Key Compliance Areas to Review for the End of the Year
As the calendar flips to a new year, startups and small-to-medium businesses (SMBs) have a fresh opportunity to review and strengthen their compliance practices. Legal and regulatory compliance is not just about avoiding penalties; it’s about setting your business up for sustainable growth. Below are ten key compliance areas every startup and SMB should prioritize at the start of the new year.
Corporate Governance: Proper governance ensures your business operates within legal boundaries and maintains its credibility with investors, partners, and clients. Review your articles of incorporation, bylaws, or operating agreements to ensure they reflect current business practices. Confirm your board meeting minutes and resolutions are properly documented. Update ownership records, including stock ledgers or membership interest allocations.
Contracts and Agreements: Contracts form the backbone of business relationships. Outdated or ambiguous agreements can lead to disputes or financial losses. Audit all active contracts to ensure they are enforceable and reflect current terms. Check for expiring agreements and plan for renewals or renegotiations. Review termination clauses, non-compete terms, and confidentiality provisions to ensure they align with your business goals.
Employment and HR Compliance: Missteps in employment law can result in costly penalties or lawsuits. Ensure employee classifications (e.g., full-time, part-time, contractor) comply with federal and state laws. Review payroll practices to confirm compliance with minimum wage, overtime, and tax withholding requirements. Update employee handbooks and policies to reflect new labor laws or workplace changes, such as remote work arrangements.
Tax Compliance: Staying tax-compliant avoids penalties and ensures smooth operations with financial authorities. Verify that all tax filings are up-to-date, including federal, state, and local taxes. Plan for estimated tax payments for the year ahead. Take note of any tax law changes that could impact your business and consult with a tax advisor.
Privacy and Data Protection: With increasing consumer awareness and stricter regulations, data privacy compliance is non-negotiable. Conduct a data protection audit to ensure compliance with laws like the GDPR, CCPA, or others applicable to your operations. Update privacy policies to reflect how customer data is collected, stored, and used. Train employees on best practices for cybersecurity and data handling.
Licenses and Permits: Operating without the proper licenses can lead to fines, business closures, or reputational harm. Verify that all required licenses and permits are current and valid. Research any new licensing requirements that may apply due to changes in your business activities or jurisdiction.
Intellectual Property Protection: Your brand and products are among your most valuable assets. Ensure trademarks, patents, and copyrights are registered and up to date. Monitor for potential infringements and take steps to address them promptly. Review any IP licenses or agreements for upcoming renewals or modifications.
Industry-Specific Compliance: Each industry has unique regulations that must be followed to remain competitive and compliant. Research regulatory updates specific to your industry (e.g., health and safety laws for retail, FDA regulations for food businesses). Schedule regular compliance check-ins with industry-specific consultants or legal professionals.
Risk Management and Insurance: A robust risk management strategy protects your business from unexpected liabilities. Review insurance policies to ensure adequate coverage for general liability, professional liability, and other risks. Update risk management plans to address changes in operations or emerging risks.
Create a 2025 Action Plan with Key Priorities: A clear action plan aligns your team’s efforts with strategic goals and ensures critical compliance tasks are not overlooked. Identify top compliance priorities for the year, such as addressing new regulations or improving internal processes. Develop a timeline with specific milestones and deadlines for achieving these priorities. Assign responsibility for each priority to team members or external advisors and establish regular check-ins to monitor progress.
Final Thoughts
Taking the time to review these compliance areas at the start of the year can save your business from costly mistakes and pave the way for success. If you’re unsure about your compliance status or need assistance, consult with a legal or compliance professional. StartSmart Counsel specializes in helping startups and SMBs navigate the complexities of compliance. Reach out to us to schedule a Business Wellness Check and ensure your company is ready for a successful year ahead!
