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The complete guide to business compliance for SMBs

By Abigail Sims
Published on August 14, 2025

Key takeaways:

  • Business compliance involves adhering to all laws, regulations, and guidelines required for operating your business
  • Paying your taxes correctly, observing fair hiring practices, and applying for the appropriate state licences are just a few examples of business compliance
  • Non-compliance can result in fines, damage to your reputation, and open you up to lawsuits or criminal charges


Complying with all regulations, standards, and laws is a crucial part of successfully running a business. However, business compliance is often overlooked. 

For example, less than half of business owners are confident they are paying taxes correctly, according to a recent survey on accounting from Intuit. 

Errors and non-compliance with important regulations can result in serious consequences. To protect your business, you need to understand what compliance is and how it works. 

Let’s explore the risks of non-compliance, but also look at who is responsible for compliance, and define the six key areas of business compliance. 

Jump to:

What does business compliance mean for your SMB?

Business compliance for your SMB (small or midsize business) means having to strictly adhere to all standards, regulations, and laws governing the operation of your business. 

These rules can be local, federal, or international, and provide guidelines on everything from paying your employees to recording meeting minutes. 

Being proactive about business compliance can help your small business: 

  • Avoid financial penalties (fines, lawsuits, imprisonment)
  • Build trust and credibility with customers and partners
  • Protect your company’s reputation
  • Attract investors and gain contracts
  • Ensure long-term success and competitiveness
  • Prevent denied insurance claims for non-compliance losses
  • Decrease the risk of license revocation or business closure

Whether you’re trying to navigate the FASB's Generally Accepted Accounting Principles (GAAP) or trying to avoid IRS fines, we’ll explore what compliance looks like for your business in greater detail later in this article. 

Who is responsible for compliance in an SMB?

The person responsible for compliance in business is ultimately you, the business owner. 

As a small business owner, you wear many hats. While larger enterprises may have dedicated staff for payroll, legal, and compliance, you likely don’t have the same resources. 

So, if you are handling your own payroll, accounting, etc., you are not only the one in charge, but will also be the one held accountable for any non-compliance issues.


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As a small business owner, you can limit your risk by using software, tools, and platforms that help you remain compliant by staying on top of changes in law, tracking progress, generating reports, and spotting potential compliance issues.


6 key components of business compliance for SMBs

There are many rules and regulations your business may need to follow to remain compliant. Let’s explore the 6 principal types of business compliance.

An infographic listing 6 components of business compliance

1. Internal requirements

Internal compliance is all about solid record-keeping and adhering to the standards you set forth. As a company, you can outline internal regulations like a code of conduct, ethics, privacy standards, etc. Then record your compliance with these internal regulations. 

For example, your business may define a set of ethical guidelines, create training documents, and establish procedures to hold employees accountable for compliance.

Recording compliance with internal guidelines can be particularly useful when encountering lawsuits, documenting major business changes, selling your business, or establishing business continuity. And, depending on your company’s size, it may be a shareholder requirement.


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How you structure your business will determine the level of internal compliance needed. For instance, publicly traded corporations have a high level of internal compliance.


2. Ongoing state filing requirements

Depending on the location and structure of your business, there may be state and local filing requirements you must adhere to. These can include: 

  • Submitting an annual report or biennial statement with the appropriate filing fee
  • Collecting sales tax and reporting it (state, city, county, and township)
  • Filing income tax (in some states)
  • Paying franchise tax (in some states)
  • Filing articles of incorporation (corporations), articles of organization (LLCs), and articles of amendment (for changes)

Compliance with regulations is required at every level of government, including state, county, city, parish, and township. Be sure to check the laws specific to your area.

3. Ongoing federal filing requirements

In addition to state and local regulations, there are also federal-level requirements you should be aware of, including: 

  • Filing small business taxes with the IRS (income and employer taxes)
  • Providing healthcare coverage under the Affordable Care Act (ACA) reporting (for 50+ employees)
  • Offering equal access to employees and customers under the Americans with Disabilities Act (ADA) 
  • Adhering to workplace health and safety laws
  • Business compliance with marketing and advertising laws
  • Obeying strict environmental regulations
  • Adhering to industry-specific laws like HIPAA for the healthcare industry, or the Truth in Lending Act (TILA) for financial institutions

While many compliance concerns will require active involvement, other issues, like filing taxes, can be outsourced to experts using tools like QuickBooks Live Tax. 

4. Licenses, permits, and recertification

Depending on the type of business you own and operate, there may be governmental agencies you’ll need to register with or obtain permits from. 

Here is a quick review of the permitting and registration needed for various industries: 

Beyond federal requirements, there are often state-level and local permitting, licensing, and certification requirements. 

