Legal compliance is never something an entrepreneur dreams of when starting a business. However, its importance cannot be overlooked or underestimated. Being legally compliant, as well as staying legally compliant is essential for the smooth running of a business as well as the health and safety of wider communities and populations.
Here, we look at a legal compliance definition to clarify what exactly it is. From there, it is possible to investigate what steps can be taken to achieve legal compliance and, importantly, how to remain legally compliant. Remaining legally compliant is just as crucial as achieving it in the first place. Finally, we investigate what legal risk is, which is why all businesses need to adhere to legal compliance standards.
What is legal compliance?
Briefly put, legal compliance is the act of a company adhering to laws and policies that are pertinent to the sector within which they do business. Those laws can be requirements that a company needs to attain before it can trade or carry out its services, as well as ethical standards it should meet.
A large part of legal compliance is having a robust procedure in place to monitor a business continually to ensure that it remains legally compliant. In practice, this means that audits of departments repeatedly take place in addition to the company staying up to date with any changes in the law which impact them.
The basic idea behind legal compliance is to minimise legal risk in addition to minimising negligence that could cause undue harm to a person or group of people.
What steps can you take to achieve legal compliance?
Given that legal compliance varies from business to business, sector to sector, depending entirely on the entity’s own individual circumstances, how do you achieve legal compliance? And, consequently, how do you ensure you remain legally compliant given that legal compliance is a continuous process?
Firstly, it is essential that you identify what your legal responsibilities are, depending on those aforementioned individual, business circumstances. Commonly, businesses will have a responsibility to maintain accurate and up to date records documenting legal checks. Additionally, companies will often have to submit documents to regulatory authorities to confirm their auditing and risk management processes. Finally, to be legally compliant, businesses will often have to have the correct licences, certificates or permits in place to be able to trade lawfully.
As staying legally compliant can be a complex procedure, it can help to seek the help of a professional for advice. However, that does not mean you need to go to the expense of hiring a costly solicitor or lawyer. Instead, you can make use of the wealth of information available on the web generated by the regulatory bodies that outline the requirements you need to meet.
Additionally, there is an increasing amount of software available that can help streamline, simplify and automate your legal compliance procedures. The technology available from the likes of Contractbook helps take out the complexity of legal compliance, by providing templates and contract automation that help outline what requirements your business will have to follow, depending on your industry and company needs.
What is legal risk and compliance?
Legal risk is what can happen if you do not remain compliant with the laws and policies in place that oversee your business. In practice, this means what you could be subjecting yourself to in future if you do not follow the laws in place. You are exposing yourself to the chance of legal penalties, fines and temporary termination of trading licences if you do not comply with legal rules and regulatory frameworks.
In fact, if your business is found to be so grossly negligent with respect to legal compliance procedures, you can find that you have your trading licence permanently revoked. In essence, you can be banned from running your business ever again and having charges made against you by the authorities - perhaps the biggest legal risk of all as you could end up having a criminal record.
What is legal compliance? Overall takeaways
Legal compliance is essential to achieve and maintain for a business to trade lawfully. If legal compliance standards are not met, businesses can face fines and penalties - if, indeed, that business is permitted to continue to run at all.
Considering that authorities have the legal capability to shut businesses down if they do not meet compliance requirements, the importance of having an effective compliance procedure in place is evident. The time and energy needed to meet those requirements needs to be given the proper time and attention it deserves. Having a robust, workable series of procedures in place to maintain legal compliance is essential.
Using software, like that available through Contractbook, can materially reduce the complexity surrounding legal compliance. It can be leveraged to ensure that you can spend time improving the productivity of your business, while safe in the knowledge that you are still legally compliant.