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What is small business compliance and why does it matter?

If you thought small businesses don’t really have much to comply with you'd be wrong. Find out about small business compliance.

Why is small business compliance necessary?

Like businesses of all sizes, there are lots of reasons why compliance is necessary. In situations involving regulatory compliance, a business might be breaking the law if it doesn’t follow the rules.

In many other situations, it makes sense to have small business compliance. That’s because it is the right thing to do. For a business, its employees, customers and the communities where it operates.

With small business compliance, you can be a:

  • Better business owner
  • Better employer
  • Better supplier of services to your customers
  • Better member of the local community

Perhaps the question to ask is: ‘Why wouldn’t you want small business compliance’?

Grow your business

Benefits of small business compliance

You are more likely to:

You are less likely to:

  • Face fines for not meeting regulatory compliance for small business
  • Increase business costs by not doing things right the first time
  • Incur insurance claims from employees and customers if jobs go wrong
  • Damage your business reputation

Small business compliance is about quality

You often hear businesses talk about ‘quality assurance’. This is their way of telling customers, staff and the regulators that they perform to high standards.

Small business compliance means you understand and follow operating methods that deliver good quality.

A globally recognised example of quality assurance is ISO accreditation. These standards are described as “the best way of doing things” for businesses.

Another quality assurance area is Investors In People (IPP) This is a scheme that sets standards for how businesses treat their staff.

Running your company according to ISO or IPP rules may not be necessary for a small business. But you can follow similar principles.

Operating your business to high-quality standards helps you to:

Checkatrade helps its members with advice, ideas and support to improve their businesses.

Who sets regulatory compliance for small business?

Regulatory compliance for small business comes from a variety of sources:

  • Central government
  • Local authories – England and Wales, Scotland and Northern Ireland
  • Industry sector compliance – licences and permits to carry out certain types of work
  • Financial compliance – mainly tax and accounting requirements plus company reporting
  • Health and safety – mostly set by the Health and Safety Executive

What are small business compliance requirements?

These vary between trades. Some small business compliance requirements are universal.

Others apply only to a particular trade or industry sector. While some are related to the size of a business.

Small business compliance requirements can include:

Health and safety compliance

The Health and Safety Executive has a handy list of basic compliance measures for small business. These include business compliance on:

  • Health and safety
  • Managing and assessing risks
  • Accidents and illness reporting, where required
  • Workplace facilities, such as toilets and washrooms
  • First aid

cpr first aid requirements

Environmental compliance

It’s the job of the Environmental Agency to protect our air, land and water. The Agency has a number of initiatives to help small business compliance with environmental regulations.

The agency admits it can be difficult to regulate small businesses. That puts the onus on tradespeople to comply with the rules.

Small businesses also need to think about a broader picture that goes beyond sustainability. This is often called environmental, social and governance (ESG).

ESG determines the approach businesses take not only to the environment, the communities where they operate and how they are run.

Compliance with ESG factors isn’t a legal requirement in all areas. But it makes good business sense to be compliant with the latest best practice in them all.

GDPR for small businesses and sole traders

Data protection compliance

Much of our personal and business life nowadays is conducted online and digitally. Inevitably, rules and regulations are there to protect people’s personal data.

These regulations are changing all the time to keep up with advances in technology.

Small business compliance is governed primarily by the General Data Protection Regulation. If your business handles any personal information digitally then the compliance regulations probably apply.

You have to make sure the information is:

  • Used lawfully
  • Used only for specific purposes
  • Used in a limited way only for what is necessary
  • Only kept for as long as is necessary
  • Kept accurate and up to date
  • Handled securely and protected against unauthorised or unlawful access or use

Strong data protection compliance helps to protect your online business reputation.

Financial regulation compliance

Small business compliance covers a lot of financial areas. These include:

  • HMRC requirements – to keep accurate business records for tax and National Insurance purposes
  • Companies House – for limited companies to file their annual accounts
  • Banking compliance – businesses have to comply with various rules on anti-money laundering and on holding a business account
  • Payroll compliance – if you have employees your business must comply with regulations on deducting taxes and paying people
  • Insurance requirements – certain trades may have professional trade body insurance requirements. Insurance is often a requirement if you have employees and for assets like vehicles and buildings

what business taxes do I need to pay

Industry regulations

Different trades may have small business compliance regulations. These are often set by their trade association or industry-led organisation. The aim is usually to protect and enhance:

  • The reputation of the trade organisation by compliance with its rules
  • The tradesperson’s business by complying with high professional standards

Key takeaways

  • Compliance for small business helps tradespeople to protect and grow their businesses
  • Small business compliance requirements are wide and varied. Some have legal obligations, others are voluntary
  • By following small business compliance standards tradespeople can act more responsibly and offer better quality assurance in their work
  • Regulatory compliance for small business covers health and safety, environmental, financial and data protection

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