Is your small business in compliance?

Running a small business can be a lot of work. Between managing operations, meeting customer demands, and keeping up with the latest trends, it’s easy to forget about compliance requirements.

But failing to meet mandated regulations can have dire consequences that cost time to fix and more importantly your hard earned money. 

All businesses no matter the size are impacted by compliance. However for small businesses with limited resources, it can be difficult to keep track of what is required.

In this article we will look at some key compliance areas that small businesses need to pay attention to. 

While this article is based on the requirements in Trinidad and Tobago, there tends to be similar requirements across different countries so please check the specific requirements of your country. 

In Trinidad & Tobago there are 3 main types of business registration.

• Sole Trader
• Partnership
• Limited Liability Company

It is important to understand each registration type as each type has different implications regarding how you interact with and comply with our regulatory bodies.

But before we understand “how” let’s understand “what”.

What is a sole trader

The name itself gives a very big hint to what this is. A “sole” person carrying on a “trade”. This is a singular person conducting a business for themselves.  

What is a partnership

A partnership is a business with 2 or more owners. A simple partnership can be 2 or more sole traders coming to work together because of common interests or synergies within their businesses. A more complex model can be a law or accounting firm that is in an incorporated partnership with legal status similar to that of a limited liability company. 

What is a Limited Liability Company (LLC)

A business that is incorporated under the Companies Act. The business identifies itself with “LTD” at the end of its name. It is on the other end of the registration spectrum when compared to sole trader in that it is a separate legal entity from the person/s who own it. This causes the business structure to have much more compliance needs and is more regulated than the sole traders.

So how do you comply?

The level of compliance needed by a business depends on the structure chosen with the LLC having the most requirements.

At a basic level all the structures are subject to tax returns with the BIR (Board of Inland Revenue). However, the returns for each are different with different allowances and deductions. ALL businesses must file a tax return.

For the Registrar General (Ministry of Legal Affairs), at a minimum all business names must be registered. For a sole trader and unincorporated partnership, there are usually no other requirement after that.

However, for incorporated partnerships and companies, there are additional documents for initial registration and EVERY YEAR after.

So it’s important that the right business structure is chosen from the start so that entrepreneurs are fully aware of what they are getting into and the resources it would take to stay compliant.

This table summarises the basic requirements of the different the business structures.