Are you planning to start a business?
If yes, then you should know the compliance requirements. You should know these requirements to understand how to manage a business and its staff and how to treat the customers. The compliance requirements are needed to ensure that the businesses are acting responsibly without violating the legal norms. These laws and regulations are applicable to both the small and large companies. If you have a small business then your obligation might be less, but in the large business, you will have to meet more requirements.
Types of the Compliance
There are two types of the compliance, internal and external. Both these categories are applicable to the small and large businesses. Followings are the details of both these types of the compliances.
Internal requirements are those actions that need to be taken by the company authorities within the corporation. These requirements are documented in the company’s record and all the employees are obliged to follow these rules and regulations. If you are selling your company, you will be asked to present those documents for the future use. Though these internal requirements are easily overlooked, but they need to be maintained.
When it comes to the large companies, they need to follow the internal requirements to maintain the discipline. They have a strict internal compliance that includes the forming of the board of the directors, conducting annual director meeting, creating and updating legal procedures, and offering stock to the shareholders. But when it comes to the small business, they usually maintain compliance kit to organize the records. The compliance kit maintains all the required information that includes sample bylaws, stock certificates, operating agreements, sample meeting minutes.
External compliances are those which are imposed on your business by the state authorities, where it is registered. Some of the requirements of the external compliances are annual state filling and franchise tax. State compliance requirement always demands an annual statement or report and the payment of a related state fee. Followings are the some of the requirements of the external compliances.
Annual Reports: Many states require the large and small businesses to file an annual statement that permits the state to track qualified businesses. Some other states demand a biennial statement. In both the cases, states demand that a fee needs to be paid while statements are filled. The charges will vary from $10,000 to $30,000 depending on the size and condition of the business.
Franchise Tax: Some states also demand franchise taxes to both the large and small business. The franchise tax is the one that needs to be paid to the state for the privilege of operating as a business in that state. States apply different formulas to collect the franchise tax from the corporations.
The amount of the fee and due dates may vary from the state to state. You should consult the concerned authorities to know the legalities and when and how much you have to pay for the franchise tax.