In order to avoid such outcomes, follow these six steps to evaluating your company’s business license compliance.
The six steps of business license compliance
Step 1: Gather all relevant data into a single portfolio
Effective business license compliance begins with thorough research of your existing portfolio.
- Document your existing license portfolio and licensing footprint
- Create a list of all the information that must be reported on each filing
- Compare this list to your portfolio footprint and document potential gaps (this helps to ensure that all specific licensing requirements in varying locations are understood and accounted for)
Step 2: Storyboard your process for business license management
Review how the current business license compliance function is conducted, and how effective it is at meeting business needs.
- Identify all parties and groups that contribute to the license process and include them in the discussion, such as tax, legal, corporate secretary office, controller, etc.
- Engage corporate leadership sponsorship
- Task each group with storyboarding each step in the business license filing process.
- Identify gaps, team overlap, and opportunity for improvement
- Establish your list of priority compliance needs broken down by operations, industry and ownership
Step 3: Identify triggers for new compliance actions
The following business events and changes trigger a license action, such as applying for a new license or a cancellation of existing certifications. Do you have a process to track such changes?
- A name change
- Ownership changes
- Address change
- Remodeling
- New product launch
- Stopping certain business activities
- Entity conversion
- Expanding to a new location
- Foreign qualification
- Merger or acquisition
- Closing a location
Step 4: Assess your compliance risk
To avoid noncompliance, review your current process for assessing business license compliance.
- Pinpoint the last time you evaluated your current compliance status
- Assess your current license portfolio based on priority
- Review any penalties and fees have you received in a full year
- Develop your remediation plan when non-compliance is identified
- Create an escalation process for noncompliance activities with key stakeholders
Step 5: Ensure due diligence moving forward
Gaps in compliance put your business at risk. Develop a process to ensure you’re conducting the appropriate due diligence to help you assess and react to the licensing implications of the business events listed above.
- Identify licensing requirements within your industry
- Engage an independent third-party to conduct a thorough license assessment strategy
- Leverage technology to develop a knowledge base so you can better keep track of business license filing, management, and renewals
- Establish a process for reviewing license requirements on a regular basis (quarterly, semi-annually, or annually)
Step 6: Develop your compliance plan
Effective compliance management is difficult without a plan, the absence of which can lead to things falling through the cracks. Consider the following as you develop your license compliance plan.
- Engage and involve your executive sponsors. This helps drive transparency and ensures the compliance plan aligns with corporate initiatives
- To avoid overlap of license management, create a license support team and establish a clear escalation process
- Work with a partner to understand options for optimizing your business license compliance strategy. This might be a technology-enhanced self-management approach, working with a trusted compliance partner, or a blend of both.
- Implement a centralized process for easy review and access of all license data
- Document and share your plan with the corporate governance team
Mastering entity compliance
Regardless of the size or type of business you operate, getting your business licenses in order – and ensuring ongoing entity maintenance – is more important than ever. Regulations are constantly changing, and enforcement is on the rise. Creating a compliance plan and developing a strategy to ensure the compliance portfolio offers long term protection is key to lowering risk due to non-compliance.
Learn more
To learn more about how CT can help you manage your business license needs, contact a CT Service Representative or call (844) 400-9804.
