10 business documents every business needs
Starting a business can be a daunting task, with many moving parts and important details to consider. One of the key aspects of starting and running a successful business is ensuring that all necessary documents are in order. Here are 10 business documents every business needs to have in order to operate legally, protect themselves and their customers, and maintain accurate records.
1. Business Plan
A business plan is a comprehensive document outlining the goals, strategies, and tactics of a business. It serves as a roadmap for entrepreneurs to follow as they start and grow their businesses. A business plan typically includes sections on market research, target audience, financial projections, and marketing strategies. Having a business plan is critical for securing funding, attracting investors, and measuring the success of a business.
2. Articles of Incorporation
If your business is incorporated, you’ll need to file articles of incorporation with your state’s Secretary of State. These articles are legal document that establishes your business as a corporation and outlines its purpose, structure, and ownership. Filing articles of incorporation protects your personal assets and limits your personal liability in the event of legal action against your business.
3. Operating Agreement
An operating agreement is a document that outlines the ownership, management, and operating procedures of a limited liability company (LLC). It typically includes sections on how profits and losses will be distributed, how decisions will be made, and how members can exit the business. Having an operating agreement in place is crucial for protecting your personal assets and ensuring that your business is run according to your wishes.
4. Employment Agreement
An employment agreement is a contract between an employer and an employee that outlines the terms and conditions of employment. It typically includes sections on compensation, benefits, job duties, and termination procedures. Having an employment agreement in place can protect both the employer and the employee and can help to prevent legal disputes in the event of a disagreement.
5. Non-Disclosure Agreement (NDA)
An NDA is a legal document that establishes a confidential relationship between two parties. It typically includes provisions prohibiting one party from disclosing confidential information to third parties. NDAs are commonly used in business to protect trade secrets, proprietary information, and other sensitive information.
6. Purchase Order (PO)
A purchase order is a document used by businesses to request goods or services from a vendor. It typically includes information on the products or services being ordered, the price, delivery date, and payment terms. Having a purchase order in place helps to ensure that both parties are clear on the terms of the transaction and can help to prevent misunderstandings or disputes.
An invoice is a document that requests payment for goods or services that have been provided. It typically includes information on the products or services provided, the price, and payment terms. Invoices are critical for tracking revenue and expenses and maintaining accurate financial records.
8. Balance Sheet
A balance sheet is a financial statement that provides a snapshot of a business’s financial position at a specific point in time. It includes information on the business’s assets, liabilities, and equity. A balance sheet is critical for understanding a business’s financial health and for making informed decisions about future investments.
9. Income Statement
An income statement is a financial statement that shows a business’s revenue and expenses over a specific period of time. It provides important information on the profitability of a business and helps to identify areas where expenses can be reduced, or revenue can be increased.
10. Tax Forms
Depending on the structure of your business, you’ll need to file various tax forms with the Internal Revenue Service (IRS) or your state’s Department of Revenue. These forms typically include information on your business’s income, expenses, and deductions. Filing taxes accurately and on time is critical for avoiding penalties and maintaining a good relationship with government agencies.
In conclusion, having all the necessary documents in place is crucial for starting and running a successful business. These 10 documents – a business plan, articles of incorporation, operating agreement, employment agreement, non-disclosure agreement, purchase order, invoice, balance sheet, income statement, and tax forms – are essential for ensuring legal compliance, protecting assets and confidential information, and maintaining accurate financial records. By taking the time to put these documents in order, entrepreneurs can set themselves up for success and ensure the long-term viability of their businesses.