6 Types of Business Documents to Review Each Year

The beginning of the year can signal a lot of things to a small business owner. Most years, it signals a time to reflect, to set new goals, and to start fresh on new habits and intentions. This year, let’s get back to the basics. Many business owners will find themselves digging through boxes to find documents they need for tax season and wishing they hadn’t put certain tasks at the bottom of the list. If this sounds like you, don’t fret. We’ve created a list of business documents to review that can help you start the year feeling a bit more prepared.

Important Business Documents to Review

Together with your attorneys and accountants, find, dust off, update, and/or create the following business documents to review.

  • Powers of Attorney

Powers of attorney (POAs) are legal documents that allow another person to act on your behalf. They are flexible, which means they can be written to meet your specific needs as a business owner. Financial powers of attorney, for example, typically allow your designated agent to delegate business operations, transact with financial institutions, manage your investment portfolio, sell business property, or enter into a contract on your behalf. But of course, your lawyer can limit the agent’s rights to any of these items. The permissions in the POA can also sit in wait until a triggering event occurs. In this way, a POA can act like an insurance policy so that your business can continue to run in the unfortunate event that you become incapacitated.

  • Trust Agreements

If you hold any business assets in a trust, review your trust’s language. A trustee has a fiduciary responsibility to diversify the trust’s investments, which can pose a problem if the trust’s investment makeup is limited to interest in a closely held business or homologous business property. Your lawyer can tweak the language in the trust agreement so that an advisor separate from the trustee can manage the trust’s investments. This helps skirt the requirement that trust assets be fully diversified; as long as the agent follows the investment advisor’s recommendations, they will be fulfilling their fiduciary duties to the beneficiaries.

  • Organizational Documents

Find and update the following business documents to review: articles of incorporation, bylaws, and operating agreements. Many business owners create these documents when they first form their business and never reference them again. But these documents detail how your business runs, so it’s important they are up-to-date. For example, if your ownership profile has changed, you’ve added more capital, you’ve changed distribution allocations, or you’ve made other managerial changes in the past year, you’ll need to amend your operating agreement to reflect those changes. Fortunately, this is a straightforward task. Simply draft the amendment, get approval from all members, and keep copies for your records. You do not need to file the document with the Secretary of State, but you do need to have it formalized in writing, signed, and dated. We recommend you have your attorney look over these documents to ensure they are legally sound and binding.

  • Meeting Minutes

If your business is a corporation, you’ll need to document the meeting minutes from your annual shareholder’s meeting. The meeting itself can be short and sweet, but like amendments to your operating agreement, the meeting minutes must be in writing so you can prove to the state you’ve complied with their laws.

  • Corporate Resolution Documents

Corporate resolutions are documents that reflect decisions of the corporation’s board of directors. These documents help keep board members accountable to federal and state regulators if there is a concern they acted without proper consent from all members of the board. A common corporate resolution is to document who has authority to act on behalf of the company, but any significant decision of the board that affects the company’s operations should be submitted as a formal resolution.

  • Annual Reports

Most LLCs and corporations are required to file an annual report with the Secretary of State. This informational report varies by state, but most request the following information:

  • Contact information for officers and directors
  • Issued stock shares
  • Affiliated entities
  • Business ID numbers
  • Tax reporting years
  • Registered agent

These reports are simple, but they’re also easy to overlook. Failing to file an annual report may cost you the ability to conduct business within the state, so it’s important to stay current with your business filings.

Collecting these business documents to review is only one part of the process. You’ll want to make sure you have access to these documents if you lose the paper versions or the digital versions get corrupted. A good rule of thumb is to have three copies of each organizational document: a paper copy, a digital copy backed up to the cloud, and a copy that’s held by your accountant or lawyer.

Safeguard Your Assets

Security should not be overlooked. Physically securing your assets has likely been a part of your everyday routine for some time, but make sure that you do the same for your digital information. To protect all your assets, you can:

  • Back up network drives, financial records, client contracts, personnel files, etc.
  • Keep employee information confidential. This may mean separating employees’ medical records or retirement plan information from their personnel files.
  • Scan and back up paper documents, then store copies in an offsite facility.
  • Destroy unnecessary paper documents and/or data when permissible.
  • Properly secure phone lines, intranets, client/customer portals, websites, etc.
  • Review insurance policies to ensure all assets – digital, intellectual, and physical – are protected.
  • Perform inventory counts at least annually. Keeping a close eye on inventory lets you see how well you’re managing shrinkage.

Always Be One Step Ahead

You may not be able to control how the economy affects the business environment, but you can prepare for its fluctuations. This includes staying on top of your corporate responsibilities, connecting with your accountant to discuss business planning and preparedness concerns, keeping your licensures and compliance filings up to date, and reviewing your business documents annually. In addition to being prepared, it is just as important to plan ahead. Businesses that adapt and adjust will have the greatest chance for success.

And lastly, we recommend you do take time to reflect. The past few years were tough, but you have accomplishments worth celebrating – even if those accomplishments weren’t what you had hoped your “big wins” would be for the year. Celebrate that you survived, and reach out to us to be prepared to thrive this year.

For additional resources, check out our Records Retention GuideFamily Love Letter, and Tax Planning Guide.

Posted January 2022. Updated March 2024.