You have a great idea! Now you are turning it into a business! Starting afresh, you will be looking to get the first sales done, running to every possible client with hopes of a conversion. Amidst all these, many startup newbies find it baffling to think of compliance. It is one thing to simply register a new business online as a mandate and it is a totally different ballgame when you are looking to be 100% compliant.
Keeping your business compliant can give you several advantages that help boosting your business prospects in the long run. Why wait for your business to grow and then create a compliance function while you can still be well-prepared for it from the very beginning? Here’s how it can prove to be a backbone especially when you are starting up.
A. Pre and Post Incorporation Compliances
One thing that compliance assures is the ease of doing business – securely and responsibly. Being compliant will help to mitigate operational risk, make it easy to manage third parties, and even ensure cyber-security in the tech environment. The effective way to simplify it is to take one step at a time and not try everything about compliances at once. Take an efficient approach by creating a compliance checklist based on pre-incorporation and post incorporation compliance requirements. This will ensure a certain amount of business hygiene to work smoothly.
Major Pre-incorporation compliance includes;
- Registration of firm or company
- Name approval
- Allocation of Designation.
Post-incorporation compliance includes;
- Apply for company PAN and TAN
- File an agreement
- Get GSTIN number
B. Facilitates PR and Fundings
Most of the startups are always looking for investors during the initial days. But it takes more than just an idea to convince investors for putting their money in. Because investing in a startup will require them to go through all the financial records and even the compensation rates of the organization. This is where being compliant can help businesses to get better funding.
Also, startups showing a fulfilled compliance can also engage better in public relations. This happens because it can significantly demonstrate their reliability required to ensure a healthy presence in media. Customers – current & prospective and vendors trust the organization more when they know that the organization is following the rules and regulations. Compliance increases customer loyalty, customer trust, and overall builds a positive image for the organization.
C. Ensuring Employee Retention:
One of the core strengths during the initial period of a startup involves hiring and retaining the employees. Probably you are building an A team for your startup and to ensure their stability, you will have to be compliant in terms of their contracts, payment structures, hiring methods, etc.
The focus should be on providing employees with a safe, professional, and a transparent environment to ensure better retention. Prioritizing compliance in the startup will make them feel safer for not being penalized for non-compliance. Moreover, it keeps employees motivated once they feel suitably compensated for the amount of work they are putting in. The safer they feel, the harder they work.
D. Facilitate Brand Protection
Compliance comes into play when startups start becoming a brand. There are intellectual properties associated with branding elements that work as an asset as the company marches ahead in the market. The most important of all assets that a startup can have is it’s intellectual property and ensuring intellectual property rights protection in India becomes highly important.
Leverage the following benefits of IP Compliance:
- Create a distinct business identity separate from the competitors
- Sell it or license it, so that adds to your revenue stream
- Provide unique offerings to the customers
- Creating an integral part of marketing or branding
- Providing security for loans
IPR Covers the Following Aspects
- Name and Logo of the company
- Brand specific designs including branding colour
- Special inventions that are patented
- Works of creative or intellectual effort
- Trademarks that classify your business.
E. Mitigating Risk
Businesses need to push limits and explore new avenues to grow and that can happen only if it can take risks. Every risk has its own impact - where some can even devastate the business when it’s an otherwise profitable function of selling a popular product. Failing to comply with laws and regulations is perhaps a bigger risk that the business runs if it is operating without one.
Here are a few examples of noncompliance that can put the business in danger.
- Tax evasion
- Employee rights violation of employee rights,
- Lack of waste disposal management,
- Lack of safety measures at the workplace,
The implications of noncompliance range from revoking the business license, shutting down the company, and even prosecuting shareholders and employees.
It is therefore highly recommended to embed the compliance considerations in policies and procedures right from when the business is incorporated to substantially negate exposure avoidable risks.
If nothing else, consider compliance as a part of legal considerations to follow. Any failure in complying with the predefined business standards means going against the law; in your state, country, or even industry. As a matter of fact, there is no grey area when it comes to validating the compliance requirements. Expanding your business to the global community, later on, will require a business to be highly stringent and not doing so could mean facing penalties from multiple governing bodies. Rather than as an expense, startups should look at compliance as an investment made to safeguard the business for the future.