Once overshadowed by the tech powerhouses of Silicon Valley and bustling Asian economies, Europe has made an impressive surge in the global startup scene.
According to CB Insights, as of 2022, Europe is home to 38 ‘unicorn’ companies, those valued at over $1 billion. Atomico’s State of European Tech report states that a record-breaking $41 billion was invested in European tech startups in 2020 alone.
Amidst the rapid scaling and cutting-edge technologies, there is however one often overlooked aspect that plays a crucial role in these startup success stories: compliance. An understanding of regulatory frameworks, from GDPR to labour laws and taxation ensures sustainable business operations.
This beginner's guide to keeping your tech business compliant aims to shed light on the importance of keeping your tech business compliant while carving the path to becoming Europe’s next unicorn.
What is Compliance?
Think of compliance as a company’s rule book, guiding how it should act in its day–to–day operations. In the business world, compliance mandates an organization to follow all the laws, regulations, and ethical standards that apply to its industry.
Compliance may sound complex and daunting, especially for a startup, however, it is a compass a business startup cannot do without if it must stay out of trouble.
Read also: Non Compliance: Understanding the Risks and Consequences
Beginners Guide to Keeping Your Tech Business Compliant
With the rise of European startups, especially in the tech industry, business owners must learn to keep their tech businesses compliant. Here is how.
#1. Mastering Data Protection and Privacy: GDPR Compliance
In today's digital era, data is the lifeblood of tech businesses, powering everything from search engines to customer relations. Just as essential as harnessing data is the need to protect it - a principle enforced by the General Data Protection Regulation (GDPR).
This global standard has transformed data privacy since its 2018 inception, levying a staggering €272.5 million in worldwide fines for violations by 2020. This already shows that neglecting GDPR compliance is a high-stakes gamble that no tech business can afford.
The regulations stipulate that failure to comply can result in fines of up to €20 million, or 4% of a company's annual global turnover - whichever is higher. Whether your startup operates in the EU or elsewhere, GDPR is the gold standard in personal data protection - a standard every tech business needs to uphold to succeed in the data-driven digital landscape.
Read also: Best Practices for Avoiding Compliance Fines
#2. Navigating Labor Laws: Fairness in the Tech Industry
Labour laws are the cornerstone of business compliance, safeguarding the rights of your invaluable human resources. Compliance with labour laws, such as fair contracts and work-hour restrictions, contributes to a productive and satisfied workforce while avoiding legal pitfalls.
According to Eurofound, Europe sets some of the highest global standards for labour rights, emphasizing strict regulations around working hours, leave, and safety. This is especially pertinent in the tech industry, where the UK sector experiences a 15% turnover rate, compared to 10% in other industries - a variance that could be influenced by labour law compliance.
#3. Understanding Tax Compliance: The Fiscal Aspect of Your Tech Business
Tax compliance is another critical aspect that tech businesses often overlook. This includes being compliant with income tax laws, value-added tax (VAT), and corporation tax, among others.
With 27 member countries, each with their own tax laws, navigating taxes in the EU can be a minefield. However, there are also advantages. Ireland, for example, has one of the lowest corporate tax rates at 12.5%, attracting many tech startups.
Proper tax planning and compliance can save your tech business from hefty penalties. In the UK alone, HMRC collected £34.1 billion from tax penalties and investigations in 2020.
#4. Protecting Intellectual Property: Safeguarding Your Innovations
In the tech industry, safeguarding your innovative ideas through intellectual property (IP) protection is essential for success. According to the World Intellectual Property Organization, 3.3 million patent applications were filed worldwide in 2019, demonstrating the importance companies place on protecting their innovations.
Protecting your Intellectual property involves understanding and effectively utilizing patents, copyrights, trademarks, and trade secrets. Therefore, Do not leave your IP vulnerable – act early and collaborate with an IP lawyer to safeguard your innovative concepts, ensuring your tech business's long-term success.
Strategies for Keeping Your Tech Business Compliant
Compliance isn't a box to tick off but an ongoing commitment for any tech business. Here's your game plan to stay compliant:
a. Cultivate Compliance Specialists
A dedicated compliance team isn't a luxury; it's a necessity, slashing violation risks dramatically. KPMG's survey illustrates this, with 96% of U.S. firms affirming their compliance functions' effectiveness in 2020.
Enlisting the help of legal and tax advisors could be the wisest investment, helping you navigate the intricate European regulatory waters.
b. Stay Ahead of Regulatory Waves
Regulations are a moving target. Staying updated with the latest regulatory shifts in Europe is essential to maintaining a compliant and resilient business.
c. Empower Your Team with Training
Instilling compliance knowledge in your team is fundamental. In fact, the 2020 State of the Sector report shows that 77% of companies offer regular compliance training to their employees. A culture of compliance, and understanding its role in your company's success, is key in the European context.
d. Harness Technology for Compliance Management
Tech can be your biggest ally in managing compliance. A Genpact report reveals that by 2025, 34% of businesses plan to integrate AI into their compliance processes. Regular audits, risk assessments, and a dedicated compliance team are pivotal to fostering a compliant environment, crucial in the European market.
Achieving Compliance with Youverify
Here is a step-by-step process on how businesses can automate their compliance processes with the Youverify workflow builder:
Step 1: Login to your dashboard and navigate to “Workflow Builder” at the left tab of your screen. Select create workflow builder on the bottom right as seen in the image below.
Step 2: You can either opt to choose an existing template by selecting “Choose Template”, Select a designed form draft in “Saved Forms”, copy a previously created and deployed form in “Publish Forms” or edit the template preferences in "Default Settings" tab.
Step 3: Select the solution components necessary for your business compliance needs as indicated in “1” and tailor the user onboarding flow to your preference.
Step 4: Customise individual components to your business brand feel including colours, logo, background, etc.
Step 5: Review to ensure it satisfies all the important needs in your onboarding and publish. You can proceed to share a link directly with customers.
Compliance is strategic and foundational to a tech business's success. Emphasizing data protection, labour laws, tax compliance, and intellectual property rights will help keep your tech business compliant and propel it towards sustainable growth and success.
Interesting News: Youverify Joins Europe's Biggest Startups and Tech Event
Stay updated, invest in experts and training, and leverage technology to manage compliance. This approach can secure your journey in the tech industry, making it more reliable and promising.
Youverify Solutions stands out when it comes to keeping your tech business compliant. We use top-notch technology and a focus on data to help organizations dodge compliance pitfalls. With a full range of services and tools, we can spot, handle, and control any issues related to compliance.
For a deep dive into how our solutions can help keep your tech business compliant, get in touch with us for a personalized consultation. Our seasoned specialists will evaluate your company's compliance requirements and offer bespoke advice on the optimal compliance software to employ.
Book a demo to get started today.