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3 min read | Published 09/07/2024
It’s important to stay on top of the business rules and regulations that affect your business. Otherwise, you could find yourself accidentally breaking the law. Here’s what you need to know.
Whatever type of business you have, you need to comply with certain business rules and regulations. These rules are set by a variety of government departments and official bodies. They cover everything from health and safety to environmental obligations.
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Business compliance is the process of ensuring your business activities are in line with current legislation. To do this, you need to be aware of the different regulations that apply to your company. This often depends on your industry, location and the size of your operation.
Certain sectors, such as construction, have sector-specific regulations.
And companies with employees must follow rules designed to ensure those employees are treated fairly.
In some cases, business compliance also involves having certain types of business insurance in place.
Depending on your business type and activity, you may need:
You can find out more about the types of cover you need by reading our short guide: Do I need business insurance?
We also have more in-depth guides to different kinds of business insurance, including key person insurance, cyber insurance, and equipment breakdown insurance.
The regulations your business must stick to depend on your sector and how you operate.
However, the main areas of compliance include:
Health and safety: Customers, suppliers, partners or passers-by. It’s vital to take steps to protect the health and safety of all those affected by your business activities. This can include taking out relevant insurance, such as employers’ liability cover, which is a must-have for most companies with employees.
Financial: Businesses of all shapes and sizes must follow the rules when it comes to paying tax and managing payroll. And companies in the financial sector must also follow strict rules about how they advise clients and manage people’s money.
Data protection: The Data Protection Act 2018 determines how businesses can collect, process and store customer data.
Environmental: Businesses have various environmental obligations, including how they dispose of commercial waste.
Employment: In addition to protecting workers’ health and safety, employers must follow other regulations, including those relating to recruitment and discrimination.
It’s important to stay up-to-date across the board. Failure to comply can lead to large fines and could even land company directors in prison.
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You need to review legislative and regulatory changes regularly to ensure you remain compliant. Alternatively, you could hire a legal team to monitor the situation for you.
If you want to manage business compliance yourself, it can help if you:
Become a member of trade bodies and read trade journals, which can often issue warnings or offer guidance on how to meet new rules
Join a legal register – a database that updates automatically when regulations affecting your business change
Conduct an internal compliance audit to check you are meeting requirements and identify areas where you need to do more
Provide compliance training for employees to ensure they know what they need to do to avoid breaking the rules
One of the biggest recent changes to the legislation governing companies in the UK is the introduction of the Economic Crime and Corporate Transparency Act. The new law forbids companies from using a PO Box as their registered business address from March 2024.
Not all changes to business regulations aim to constrain companies, though. Some try to ensure companies get a fair deal.
Take the Insurance Act 2015. It introduced new rules to prevent insurers from refusing to pay out on claims because the company making the claim failed to meet policy requirements.
For example, if a company makes a flood damage claim, an insurer can’t refuse the claim because the burglar alarm wasn’t set at the time.
Read more: How to make a business insurance claim
If you’re caught breaking the rules, you could be hit with a substantial fine. In some cases, the authorities may hold directors accountable for the breaches. If this happens, they could ban them from running a company for up to 15 years. And in very serious cases, they may even send them to jail.
Other potential consequences of failing to comply with business regulations include:
Your insurer cancelling your business insurance policies
Being refused business insurance in the future
Having to pay more for business insurance
Losing business due to the reputational damage
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Alex joined in 2019, bringing his expertise to a range of roles working in both the Analytics and Commercial teams. More recently he has stepped across to focus on Product, where he’s been focusing on scaling up the teams’ SME offering.
