notices on your behalf. We provide registered agent services in all 50 states. As your registered agent, we ensure that you know when your business entity’s vital compliance deadlines are approaching. But that’s not all that we can do! To make compliance even easier for you, we can also prepare and submit your business filings and reports for you. Yes, business compliance can be complicated, and the consequences of noncompliance are scary. With CorpNet’s help, however, you don’t have to sweat the small stuff (or the big stuff!). Contact us today to learn more about how we can help your business stay compliant. P.S. If your business is noncompliant and not currently in good standing with the state, all is not lost! We also help LLCs and Corporations with reinstatements filings to get them back into active compliant status. Nellie Akalp is an entrepreneur, small business expert, speaker, and mother of four amazing kids. As CEO of CorpNet.com, she has helped more than half a million entrepreneurs launch their businesses. Akalp is nationally recognized as one of the most prominent experts on small business legal matters, contributing frequently to outlets like Entrepreneur, Forbes, Huffington Post, Mashable, and Fox Small Business. A passionate entrepreneur herself, Akalp is committed to helping others take the reigns and dive into small business ownership. Through her public speaking, media appearances, and frequent blogging, she has developed a strong following within the small business community and has been honored as a Small Business Influencer Champion three years in a row. What are some of the consequences of non compliance?What Are the Consequences of Noncompliance?. Fines. Financial penalties are the top concern of many organizations. ... . Imprisonment. As mentioned above, jail terms for regulatory or legislative breaches aren't unheard of. ... . Reputational Damage. ... . Business Interruption.. What are the 3 consequences for non compliance?Consequences of Non-Compliance. Fines. Fines are a common punishment for instances of non-compliance. ... . Prison. Prison sentences can be issued for individuals found to be in non-compliance with certain laws. ... . Damaged Reputation. ... . Business Closure. ... . Worker Safety. ... . Employee Compensation. ... . Discriminatory Employment Practices.. What are the implications and consequences of non compliance?Non-compliance leaves you at risk for financial losses, security breaches, license revocations, business disruptions, poor patient care, erosion of trust, and a damaged reputation. Here is a quick overview of the impact of non-compliance.
What is a non compliance issue?Non-compliance refers to an individual's failure to act within stated boundaries or refusal to comply with such regulations or rules. Non compliant behaviour can be both intentional or unintentional, depending on the situation.
|