Compliance for entrepreneurs
By Monisha Prem
Owing to the ever-increasing number of laws, entrepreneurs are faced with mounting red tape and/or regulatory compliance to adopt and apply in their businesses. While these legal requirements create obligations, they also provide certain rights and protection. All businesses, whether small or large, are required to comply with legislation (passed by government), regulations (rules prescribed by regulatory bodies) or industry best practices.
Compliance legislations that govern business
Compliance requirements range from the registration of businesses and business names to licensing, workers’ compensation, tax, unemployment compensation, intellectual property protection and industry-specific requirements such as compliance with professional bodies.
Where does the compliance onus lie?
It is the responsibility of the business owner to determine which legislations and regulations apply to their business, and then to comply. While it is not the responsibility of regulatory bodies to inform businesses of applicable legislations and regulations, industry watchdogs are generally very helpful and willing to provide the required compliance information when requested.
6 Main types of laws that govern business
- Entity regulations such as the Companies Act and Close Corporation Act.
- Customer and information protection, for example the Consumer Protection Act (CPA) and Protection of Personal Information Act (PoPI).
- Human resources such as the Labour Relations Act (LRA) and Basic Conditions of Employment Act.
- Tax and security, for instance the Income Tax Act and National Credit Act (NCA).
- Intellectual property, for example the Copyright Act and Patent Act.
- Industry-specific; think import and export controls, the B-BBEE Act and Codes of Good Practice.
How to determine which legislations apply to your business
1. Products and services: What problem are you solving?
Assess the service and/or product offering of your business and determine what specific legislation applies to your particular product.
If you are producing goods for sale to consumers, you must comply with the CPA, and if you have employees you will be required to comply with the Occupational Health and Safety Act (OHSA). If your product relies on your Intellectual Property, protecting it will require you to comply with the relevant legislations.
2. Organisational design: What are your daily tasks and activities?
Determine the various functions of your business and the strategies you have in place to manage them. Each business function, be it finance, sales, marketing, branding, human resources or operations, is associated with various legislations.
Laws such as the CPA and OHSA are important, but it is also crucial to consider industry-specific standards such as import and export regulations and transformational requirements. If you are producing and selling a product, it is critical to consider the various packaging and labelling requirements as determined by various Acts as well as industry standards.
3. Operations: How do you perform your tasks and activities?
Consider your operations, systems and procedures and examine your input, output and production processes. Again, industry standards and certain Acts will find application here and create requirements that need to be complied with.
Raw materials, for example, may require import controls while production may include labour laws or information controls and distribution may require export controls or consumer protection legislations.
4. Stakeholder management: Who are the participants?
Consider the various players involved in all aspects of your business — from customers and shareholders to employees and even government bodies such as SARS and the Department of Labour. Governance, industry best practices and labour laws will find application here.
Putting it all together
Establish a simple compliance universe. Prepare a basic framework and checklist of applicable laws, regulations and industry best practices. List basic guidelines and draft a policy on how to adapt these requirements into your business, ensuring this framework is updated at least annually.