When you’re running a startup, it’s easy to get caught up in actually doing the work. Running the business. Meeting your goals. But it’s just as important to make sure you have a solid system in place for organizing the reams of paperwork that go along with opening any business — and to ensure that the system is being used regularly, and correctly.
In the digital age, saving original, physical documents are rarely necessary. The few paper documents I have, take up half of a single file cabinet. Everything else is scanned and uploaded immediately.
In order to sleep soundly at night, I use a multi-tiered backup strategy, similar to the one I use to protect my family’s computers. My solution combines Time Machine (for local backup), Dropbox (for cross-device backup — you could easily use another service, such as Box or Evernote, too), and Crashplan (for offsite backups).
I also rely on USB drives for occasional snapshots of critical files. Yes I actually backup my dropbox each quarter with an alternating USB drive. One lives at my house and the other with a family member 150mi away. With this system, I know that our critical paperwork — our articles of incorporation, bank records, and other financial and legal documents are safe and secure, yet easily accessible from anywhere in the world.
Why Organization Matters
Here’s the thing: This isn’t just you and an idea, anymore. It’s a business. It makes money. You may have employees, who depend on you for their livelihood. So you have to act responsibly and get your house in order.
When investors come calling, you need to be able to pull together documents at a moment’s notice. You need to be able to put your hands on everything instantly. If you create and use a simple filing system that lives in the cloud, you can count on your documents to be available and up-to-date when you need them, wherever you need them.
No one wants to be audited. But if you do get audited, it’s a massive relief to know that it’s going to be an inconvenience — but nothing more. If your paperwork is organized and filed properly, you’ll be able to produce the documents you need quickly and efficiently. You’ll be able to get back to the business of, well, business with very little hassle.
What to Keep
My general rule of thumb is to keep a copy of anything I sign. Beyond that, I make a point of keeping:
- all paperwork related to company formation
- stock and financing papers
- anything that could be considered tax-related (the IRS has put together a helpful guide)
- employee files (resumes, signed IP agreements, offer letters, and other related documents)
- NDAs with contractors, signed contracts
Do you plan to ask investors for money? They — or their lawyers — will want to see most of this documentation. If you’re working with venture capitalists, you can expect to have to produce paperwork at each funding round, and banks and business partners may also request information as they conduct due diligence. Be prepared. One of my favorite “cheats and hacks” for startups is Echosign, which lets you sign documents digitally — and provides a way to track and store them securely as well. Tools like this help you get into the digital filing mindset, streamline your processes, and keep things automatically organized.
How to Manage the Paperwork
Your system for organization only works if you use it all the time. Not some of the time, not most of the time. All. The. Time. That means you have to put some thought into parts of your system like file naming conventions. Two important tips:
Do NOT name your files things like, “AOI_rev_draft4joe” and think you’re going to remember that in two weeks, let alone in two years. Don’t be afraid of long file names. “Articles_of_incorp” will serve you better in the long run.
If you want to append dates to your file names, choose one format and stick with it to make your searches easier and more efficient.
Schedule a recurring 15 minute meeting on your calendar (Friday mornings are a good time) to quickly review your digital filing cabinet. If you make a point of doing this weekly, you’ll have the time to scan anything new that’s come in, update files when necessary, and so on. This is a critical appointment, so don’t skip it — ever.
Put your trust in search
One thing I wouldn’t bother wasting time on is creating a complicated folder hierarchy. Modern search functions are awesome. If you name your files well, you’ll have no trouble finding exactly what you need in seconds. Drilling down into 7 levels of folders is a colossal waste of time.
An organized filing system is worth the time it takes to set up — which should really be minimal. And for that small investment, you get a setup that will help you clear the mess out of your head and concentrate on getting your real work done.