As soon as you start a business or organisation you need to consider compliance as soon as you create a business or organisation, but especially a limited company, charity, C.I.C., partnership, etc.
The easiest way to put this is that compliance is all about setting and maintaining habits. The more your habits are aligned to legal and industry standards and guidelines, the easier your corporate journey will be.
In short, good habits will save you both time and money in the long run and no-one has the desire to spend time or money where things can be avoided.
The responsibilities related to compliance matters make some people in your organisation accountable for something – and that’s most probably legally. If you’re just starting out, then everything will lie with you. Even when it comes to the physical transfer of funds to settle your taxation bill for the year, you are the one accountable for making that payment, not your accountant. They are only accountable for what you tell them, or what you ask them about – they are not expected to be able to use a crystal ball. The more you tell them, and ask them about, the surer you will be that your accounting records will be correct.
The worst-case scenario for those who are held accountable for a preventable action is a custodial sentence. That’s time away from your regular life as well as your business which I’m sure you will want to avoid.
As we are human beings’ habits are part of our nature. What is a choice, even an unconscious one, is whether these habits are going to be good habits or not. Some habits are linked to personality (and these are the hardest to change) and some people are different in their personal lives to how they act in their business life.
Good habits when it comes to business are linked with honesty and transparency – even with yourself. Be happy to admit that there are things that you do not know and that some of these things will be important to you. If you “don’t know what you don’t know”, be transparent about that too.
It’s only when you do this that you open yourself, and therefore your business, to a world of opportunity, but also a lot of work to complete. The thing is most business owners know little about (and don’t care too much either) what they need to do to make sure they are following the laws and industry guidance.
What happens next is a journey of discovery when you’ll say “Oops” more than once, but the sooner you say “Oops” the less impact there will be on the business. Let’s say you didn’t have the right kind of insurance for your business, and it was only when you were talking to another business owner about their insurances you realised you were missing something. I am not suggesting you admit this to your acquaintance, but you should go back to your broker and fill in the gap.
I have heard it said too many time that “I’ll fix it when I get caught out!” That is definitely a bad habit and one that could well have a larger impact than you would have imagined.
Impacts on a business when things go wrong can easily split into three parts, a) financial, b) time and c) reputation. The issue with reputation is that it can cause you both financial issues and problems with time management – a triple header if you will.
If something goes wrong you may have to consider providing a refund, or discount on the goods and services you are providing or have provided. If it is a quality related matter you may also need to find alternative providers of materials, or goods, without passing on increased costs to your customers.
Receiving a complaint mostly impacts on your time. You should corroborate the story, or find definitive evidence to repute it, and then choose your appropriate course of action. Complaints that show a lack of understanding from your staff means that they require more training to meet the standards you require of them.
When your reputation is damaged, maybe because of a complaint, or a breaking media story, you have a lot to repair. At least one of the three elements required to form good, and lasting, business relationships has been broken. Of the “Know – Like – Trust” trilogy trust will most definitely be dented. It will be up to you to fix this before you can get back to where you were before. This will be both timely and costly, especially if you need to hire PR consultants.
So how you start out looking at compliance matters will shape you habits for some time to come. As a limited company you are expected to keep within legal guidelines. This means you have to keep with the boundaries of the Corporation Tax Act, the Income Tax Act, the Fraud Act, Money Laundering regulations, the Data Protection Act, to name just a few. You will need policies and procedures to show any regulatory investigator how you manage your affairs. If you don’t have documentation of this type, you run the risk of receiving penalties from the appropriate body and you will have to run with the impacts that brings. Let’s hope it doesn’t bring forth a reputational one!
Based on my previous blogs (you can find them here: https://eyebray.com/blog/), this one is quite light on detail. Please look through the other blogs and see if the information you want is provided. Some of what I provide is very detailed.
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