A lot of small businesses think it won’t happen to them. They won’t get fined for skirting a few rules. They’re a small business, so nobody will notice if they’re not in compliance, right?
But it can happen. It does happen. And it can be costly. One small business ended up owing $80,000 in back pay, taxes, and penalties for not paying their employees the right way.
Don’t fool yourself. Compliance issues are real, and they can literally sink your business if you’re not on top of them. You might not like the rules and you might not agree with them, but you still have to follow them if you’re going to own a business and have employees.
What is compliance?
In business terms, compliance means knowing and following all of the regulations, taxes, and laws that you’re expected to follow as a business owner. That includes regulations from the Department of Labor, Internal Revenue Service, and Occupational Health and Safety Administration, plus any other regulations specific to your industry.
It’s a lot of details, and you don’t know what you don’t know. When you’re focused on the many details and priorities for growing your business and managing your employees, there’s a significant risk of compliance slipping through the cracks.
Outside consultants like HR experts, attorneys, and accountants can fill the gaps for businesses that want to avoid costly headaches down the road. You’re an expert in what you do. Otherwise you’d never have started the business, right? But you’re probably not an expert in tax law, worker’s rights, contracts, or many of the other legal areas that businesses have to keep track of.
What does the Department of Labor want from you? What documents do you need to file with the IRS? Do you need workers’ compensation?
Important HR regulations
Investing in outside help to stay in compliance with regulations is a cost of doing business, just like paying rent or purchasing inventory. When you decide to take on employees or contractors, you incur an additional level of compliance and with that comes additional costs.
In the State of Oklahoma, you have to have workers’ comp for your employees. If you want to hire interns, they’re counted as employees, not independent contractors. That means workers’ comp coverage for them as well.
For contractors, there are specific requirements that must be met to classify someone as an independent contractor rather than an employee. If you ignore those rules, the fees and penalties are not negligible and not negotiable. The OESC can go back three years and charge back pay, overtime, fees, and more if you’re not in compliance. Sometimes the interest is more than the original penalty, and it’s a difficult hole for a lot of businesses to climb out of when they get fined.
If you’re going to be a business owner, you need to be serious about it, and that includes understanding the critical role of compliance. If you need outside help to manage compliance, ask for help. It’s not a sign of weakness; it’s a sign of a competent business owner. It’s a necessary step in growing your business and keeping yourself safe from problems down the road.
Don’t neglect compliance. Take care of it early—because the earlier you do it, the easier it is.
Want to find out more? Contact Why HR to discuss how we can help your business stay compliant as it grows.
