How Compliance Can Power Growth and Unlock New Markets

And lenders aren’t the only ones paying attention. I was recently talking with an acquaintance who was looking for a new landscaping service for his home. He mentioned that he was going to check the compliance record of a business before hiring it. While the average consumer might not dig that deep, investors, corporate customers, and government agencies certainly do. Failure to file a required periodic report or failure to maintain a registered agent may result in loss of good standing or an administrative dissolution of your business. A spotty compliance record can raise red flags, making it harder to secure financing and land new business.

Compliance isn’t just for corporations

A common misconception among small-business owners is that regulations don’t really apply to them—that compliance is just for big companies. Many sole proprietors or small teams think they can fly under the radar. But that’s simply not the case. While larger businesses do face more complex requirements, small businesses still have legal obligations, and ignoring them can have real consequences.

Late tax filings, for example, result in penalties and interest due, and can damage your credibility and reputation. Many entrepreneurs also miss routine state filings simply because they aren’t aware of them. And it’s not just state-level or federal-level compliance that matters. County and municipal permits and licenses are also important, but they often fall through the cracks. This can put your business at risk, including administrative dissolution, just because you didn’t do your homework.

Industry-specific regulations add further layers of complexity. For instance, construction and manufacturing companies may have to comply with OSHA requirements on employee safety or with FDA rules on warning labels and consumer protections. Environmental compliance could also play a major role. And this regulatory web usually becomes increasingly complex as businesses expand their operations or product lines.

A business thrives on a regular “compliance check-up.” An annual review is important to identify potential gaps or areas of non-compliance before they lead to fines, reputational damage, or even the cancellation of their business entity. A compliance review ensures your information remains accurate with state agencies, all required reports are filed on time and accurately, and your business is in good standing in all jurisdictions where it operates. 

Compliance can be a competitive advantage

What many small businesses fail to realize is that staying compliant doesn’t have to be an onerous cost center. Instead, compliance can be a strategic advantage that opens doors to new revenue streams. When your company is in good standing, it’s always ready to capitalize on growth opportunities.

Government contracts, for instance, can be a game-changer for small businesses, providing stable, long-term revenue. But getting these contracts requires strict adherence to regulations. If your business has unresolved compliance issues, you may be disqualified before the bidding process even begins.

The same principle applies to geographic expansion. Imagine your Ohio-based business identifies a lucrative opportunity just across the border in Indiana. To operate there, you’ll need a certificate of good standing from your home state—a document that verifies your business is compliant with all Ohio requirements. If you’ve neglected filings or have unresolved penalties, obtaining this certificate is impossible and can put the brakes on your expansion before it even begins.

The bottom line is that maintaining strong compliance opens doors to countless opportunities across the country for small businesses.

Successful businesses turn the rules in their favor

Growing businesses need to stop seeing compliance as a bureaucratic hurdle and start seeing it as a key enabler of growth. Too often, entrepreneurs spend the bulk of their time preoccupied with the creative vision of the business—which, of course, is important—but not enough time on understanding ongoing compliance requirements and developing a strategy for managing them. 

I’ve seen many cases where small businesses are just about to secure an all-important bank loan or government contract, and it's then discovered that they’re not in good standing due to some small issue of noncompliance, like neglecting to file a form with the state. Then the owners leap into panic mode and scramble to fix the omission—because they didn’t know they were out of compliance in the first place.

So, how important should compliance be? Far more important than most businesses treat it. The problem? It’s the “boring” part. Entrepreneurs are excited about executing on their ideas—not filling out forms or deciphering regulations.

New tech offers a solution for compliance

This is where technology can make a real difference. Most entrepreneurs simply don’t have enough hours in the day to deal with compliance issues. Imagine, for example, that you’re a manufacturing company shipping products nationwide. That level of operation brings numerous compliance requirements across multiple jurisdictions. And the reality is that no single person can be an expert in all those requirements. Even if you hire an attorney, the lawyer likely won’t know every filing obligation in every state.

The good news is that there are now tech-powered online legal service providers that help business owners stay informed and compliant, avoiding missed deadlines or surprise penalties. These providers make it effortless to maintain good standing, particularly during crucial phases like business formation or sudden regulatory changes. They offer real-time visibility into compliance status and send alerts for urgent or new regulatory requirements. LegalZoom's Compliance service can help you manage your business' compliance obligations. Our attorneys follow the latest federal and state filing requirements relevant to your business, and we'll reach out when you need to take action. 

Some platforms even provide concierge services that guide owners through the compliance process to ensure they dot every “i” and cross every “t.” The use of AI can make compliance even easier by automatically flagging new requirements or updates—thus eliminating manual tracking and ensuring all the latest rules are followed.

Comply and thrive

Launching your business is just the first step. Growing it and sustaining it over the long term is what really matters. To do that, you need a procedure in place around compliance. And you need to remember that compliance isn’t a legal obligation to worry about—it’s a competitive advantage to be embraced.

Allison DeSantis is the Senior Director, Product Counsel at LegalZoom