What you need to consider with document management systems
If there is one thing that you need to start early in any company is beginning a document management process. If you manage to maintain your files diligently and in an organised fashion, you’re not only limiting your potential liability, you’re also making your startup more valuable to investors. Being organised and responsible reflects on you and your team.
Due diligence is a process investors, buyer or lenders go through before purchasing shares in your company or lending capital. The due diligence process involves investigating your company to determine the company’s value and uncover any issues with the company. Various professionals will examine your company’s financial records, contracts, assets, employees, legal actions company is involved in.
If your company documentation is in order, it is an excellent sign of a company that is properly operated, which can increase your company’s value. Have your company records in order to prevent delays in the due diligence process, which cause delays to mergers, acquisitions, finance approvals and share sale settlements.
The tax man can also provide you some motivation to have your documentation in order. I assure you, if the tax man wants to audit your company and ask to look at contracts, loans, and accounts, you will be thanking your lucky stars you had a document management system in place.
What you need to consider.
For starters, you need to diligently document and record your accounting records, which include your company’s sales, profits, expenses, income statements, cash flows, inventory numbers, and other similar financial related information. There are some great accounting software options on the market, such as Xero and MYOB, that can help you keep your electronic records safe and organised. The best place to start is to ask your accountant and bookkeeper, which they advise you to use. They will recommend what they prefer to use.
Your company will have various contracts that you need to store. Whether it is a joint venture, equipment loan or lease, purchase agreement, or otherwise. You must ensure contracts your company enters are kept on file as part of your document and record-keeping protocol. A general rule of thumb is that if there is a signature, whether in ink or electronic, it should be saved and organised in your business files. Practising this simple rule will help limit the potential liability and will serve you well in the case a lawsuit ever arises in the future.
Your company will also need to maintain is the employee records that will quickly pile up as your company grows and expands. With every employee comes new records to keep, such as specific offer letters, performance records and reviews, PAYG, superannuation records, employee policies and implementation, handbooks for the employees, etc. These records are essential to retain using employee record software.
Correspondence is also an important type of record that you may want to consider for retaining. Retaining correspondence and file notes can assist in legal disputes. Correspondence from clients, staff and contractors can form part, or sometimes all of a contract.
It wise to have great bookkeeping systems in place for strategic analysis and understanding, but it is also required at law to keep your financial information for taxation purposes for seven years. You should also keep your corporate records, like your company incorporation documents, your company constitution and shareholder agreement. Other relevant documents to retain may include intellectual property documents, accident or incident reports, licenses, permits, and more.
A cloud-based system is the best way to store and maintain your business records. You must ensure the cloud storage provider you use is reputable and secure. Check their track record.