Business types most often subject to regulations include: 

  • State, city, or county licenses/permits (e.g., health, sales, professional certifications)
  • Construction
  • Dry cleaning
  • Farming
  • Firearms
  • Healthcare
  • Law
  • Manufacturing
  • Pawnshops
  • Plumbing
  • Restaurants
  • Retail (clothing, grocery, pet supplies, etc.)

Your business may need multiple licenses to operate, and you’ll need to comply with each governing body's rules and regulations carefully.


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Each license or permit has a separate fee, often ranging from $25 to $500 or more. Some of these licenses are one-time deals, like a building permit, while many others have to be periodically renewed, like a federal firearms license, food handling permits, and medical licenses. 


5. Employment and payroll compliance

If you are an SMB with employees, there are many employment and payroll regulations you’ll need to be mindful of, including:

  • The Fair Labor Standards Act (FLSA) sets minimum wage and overtime pay requirements
  • The Equal Pay Act (EPA) prohibits wage differences between men and women doing the same work
  • Payroll taxes withhold necessary taxes for state, federal, Medicare, and Social Security
  • The Federal Unemployment Tax Act (FUTA) requires you to pay unemployment insurance for each of your employees
  • Employee classification means you classify employees correctly (such as 1099 vs. W2 employee)
  • Worker benefits require you to comply with all employee benefits and protections, like disability, FMLA, and workers’ compensation.

These are just a handful of the regulations you may encounter for payroll compliance. There are additional rules that apply to certain industries, the hiring of non-citizens, and to businesses that employ staff globally. For example, the U.S. Immigration and Customs Enforcement regulates employment authorization with the I-9 form. 

6. Other federal requirements (non-filing)

Business compliance takes many forms. Here are some other rules and standards you may need to adhere to depending on your business structure, industry, and location. 

While PCI compliance for small businesses is a shared responsibility between you and your payment services provider, compliance with many regulations falls fully on your shoulders.

It's best to educate yourself on all of the federal, local, industry-specific, and international regulations your business might be subject to.

Risks of poor compliance for SMBs

Failing to adhere to set standards and practices can land you in serious trouble. You could find yourself facing hefty financial penalties, at risk of having your permits and licenses revoked, and even subject to criminal charges. Below is a quick overview of the potential risks of non-compliance.

Financial consequences

Non-compliance with regulatory requirements can result in both direct and indirect financial consequences. For instance, your business can suffer directly through fines, remediation costs, and shutdowns. 

Other financial costs incurred could come in the form of lost business, increased insurance premiums, a loss in reputation, and more. 

Legal consequences

Failing to comply with specific regulations could expose you to legal consequences. This includes monetary consequences such as fines, legal costs, loss of revenue, and more severe actions. 

Severe legal ramifications could include:

  • Loss of licenses/permits
  • Lawsuits
  • Forced business closure
  • Criminal charges

Damage to your business reputation

A lack of business compliance can also damage your reputation, which in turn can make it difficult for you to acquire business insurance and loans, harm customer relationships, and complicate the sale of your business. 

An infographic listing the cost of a data breach

Streamlining business compliance for SMBs

Business compliance is important, but it doesn’t have to be difficult. Let’s explore some strategies you can implement to streamline your business compliance. 

Define your processes

From payroll procedures to documenting workplace ethics, you can prevent future issues by defining internal and external compliance processes. Try to integrate compliance into daily workflows and make sure your new documented processes are readily available to your employees.

Work with experts

You can reduce your risk of fines, litigation, and other non-compliance issues by working with the appropriate experts, like lawyers, payroll experts, and financial professionals. You can also explore 3rd party solutions like partnering with a company that provides business compliance services. 

Hold employees accountable

There is only so much you can do as one person. This is why empowering your employees and holding them accountable for implementing your defined processes is important. 

Provide as many educational resources as you can to ensure employees are well-informed about compliance issues. And be transparent about your compliance processes and the consequences for non-compliance.

Utilize business tools

Put your resources to work. Software, financial planning tools, AI-powered assets, and other business tools can lighten your load and ensure compliance with necessary regulations and laws.

For example, Intuit Assist offers real-time accuracy checks and proactive insights and advice, so you can file your business taxes with greater confidence.

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Run your business with confidence

From accurately calculating payroll deductions to applying for the proper permits, business compliance touches on every part of your business. You can ensure your business is well protected by complying with these rules and regulations. 

As an SMB owner, you already wear so many hats, so why not get a little help with compliance from QuickBooks? The QuickBooks accounting software and platform can automate many payroll and tax processes, helping you keep clear, accurate records to ensure compliance with many regulatory requirements. Check it out today.


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