Records and files matter in any business. They are the company’s proof of transactions and interactions with clients and employees, helping safeguard against future legal actions. Here are the essential records that any business must keep:
Electronic records
These days, millions of interactions, connections, and conversations are happening online in just a mere minute. Imagine having to wade through that to get to a crucial piece of information. This is why companies need to keep records of their electronic presence. There are plenty of archiving software solutions available for this.
The electronic archive should include the company website, company mobile messages, social media channels, emails, and office online chats. Having a complete record of these things will enable the company to quickly reference specific conversations that might be at the center of legal issues. They can serve as evidence against litigations in the future.
Insurance files
Businesses often have different insurances for different areas and aspects of the operations. There’s auto insurance for company vehicles, renter’s insurance for the office, and liability insurance for protection in case of business losses.
Having documents proving that these areas are covered by insurance will speed up the process of getting your coverage. Also, your business will be protected against legal disputes.
Employee documents
No business can function without employees. Keep records of all of your employees for a minimum of three years. This should include not just regular employees but freelancers and subcontractors as well.
Make sure that you have details of all that they’ve done for your company. The files you need to keep include signed contracts, payslips, insurance, and tax records.
Having these files will let you quickly get information about former or current employees. These are useful in cases of lawsuits and disputes.
Client records
Just as you need to keep records of your employees, you also need to keep files on your clients. Again, these would be useful during legal actions or audits. Keep records of all business deals, contracts, arrangements, projects, services, and conversations.
These types of files should always be kept, no matter how small the business might be. You can look into electronic filing for these if office space is limited. Anyway, having an automated backup is essential in case paper records are destroyed or lost.
Financial record
Most businesses make use of accounting software for all of their business transactions. However, having paper records is also essential, especially for backup purposes.
The files that should be kept include expenses, bank statements, credit card statements, payroll records, tax returns, sales invoices, inventories, and travel documents. Tax and financial records are recommended by the IRS to be kept for at least seven years, especially when there is a stated loss.
Legal business documents
Your business should have legal records, depending on your type of business structure. Partnerships have a partnership agreement, while incorporated businesses have articles of incorporation. There are also different legal documents for sole proprietors and limited liability companies or LLCs. These types of records are necessary as proof that you own the company.
Different industries and locations might also require licenses and permits. These include city permits that show that you’re operating under the local regulations. Make sure to keep these documents on file.
Running a business requires meticulous recordkeeping. This is necessary to insure against legal actions in the future. Make sure to have these records secured and filed so that you can have some peace of mind should legal issues arise.
