If you are running a small business, you will need to keep records in order to maintain your corporate status. Even if you choose not to incorporate your small business, it simply makes sense to keep business records. If you ever want to sell your business or track what you have done in the past, you will need to have data to reference. Here is how to keep records for a small business.
Purchase two three-ring binders and index tabs. You will use one binder for your official records (those required by the Secretary of State’s office in order to maintain your business' corporate status) and the other for day-to-day business records.
Research what records need to be maintained in the official binder. Go to the Secretary of State’s website for a list of records that are required by law. Most states require that a minimum of the following records be kept in the official binder: articles of incorporation or organization, meeting minutes, resolutions, certificates and the company’s seal.
Determine what additional records need to be kept. Those records will be maintained in the second binder. The following are examples of records that should be kept in the records binder: * Accounting records Applications and permits Contracts entered into by the company Insurance polices held by the company Membership certificates Names & addresses of all members or shareholders and their interests Names of the officers Operating agreement or by-laws and any amendments Share transactions * State filings (such as annual reports)
Label the index tabs. Create index tabs for all of the records you will keep in each binder.
Place the records behind their corresponding index tabs. Sort through all of your paperwork and place the business records behind each corresponding tab. Alphabetizing the index tabs will make it easier to find the records you need.
Document business decisions as they transpire. Create a paper trail for every decision and transaction that your small business makes. Keep a written record of business decisions, both with minutes for official meetings and an unofficial recording of decisions made in day-to-day company management. Be sure to date all of the records.
Keep the records up to date. Setting up the binders is only the first step. You need to keep the information current, holding on to at least three years of member or shareholder resolutions.
Sample minutes and other business records are available online. You can also purchase generic business record templates from various companies that specialize in incorporating new businesses.
If you fail to maintain adequate records for your small business, your business could risk losing its corporate status.
- Faith Allen