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From the second they start forming their business, entrepreneurs are flooded with reams of important documents. From business plans and financial projections to permits and tax records, the list of essential papers seems to grow on a daily basis. The mounting stack can become overwhelming to manage and leaves many business owners trying to figure out which ones can be discarded and which ones are worth keeping longer. Here are 9 documents you should keep forever. .
Permits
One set of documents that is critical for all businesses to keep easily accessible is the permits that allow for operation, said Ian Aronovich, co-founder and CEO of GovernmentAuctions.org.
"Many businesses are completely dependent on permits, and they cannot legally carry on certain activities without them," Aronovich told BusinessNewsDaily. "As a result, if you're a business that runs on permits granted by the state or local government, you'd better keep them around at all times."
Tax records
A business's tax records are other documents worth keeping around, Aronovich said. "The records are essential for keeping track of the state and progress of your business," Aronovich said. "And, whenever the IRS [Internal Revenue Service] wants to conduct any inspections, you better have all your tax records to avoid complicating matters."
Shareholder agreements
Senen Garcia, a managing partner at the Florida-based SG Law Group, said he advises his clients to never lose track of their shareholders' agreements.
"This document provides many important provisions regarding shareholder involvement, such as protections for shareholders and responsibilities for shareholders, like rights of first refusal, the course of action for receiving compensation for a repurchase by the company or even buy-sell agreement matters," Garcia said.
Bylaws
Garcia said company bylaws are also critical documents to keep. "This document is the governing document for a corporation and provides procedures for handling important matters, such as the voting of board members and annual meetings," Garcia said.
Leases
Whether they're for equipment or office space, lease agreements should be kept, said Gary Naumann, director of the Spirit of Enterprise Center at the W. P. Carey School of Business at Arizona State University.
"Not only might these have a useful life beyond the termination date, they may also contain favorable terms you were able to negotiate that will serve you well in future negotiations," Naumann said. "With the crush of business that always accompanies a new transaction, it's very helpful to have prior deal terms readily available to use for comparative purposes."
Board minutes
Businesses that are set up as corporations should never discard formal board minutes, advised Christopher McCauley, an Alabama attorney and president of Whizkins. He said the minutes provide an excellent picture of the board's history of decisions.
"This information is relevant for due-diligence purposes in preparing for financing, auditing a company and possible litigation brought on from a form of government or shareholders," McCauley said. "These documents are generally not filed, so state repositories won't have [copies]."
Formation documents
As a business broker who facilitates the sale of businesses all the way through the escrow process, Deborah Meeker said the most important documents business owners should keep are those involving the formation of their corporation or partnership.
"When a company is being sold, it goes through a business escrow process, and a title company needs to verify the individuals who have the authority to sign on behalf of a corporation or partnership to sell," said Meeker, a business broker with Murphy Business & Financial Corp. "If there is no document that shows the current legally authorized parties with all signatures and one party has died or, after being bought out, wants to cause difficulties, the sales process can become quite lengthy, difficult and expensive, as attorneys need to get involved to try and sort everything out."
Stock certificates
Don Fornes, founder and CEO of Software Advice, believes his stock certificates are the most important documents to hold on to until he dies.
"This is the primary evidence that you own your company, or the company you've invested in," Fornes said. "Having this can settle any disputes over proof of ownership, and getting them replaced is a relatively difficult process, especially if the company or other owners are not on your side."
Mortgages
For brick-and-mortar businesses, Nina Ries, principal of Ries Law Group in Santa Monica, Calif., emphasized the importance of keeping mortgage and other loan documents, payoff letters confirming the satisfaction of those debts, and deeds to any property business owners own.
"While the county also maintains records of property ownership, and while lenders are required to file satisfactions of debt once payment in full is made, you will want to have proof of the full payment being made, in the event the lender forgets or there is a mix-up at the county recorder's office," Ries said. "For the same reason, you should permanently retain records of any judgments entered against you, together with evidence of satisfaction of those judgments."
