Are you a founder of a tech startup or are you looking to set up a tech business, then this is for you.
We understand that at the sound of the word compliance you may feel inundated with the countless rules, laws, and policies you need to adhere to. Here is a guide to ease you into compliance for your tech startup.
Firstly, compliance means adherence to laws and regulations. Thus, a compliant startup or business follows the same logic. A compliant startup/business is a business that operates in accordance with all the applicable laws and regulations that guides not just the business but the ecosystem or sector in which the business/startup operates. This includes issues on licenses, permits, taxations, etc.
Why do you need to be compliant?
The primary reason is because it is mandated by law. However other reasons are:
- To avoid the payment of penalties and fines. Non-compliance can lead to costly fines & sanctions from government agencies, and in some cases, criminal proceedings for business owners.
- For customer protection especially where your business is in possession of the personal data of its customers.
- To build trust with your stakeholders including shareholders, employees, partners, vendors, and customers/ clients.
- Increases the chance for investment opportunities – Investors are more inclined to fund a compliant startup
6 quick steps to start your compliance journey as a tech startup.
- Know the right corporate entity your business requires and register with the Corporate Affairs Commission (CAC).
- Get a tax identification number (TIN) from the Federal Inland Revenue Service (FIRS). This will help with easy and accountable tax remittance.
- Obtain the necessary licenses and permits from the relevant authorities operating and regulating the sector your business operates in.
- Open a corporate bank account. This will make it easier for you to manage your finances and comply with financial regulations in Nigeria.
- Setup your corporate governance structure.
- Engage the services of professionals. (Perhaps the first thing to do)
Customer Identification Procedure (CIP)
The Customer Identification Procedures (CIP) is designed to help businesses verify the identity of their customers.
How to comply with CIP
- Obtain/collect specific data from your customers. This includes information like their full name, date of birth, and address and a copy of their government-issued ID.
- Run a background data checks to verify your customers’ identities. This can be done through an online database or by contacting the customer directly.
- Upon verification of their identity, you’ll be able to complete your customer’s profile and move on to providing them with your product or service.
- Ensure you have a Customer Identification Procedure (CIP) in place.
- Ensure that your CIP is robust and includes all the necessary information.
- Ensure that you have systems and procedures in place to verify the customer’s identity. This may include things like asking for identification documents or using third-party verification services.
- Ensure that you keep accurate records of all customers who are identified through your CIP. These records must be kept for at least five years.
- Finally, make sure you review your CIP on a regular basis to ensure it is still up to date, relevant and compliant with Nigerian regulations.
Building a compliant business may seem tasking however it is better than facing the consequences of non-compliance. I bet you would rather spend that time on your business than on legal proceedings or responding to sanctions for non-compliance.
For more information on Compliance, contact us today at Acuity Partners.