Why is Statutory Compliance necessary for businesses?
Every company has one thing in common at its core - people. Without people, no organization can function. These people are the employees of the company, who work in different roles to achieve its purposes. For a company to function well, it must be organized and streamlined, with appropriate rules and regulations in place. These regulations extend to every aspect, including the company's interactions with its employees and its finances. This is known as legal compliance.
What is Statutory Compliance?
In the definition of human resources (payroll and taxes), Statutory compliance services is the legal structure within which a company must act in relation to the treatment of its employees.
Importance
Legal compliance relates to various labour and tax laws prevailing in India. These laws change at the state and national level, and businesses are required to comply with them. Failure to comply with these regulations can result in the company getting into legal trouble such as penalties, fines or worse. This is why companies spend a great deal of resources to ensure legal compliance.
It is important to have a sound understanding of the various labour and tax laws in India to keep up with any changes you need to incorporate as the law is very dynamic and the rules change from time to time. Recently, legal compliance service providers in India have been in the spotlight more than they used to be for the same reason.
Legal compliance for a partnership corporation, private limited company, LLP, or any type of broadly based corporation remains the same. Any organization that employs and pays employees or workers must comply with labour laws regarding monetary compensation, payment of taxes, and employee protection and safety and labour fairness.
Maintaining books of accounts that provide a complete and fair overview of the company's financial position. These books must be maintained in accordance with relevant accounting standards and must be audited by a certified auditor or chartered accountant.
Deposit advance taxes and TDS on time, and submit returns as standard. This varies depending on the nature of the company.
Conduct a legal audit when required by law.
All papers and other documents related to the formation and registration of the company, among other things, must be in place.
Ensure legal compliance.
Understandably, it is difficult to know every business and tax law and its basic principles. What could be the solution to ensure full legal compliance of the company without any errors? Convenient payroll management system.
Effects of pandemic on statutory compliance
To deal with such special circumstances, more than 100 countries had to issue more than 350 new regulations, considering the Covid-19 scenario. More than 150 expected commitments will likely arise, all thanks to the state of the pandemic. Moreover, the central government, along with 7 other state governments, have collectively invoked certain provisions and powers - all under the Pandemics Act of 1897. Needless to say, the implications of non-compliance were upgraded to a much more serious and stricter capacity.
Advantages of statutory compliance
The most important feature of the employee statutory compliance checklist is that it ensures the fair treatment of workers. It is prohibited to exploit employees or force them to work for inhuman hours or in inhumane conditions. It also ensures that they are paid fair wages in proportion to the work they have done, and that companies comply with the minimum wage rate.
The predefined set of rules makes it easier for the government to collect revenue as well as for companies to regulate their financial statements. Legal compliance is important to prevent legal problems.
1. Avoiding Sanctions and Other Legal Effects - Legal compliance ensures that the organization can avoid penalties, ineligibility, license forfeiture, fines, lawsuits, etc. In other words, compliance with the basic regulations and rules ensures that the company does not suffer any legal repercussions.
2. Increased Efficiency – When the company successfully complies with the required regulations, the company can save a lot of time, effort and resources which it can employ in the sectors which are more local to its cause and existence.
3. Better Public Relations - A company proficient in legal compliance is a symbol of stability and a first-class business ethic.
4. Higher employee morale – Legal compliance automatically boosts employee morale. Compliance with the above set of regulations will ensure that the Company performs with maximum efficiency and in good faith. This will promote good intentions. When a company has a good reputation, the employees of the company are automatically in high spirits and tend to stay longer than a company that does not abide by the law.
When the company is in compliance with the law, the workers or employees will be more and more familiar with it. Statutory compliance services is a two-way street and once employees begin to abide by the law, the potential for legal implications and other setbacks (major or minor) are reduced to a minimum or even zero. Any risks of non-compliance are automatically eliminated.
Legal compliance not only helps the business from the inside but from the outside as well. A law-compliant business is bound to fetch good ratings, and therefore has a good reputation. Now in the business world, goodwill is almost everything, so if your company is in compliance with the law and has a good reputation, you are bound to stay ahead of the competition in most areas.
Conclusion: Legal compliance is very important and must be given due consideration. Companies should have a proper payroll management system to simplify it.
