Let’s face it, most business owners don’t run a business for the love of paperwork or compliance regulations – even if technology has made form completion faster and easier. The downside? In 2016 you’re filling out more of those digital forms than at any other point in history. We are now in a period of business history where compliance often requires more resources than many other business functions. Make sure you’re on top of everything that’s required of you. Here, in my opinion, are the three areas of compliance that are top three compliance tips for any Connecticut business, no matter its size:
•Compensation Compliance. Paying employees has turned into a process that’s best left to an expert. Welcome to the new world of wage and hour compliance management, one where wage and hour lawsuits in the U.S. hit the highest volume ever recorded in 2015. Add to that the brand-new and still quite ill-defined overtime regulations that go into effect December 1, 2016 and business owners should nudge this area of compliance to the very top of their must-do list. If you currently have full-time, salaried (exempt) employees who earn more than $47,476 per year, get ready to either a) pay overtime for every minute over a 40-hour work week or b) convert them to non-exempt contractors. Oh, and by the way, the compliance regulations include an automatic threshold update every three years with the first one scheduled for January 1, 2020. Payroll processing requires your full attention and vigilance – if you can’t spare the time, consider outsourcing the function to professionals.
•Data Privacy and Security Compliance. We’re celebrating Union Savings Bank’s 150th anniversary this year, and as we’ve been sorting through our historical archives there are quite a few “old school” products that we’re fondly remembering. We’ve come a long way since the day of the cash register and manual cash deposits. The giant leap in technology for payment processing alone has created many challenges for businesses. According to data from Thomson Reuters, over 1 billion accounts were compromised in 2014. The culprit? Experian says that human error and negligence are a frequent cause of data breaches. This particular blog would have to be many thousands of words longer if I were to delve into all the nuances of privacy and cybersecurity compliance. Suffice it to say that we’ve all read the horror stories and understand the potential cost if we don’t meticulously, constantly and strictly safeguard customer data.
•State and Federal Tax Compliance. If you’re a Connecticut small business with five or fewer employees, you’re already spending several thousand dollars per year just on tax compliance, according to the Journal of Accountancy. If that’s the size of one of your company’s smaller departments, the numbers multiply quickly. Businesses will literally spend billions of hours this year to stay tax regulation compliant – and given the risk and threat of an audit, this is a critical element of your compliance focus. According to Accounting Web columnist Terry Sheridan: “In 1955, the (tax) code had 409,000 words. It’s now at 2.4 million words. Adding to that are a 100 years of IRS regulations, which amount to about 7.7 million – give or take a word or two. There’s more: almost 60,000 pages of case law.”
If you’re a bigger business, you may already have entire departments devoted to compliance to regulation. Given the volume of regulation that we’re faced with as a bank, we certainly do! And, based on these top compliance trends noted by CT Corporation, a company specializing in compliance solutions, you have your hands exceptionally full if you happen to have offices abroad, as many Connecticut companies do.
Are you a mid-sized company with 50 or more employees? You’ll need to ensure that you’re fully compliant with regulations that range from Affordable Care Act (ACA) Reporting and the Family Medical Leave Act (FMLA) to benefits reporting via Form 5500.
Even entrepreneurs who are just getting a company off the ground need to pay attention. A recent article in Small Business Trends pointed out no matter how small, you must comply with payroll compliance regulations, Department of Labor and tax regulations – unless of course you’re involved in a heavily regulated arena such as financial services or healthcare, both of which require multiple additional compliance steps.
My best small business compliance tip: whether you’re just covering the basics or devoting huge blocks of human and financial resources to compliance, I suspect it’s only going to get more complicated. We live in a litigious world and technology, while often our friend, is not making our business life easier when it comes to protecting our assets, from customer data to intellectual property to corporate credentials.
Compliance is a never-ending and always evolving chore for many Connecticut small business owners. Yet, while it’s my personal passion, it’s not an option – so use these compliance tips to stay alert (or hire a professional resource to help you.)
By Deborah Jacobson
Director of Compliance, Union Savings Bank