Understanding Legal vs Compliance in Business

For methodical people, the concepts of ‘legal vs compliance’ become a big deal when they are about to start a business. Then those who think legal and compliance are not really coherent may have their own thoughts that represent half of the truths. The things to know in order to relate both concepts are to know the definitions, differences, and the subsequent effects of both. Therefore in this post, we might be able to understand what legal and compliance are, why it is important for business activities, and how legal and compliance concepts are useful when renting office spaces for business activities.

The legal aspects are things that run according to law or regulation; legal means valid; proper, observant, and the whole aspects are many. Meanwhile, compliance refers to be the state of conforming to or falling in line with some regulation, standard, or rule; as well as conformity in the context of voluntary, self-regulation or negotiation. To put it simply, the regulatory aspects of balances will actually provide us the guidance to run the business properly. You will have to give full attention to legal or compliance aspects if you are living and running a business in Indonesia, Jakarta should be the spot that makes you focus on those aspects.

Legal and Compliance are two sides of the same coin, that legal aspects are the objective side and the compliance aspects are the subjective side. But that does not mean that you can violate the law. It means that the aspects of compliance may be more in connection with the internal environment of your business. So in order to run a business, you need to comply both aspects at the same time. In this case, renting an office space will relate to the regulation that governs real estate businesses. For example: a physical store or building should have a PBB, or PBB2, and might have what it takes to have a license (i.e. IMB) to operate a business in that space. PBB is a tax for the real estate object, while IMB or Ijin Mendirikan Bangunan is a license to use space for building.

By understanding those regulations, business owners will be able to maximize the physical store or building to support business activities. When it comes to meeting spaces, the same regulation will apply, but maybe it will be more on the kafe or restaurant category, for example. The importance of these concepts works together with the practicalities of business activities; it will ensure you to comply with the regulation. Remembering the ‘social contract’ terminology; if you want to build a school, for example, you will need to get approval from the Ministry of Education and related institutions; you should also follow the procedures and guidance that have been laid out.

In terms of corporate action, business entity needs to have legal rights to operate, the same goes with the expectations from the society to get the necessary permits and permissions, such as the comprehensive legal and compliance guidelines mentioned above.