Resources and Strategies for Startup Compliance

Startups can bring their owners to the top of success or throw them into the abyss of disillusionment. However, the threat of facing the latter becomes considerably lower if you, as a startup owner, minimize all the reputational and legal risks. For this, there are special regulating guidelines called compliance certifications. In this article, we’ll discover the role of compliance in the world of startups and some effective strategies for its implementation in your business.

What Is a Certificate of Compliance?

Generally speaking, a compliance certificate is a document that proves the goods or services your company sells or provides meet all legal standards. Its main goal is to protect customers from low-quality or even harmful services and goods. For this, state or international committees develop certain universal criteria that all businesses and manufacturers must meet. Once you obtain such a certificate, it becomes a piece of evidence for your customers that your startup is legal, reliable, and worth trusting.

Why Is Compliance Important in Business?

Any business is inextricably linked to its customers. If the latter are not satisfied with the services they get, the business loses reputation and money. Let’s have a look at the main reasons startup compliance is important.

1. It helps you to prevent legal problems. According to recent studies, 90% of all startups fail, and 2% of them fail because of legal issues. Compliance with the key regulations and legal demands ensures your startup won't end up broke and with a few lawsuits or a huge fine to deal with.
2. It serves as a foundation of people’s trust. If a customer, partner, or employee sees that your company adheres to all the rules and provides the best quality services, they will not only support your business but tell others about it, which will build your positive reputation.
3. It ensures employee safety. Your startup is the people creating it, and, as a business owner, you’re responsible for their safety. Therefore, compliance with health and safety regulations aims to prevent workplace injuries and foster job satisfaction.
4. It saves you money. Non-compliance can lead to severe financial penalties, which can be very painful for a small startup. Compliance, in its turn, helps you prevent such unpleasant expenditures.
5. It makes your work easier. Though it may seem strange, limits help to build a business. When you know what you should and shouldn’t do, you don’t waste time on experiments and mistakes correction. Just follow the rules and enjoy the result.

What Are the Best Strategies for Ensuring Startup Compliance?

• Seek professional help. If you’re at the beginning of your path as a startup owner, you may find it difficult to figure out what regulations you need to follow and how you can do it. In this case, your best solution is to hire a professional lawyer who will deal with all the legal matters. Yes, the services of such an expert will cost you some money, but this sum will definitely be smaller than a fine you’ll have to pay or the cost of a lawsuit you may face if you fail to stick to certain laws and standards.
• Use reliable software. The majority of data safety breaches occur because business owners use software with a low level of data protection. It is always better to pay $5 more for a program than $1000 for a fine.
• Study changes in regulations. No matter how much you trust your lawyer, data security specialist, and financial manager, as a startup owner, you should always keep abreast of the recent changes in the laws that concern your business sphere. Check governmental websites and reliable legal resources, like Lawrina, and don’t hesitate to ask more experienced business partners for explanations.

How Can You Know What Regulations To Adhere To?

There are two main types of compliance regulations — internal and external. Internal compliance refers to the codes, regulations, and policies that are relevant to your company. No latenesses for work, no phone calls at the workplace, or a compulsory night shift once a month — it can be any rule employees are expected to follow to ensure the smooth operation of the business.

As for external compliance, it includes such subtypes:

Financial

• Your startup must comply with IRS tax regulations and pay federal, state, and local taxes.
• If your business raises funds, you have to follow the Securities Act of 1933 and the Securities Exchange Act.
• Don’t forget about the importance of salary and wage laws, such as the Fair Labor Standards Act. You should pay all your employees at least the federal minimum wage.

Legal

• Your startup must have the necessary city, county, or state licenses, permits, or registrations, depending on the industry and your location.
• Any business that has employees should comply with laws regulating employee rights, such as the Civil Rights Act and the Fair Labor Standards Act.
• Make sure your products, inventions, trademarks, or original works do not violate any intellectual property laws.

Data security

• Such laws as the California Consumer Privacy Act and Virginia Consumer Data Protection Act protect customer data and privacy rights.
• Depending on the industry and the nature of your business, your startup may need to follow sector-specific cybersecurity laws. In particular, if your business deals with data, it should go through the SOC 2 audit and get a certificate.
• If your startup deals with card payments, you need to follow Payment Card Industry Data Security Standards.

Field-specific

• All healthcare-related startups must adhere to the requirements of the Health Insurance Portability and Accountability Act (HIPAA).
• Businesses In the education sector, especially ones dealing with student data, must follow the Family Educational Rights and Privacy Act (FERPA).
• If your startup produces food or beverages, it will need to comply with such regulations as ISO, FDA, or USDA.

Conclusion

To be a startup owner is like driving along a mountain road that is curvy, rocky, and full of ups and downs. However, you can make it smoother and mitigate the risk of falling into the abyss. To do it, you simply need to follow certain compliance regulations. We know that dealing with legal issues may be a tricky and stressful task for an entrepreneur, but it is the only way to ensure you won’t get a pack of fines instead of profit at the end.