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How to Stay Compliant as an SMB — A Comprehensive Checklist

SMB | How to Stay Compliant as an SMB — A Comprehensive Checklist | MartinoWest October 2021

Staying compliant suddenly becomes difficult as your business starts to grow. Each state has its own set of regulations to adhere to, and then there are federal and internal regulations to consider as well. 

As anyone who’s struggled with compliance will tell you, falling behind happens slowly — and then all at once. One task falls through the cracks, then two, then more… and, before you know it, you’re facing some dire consequences. Failure to adhere to state and federal regulations can land your company with heavy penalties. And that can tank your business before it reaches its true potential.

That’s why it’s smart to plan ahead with small business compliance. Don’t wait until it’s too late and your standards are already starting to slip. A PEO partner can help your SMB stay compliant, no matter how complex the tasks. In fact, the more complex the better — that way you get a huge weight taken off your shoulders, while the PEO ties up all loose ends.

What do we mean by SMB compliance?

SMBs have both internal and external compliance regulations to manage. Let’s kick things off by explaining the differences between internal and external compliance rules, plus the need-to-know examples.

External requirements

External requirements are the regulations your company has no control over. This can be dictated by the industry you operate in as well as federal, state or local laws. Some of the regulations may come with fees, while failure to adhere to external requirements can result in large financial penalties. 

Examples of external requirements include: 





Local legislation can be tricky to navigate and can change often. Make sure to keep in contact with local offices to ensure you stay compliant. 

Internal requirements

Internal requirements vary depending on the size and structure of your business and how it operates. They are designed to provide transparency for your organization; demonstrating to others that it operates with integrity. 

These regulations can also be put into place to ensure business-wide compliance with external requirements, offering strict structures that provide little opportunity for accidental slip-ups. For example:


There are smaller business structures that have little to no internal requirements, such as Sole Proprietorship. However, for these businesses, it’s still good practice to keep accurate records to fall back on in the event of legal proceedings. 

How to stay compliant as an SMB

Trying to stay compliant can be a minefield — take too many wrong steps and you’ll be hit with hefty fines. But, don’t worry, we’ve put together a handy checklist to keep you on the right path.

Please note that this is not an exhaustive list of external requirements. You should always keep updated by checking in with local authorities and the U.S Department of Labor, or asking your PEO.


Payroll is one of the most important areas of compliance for your employees and your business. Make sure you’re up to date on regulation such as:


Just because you’re running an SMB doesn’t mean that your tax requirements are lessened. All businesses must adhere to:


SMBs are required to offer certain employee benefits, depending on the size of the business.


The federal Fair Labor Standards Act (FLSA), mentioned above, requires employers to keep certain employee payroll records. You are responsible for keeping records confidential and in a secure location for at least three years. Some states have additional requirements, too.

Employee payroll records must include:


Recruitment for SMBs may be a little less demanding than in large corporations (in that there are fewer spots to fill). That said, you must still adhere to regulations. These include, but are not limited to: 

Trust MartinoWest to keep your SMB compliant

We said it once and we’ll say it again: employment law is a minefield to navigate. 

Staying compliant can take a lot of time and effort that could be better used elsewhere in your business. And with a third of US small businesses fined every year, it’s no surprise that more and more business owners are choosing to outsource their compliance responsibilities to a trusted PEO. 


A PEO offers expert advice and guidance from HR professionals to help you stay on the right side of regulations. With a program from MartinoWest, you don’t have to take on these stressful tasks alone. Let the PEO professionals handle the paperwork, while you focus on the important tasks that only you know how to do.

Stay in the loop with developments and stay compliant with MartinoWest. Get a quote today!

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