Page 18 - GIADA-Mar 2018-web

COMPLIANCE

Prioritizing Entity Vitals

Real-life examples prove that failing to meet federal, state, and local requirements for
licensing and permits can cause otherwise successful dealerships to lose their right

to do business and, in the most extreme cases, their very names.

By Brennon Romney, Account Development Supervisor, American Financial & Automotive Services

or county department
• Business licenses filed with the state,
county, or city department
• Trademark registration
• Domain registration
• Franchise tax reporting
• Department of Revenue annual tax
filings
• Insurance licensing
• Motor club licensing
• State DMV licensing
• Office of Consumer Credit
Commissioner licensing
• Applicable out-of-state registrations
for multistate operations
• Building and land permits

These are just a few examples. Failing to
From the Red Flags Rule to the Safeguards Commission’s Red Flags Rule and register, renew, or maintain any of these
Rule, the Equal Credit Opportunity Act Safeguards Rule — to manage the CMS could result in fines, penalties, and license
and compliance with standards enforced and train employees involved in the revocations. Your dealership could even
by the Occupation Safety and Health sale of vehicles. be subject to involuntary corporation
Administration, we all know that a • Outsourced fixed-operations compli- dissolvement by your secretary of state.
compliance management system is critical ance and third-party audits for the ser-
to managing all the rules and regulations vice department. Annual reports filed with your state could
the various departments are subject to. But arguably be the most important filing on
a CMS can’t be effective if it doesn’t account But all these initiatives will not matter if, your list. A serious consequence of not
for compliance initiatives that don’t often for example, an annual report is not filed filing could be that the dealership must
capture the headlines. with your secretary of state. This seemingly cease to do business until rectified. When
small task can become extremely vital to a dealership’s status with a secretary of
I’m referring to corporate filings, business your dealership’s future and reputation. Are state is “not in good standing,” the dealer
licenses, professional licenses, and annual you aware of the required entity vitals for may be faced with penalties, loss of
registrations. Commonly referred to as your dealership? revenue, or worse. In fact, if a dealership’s
“entity vitals,” they are just that — vital name is at stake because the dealer failed
to the long-term survival of a dealership. ENTITY COMPLIANCE to submit an annual report, a competitor
Ideally, your operation will have three Entity vital requirements will depend on can claim it.
key components in place to ensure all your state as well as the F&I products you
departments are consistently compliant: sell. For example, key replacement and Also critical are the entity vital
• A human resources director who credit insurance have different licensing requirements around assumed name files,
understands applicable human requirements based on the state in which more commonly known as a DBA, for
resources and workplace laws and can the dealership operates. Some entity vitals “doing business as.” They are applicable to
also successfully implement company may include: most dealership entities. And depending
policies to adhere to those laws • Annual reports filed with the state on the state, a DBA must be registered
• A dedicated compliance officer — a department with the county, state department, or
requirement of the Federal Trade • Assumed name filings with the state both.

16 | GIADA Independent Auto Dealer MARCH 2018