What do we understand by the term business?
Under Income Tax Act, 1961, ‘business’ includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. While this sentence does not make the meaning of business very clear, it throws back some questions at us.
Will the trade, commerce or manufacture be carried out in India or abroad?
Does the business fall under manufacturing sectoror is a part of service industry?
– If it is the former, then are goods sold through wholesale or retail?
– If it is the latter, then what kind of service industry would it be? IT, Manpower or Healthcare, etc.?
Will the entity of business be proprietorship, partnership, company, or any other?
Answering the above queries will lead to fetching and finding compliances which are applicable to the business. Similarly, studying all aspects of the business and answering other pertinent queries will help in drawing compliance perimeter within which the organisation will function.
Now, let us try and understand why multiple regulators impose plethora of compliances on business operations?
The answer is simple and friendly!
Simple because, the regulators ensure that in our race to the top we do not trample interest of others.Others not only include employees, business partners and consumers, it also includes the environmental resources which we use.
Friendly because, we are a part of the socio-economic structure and the same regulators also protect our interests and concerns. So, while we comply with the laws to make sure that we are not acting against our business contributors, the contributors too are made to act in a manner to serve our business needs in the best way.
Wondering why compliances need to be managed? Will compliances in an excel sheet not help?
Here are 5 best reasons why compliances must be managed and managed well to run business smoothly without intervention from regulating authorities!
To know what applies
The first step to managing compliance is to identify the applicable laws that a company or organization must comply with at a Central, State and Local Body level. Detect if any exemptions as notified by the Central or State Government is applicable to any operating unit or the organisation. Accurate knowledge of applicability will minimize the risk associated with non-compliance.
To know what’s missing
If there is a compliance management system in place, then it becomes easier to conduct a gap analysis between the compliances that an organisation already follows and additional compliances that are applicable to it. Imbibe a good compliance culture and it will have a positive impact on brand value and profitability.
Training personnel and employees
A compliance program will not be effective unless the employees are aware of the regulations and the impact they have on the organization. Work with colleagues in other business units to identify gaps and how they can be addressed. Employees need to understand the organization’s culture, its ethical boundaries and respect it.
Aligning policies and business processes with compliances
Companies follow several internal policies like leave policy, IT policy, Waste Management policies to name a few. The company policies should be in line with the statutory compliances that are existing or are identified as applicable, as the case maybe. A management system helps by keeping a tab on the laws with which the organisation should always align its internal policies.
Monitoring changes and reporting mechanism
This is where an efficient compliance management system overthrows its competitors in terms of being compliant. Compliance management software helps corporate legal departments track regulatory amendments and receive alerts ahead of time so they don’t have to worry about missing deadlines. Real time reporting abilities showing the actual picture of compliance status across the organisation only aids in transparency and greater accountability.
Successful organisations are keen on proactively establishing processes and controls, defining accountability and managing compliance through a centralized management system.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the publication