Across industries such as professional services, technology, healthcare, and construction, business leaders must diligently navigate a complex landscape of legal obligations. Ensuring compliance is crucial to avoiding significant liabilities, fines, reputational harm, or even forced closure.
A business compliance checklist is a structured tool that helps small and midsize businesses (SMBs) meet their legal obligations and avoid penalties. It is an important risk mitigation tool that will help you periodically audit compliance with all facets of applicable state and federal laws, and industry rules and regulations.
Six Essential Elements to Include in Your Compliance Checklist
- Entity Formation and Corporate Governance
Confirm that you have taken all required entity formation steps and have transparent corporate governance practices in place:
- Register your business with the appropriate state agencies (incorporation or formation as a corporation, limited liability company (LLC), or partnership).
- Prepare and regularly update governance documents such as operating and shareholder agreements.
- Conduct regular board or ownership meetings and document the decisions.
- Implement record retention policies that include making records readily available to owners as required by state law.
- Industry-Specific Regulations and Licenses
In addition to general corporate requirements that apply to all SMBs, there may be regulatory requirements that are specific to your specific industry. Some examples include the following:
- Healthcare organizations must adhere to strict patient privacy obligations under HIPAA, anti-kickback and fee-splitting laws.
- Construction firms must comply with building codes and health and safety standards.
- Professional services and technology firms may need to comply with industry-specific standards such as SOC 2, ISO certifications, or regulations governing intellectual property use, client confidentiality, and software licensing.
You should also confirm that all required licenses and permits are valid.
- Employment Law
Review hiring practices, wage and hour regulations, workplace safety standards (OSHA), anti-discrimination policies, and the classification of employees versus independent contractors to ensure compliance with employment law. This entails:
- Maintaining accurate employee records and payroll documentation, and conducting consistent employee training on anti-harassment, non-discrimination policies, and safety programs.
- Contract Management and Review
Confirm that client, vendor and employee contracts are well-drafted and legally sound and align with current business practices. A construction firm, for example, should have a robust contract monitoring process to ensure contractors comply with contract terms, address issues promptly, and meet performance expectations. Periodically review contract terms, templates, and forms to ensure they reflect any changes in applicable laws since the last update or review. In industries such as construction, ensure that claims of lien are properly noticed and filed to protect the company’s interests. Also consider including limitations on liability and indemnity provisions that align risk exposure with the value of the project or sale.
- Data Privacy and Security
Any company that handles data needs to be familiar with and adhere to data privacy regulations like GDPR, CCPA, and other cybersecurity and data protection laws. This includes reviewing data breach protocols, consent management, and secure storage practices. Careful attention in this area helps protect against cybersecurity threats, safeguard sensitive data, and avoid regulatory breaches.
- Insurance, Liability and Risk Management
Proper liability and risk management practices allow your company to anticipate potential liabilities. Your company should regularly review policies such as general liability, cyber liability, workers’ compensation, professional liability, and industry-specific coverage to ensure adequate protection, especially as a company expands and the risk profile changes.
Maintaining Ongoing Compliance: Regular Reviews and Updates
Developing a corporate compliance checklist is a first step towards a process-driven approach to stronger legal protection. Preferably one that is proactively integrated into a company’s operations instead of reactively addressed after an issue arises. Compliance is an ongoing responsibility that requires periodic review and update. Regulatory standards continuously evolve, and your process must stay current.
Need Help Building or Auditing Your Compliance Checklist?
At Jimerson Birr, our attorneys specialize in helping businesses like yours stay ahead of changing legal standards. Contact us today for a complimentary consultation and get the peace of mind that comes from knowing your compliance bases are covered.