For small businesses, and perhaps businesses of any size, compliance with the rules and regulations of being in business is becoming more and more complex. It’s getting to the point, it seems, that it is almost impossible to be 100% in compliance, mainly because you can’t find all the elements you need to comply with. In addition, when you ARE working to comply, “the system” works against you: The filings and reports you submit get lost by the agencies, and if you are fortunate you sent them certified return receipt with tracking numbers and can provide verification that you sent them or you submitted them but the guidance you received (perhaps even from the agency itself) was incorrect or incomplete and your filings were insufficient or you simply didn’t know to file or what to file or when to file. (Another of my favorite situations is when you tried to file and the documents were returned to you with a note saying that you weren’t required to file.)

Increasing Complexity

In a world of increasing regulatory complexity, and where tax burdens are steadily increasing, the cost of compliance and non-compliance is substantial. Every business balances the known aspects of compliance and their costs with the unknown and uncertainty of “what is out there” and the risks and costs involved with not complying—intentionally or unintentionally. Some of the simplest things can slip through our fingers and slip our minds:

  • Taxes: sales and use, property, payroll, privilege, etc.
  • Insurance: clauses in leases, contracts, and other agreements
  • Funding: covenants, financial reports, etc.
  • Regulatory: e.g., securities, licensing, taxes.

Not only do we have to deal with the categories of compliance, but we also have to deal with the various agencies at the Federal, state, and local levels. Let’s just think about taxes (okay we really don’t want to, but like death they are inevitable). We have the Departments of Revenue: Federal (the IRS), State, County, and City. We have taxes for income, payroll (employer, employee, and self-employment), property, sales, use, and privilege (to name a few). We have to pay them with payroll, as well as monthly, quarterly, annually—whenever they are due—by the 15th of the month following the end of the fiscal year, or the 15th of the month following the quarter end, or the 15th of the month after the end of the month, or the 30th of the month following …

Sometimes you have to file a “zero” to tell them nothing is due. Sometimes they tell you not to file the zero if nothing is due and then to resume filing when something is due. And once you resume filing they start asking you where the filings were from the period when they told you not file because you were filing zeros and they told you not to file because you were filing zeros and they didn’t want you to file zeros … what IS A PERSON TO DO!

Compliance Would Be Simple, IF…

“IF” is a big word to be so small: Two little letters that hold so much potential for well everything. Compliance would be simple, IF things were simply clear as to who, what, when, where, how, why, how much, and how frequently. IF you are one type of entity you file one way. IF you are another type of entity you file another. IF you are in one state you have to file X, if you are in another state you don’t file anything. IF you filed, but the recipient didn’t get it, then you send proof you filed. IF you send proof you filed and THEN they send you another notice THEN you do it again. IF they question the whole thing THEN you … go AROUND AND AROUND AND AROUND.

Compliance requires a clear understanding of the requirements from the beginning of the process. For businesses, it means from the inception of the business working toward finding the requirements that aren’t always easy to find and are more involved than the online “1-2-3 we can set up your business for you for just $19.95” (yes, I know it is a bit more than that but you get the point). The “simple” part of filing forms to establish the legal form of your business is just the first step. It may seem a little thing and why not go online to one of the Web sites that can save you money in setting up your business.

Why not? Well, what comes after that first little step? Are the online groups there to answer your questions about the implications of each of your choices? Are they going to point out the additional requirements and things you need to do to complete the process of setting up your business and getting it compliant? What about things related to those pesky little taxes listed off earlier that usually are a part of a DIFFERENT process with the Federal, state, and local government entities from where you went to register/organize the business?

Diligence and Best Efforts

Even the experts, let things slip through their fingers. Dates slip by. Documents go astray. The government loses things or doesn’t process them. Keystrokes and check boxes are made in error. Things happen. The complexity of the number and scope of the requirements facing businesses and all organizations is immense. Accounting, finance, legal, human resources: Every aspect of what we do has someone with an interest in how we do it. We do our best and work to be 100% compliant. We are diligent in our efforts and we have a policy and practice that puts us in the best position to be compliant. Then we act in good faith with best efforts. That is all anyone can ask.


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