5 Compliance Tips for Every Small Business Owner

Whether you’re new in business, you’ve moved to a new location, or you’re just trying to keep your business out of trouble, here are 5 compliance tips every small business owner should know.

#1 – You may be required to have a business license. Not every city, county, or state requires a business license, but some do. Some cities require licenses for certain types of businesses. Some require licenses for all businesses. And, others don’t require anything at all, but it’s important to check. Before you start your new business, move your office, or open a new location, call the city offices where your business will operate and ask for help. Tell them the kind of business you are operating and where you’re located and they’ll direct you.

Pro Tip: Even home-based businesses require licenses sometimes. Check the requirements in your city.

#2 – Different states, and now even some cities, require different employee benefits, taxes, programs, and reporting. Some states require worker’s comp to be paid into the state. Others require you obtain a worker’s comp insurance policy after hitting a certain level of wages. Some states have a disability insurance program. Some require you officer paid leave. Some don’t have any requirements for benefits. Understand the requirements in your local city as well as your state.

Pro Tip: Do NOT rely on your payroll software to get this right. While payroll companies say they take the liability of payroll tax compliance off of the business. They only take that liability if YOU set things up correctly.

#3 – Depending on the business or industry you are in, there are different insurance requirements. You may be required to have worker’s comp insurance. States regulate when and how much insurance you are required to have in a lot of cases. You may also be required to have a certain level of insurance on your business to comply with certain customer contracts or banking requirements.

Pro Tip: Get a good insurance broker that knows your business and industry. Have them help you navigate the requirements and ensure you’re compliant.

#4 – There are lots of different tax requirements for different cities and states. Some states don’t have income tax, but they have a franchise tax. Some states require sales tax be charged on certain items, while others exempt the same items from sales tax. Sales tax filing frequencies are different for each business based on their location and the amount of sales tax they collect. Whether you’re new in business or you just need to do a refresh, it’s a good idea to call your state’s department of revenue and tell them the type of business you have and ask about any potential taxes or reporting you are required to provide. Some businesses will be required to report and pay use tax (similar to sales tax, but paid on certain purchases that may not have had sales tax charged). There are multiple federal excise-type taxes that are required on specific industries. Some states require property tax be paid on business assets and some do not. Make sure you know the requirements.

Pro Tip: Hire a good tax professional. Make sure they are familiar with the requirements of your state and also your industry.

#5 – Many industries have specific safety standards or product development requirements. If you’re in the food production or restaurant industries, there are requirements to provide ingredient lists and allergens as well as safety standards for the storing and packaging of product. Construction and manufacturing companies must comply with OSHA requirements for safety. Beauty and drug development companies will have to comply with the FDA requirements. You must research and understand your industry and the individual requirements and standards required of you.

Pro Tip: Join industry associations and groups. You will learn best practices and tips from those who have been there, done that!

One of the most critical compliance tips for small business owners: Don’t get behind! Whether it’s payroll taxes, insurance policy payments, sales taxes, or employee benefits, paying or even just reporting late, can have huge consequences. Penalties are stiff and taxing authorities can shut your business down fast if you are not compliant.

Compliance requirements can feel like they are dragging your business down and taking away from the time you want to be spending on sales, product development, or customer service. But, it’s critical that you keep your business compliant. You’ll have a much bigger problem than a little paperwork if you don’t.