How To Organize Your Startup Documents

To create a startup, experts recommend having a well-balanced team to increase the chances of success. Perhaps it is not our case since all the founders are Doctors in Computer Engineering, but we agreed from the beginning on the different roles that each of us would assume.  Although I do not remember showing great enthusiasm on this subject, I assumed the responsibility of the management of the company (including administrative and legal matters).

You can’t be an expert in all aspects related to a company. You’ll have to learn many things every day, whether you like it or not. Your beloved Google will help you often, but not always—sometimes you’ll need to seek advice from external professionals.

For example, we had no idea of how most of legal matters worked—the creation of a company, the shareholder’s agreement, trademark registration, terms and conditions of our services, etc. were complete strangers to us. Luckily, our contacts helped us through the process and we ended up having the support of a team of lawyers.

As for the accounting of the company, ours is pretty simple. That is, we can take care of it ourselves. But we do have an external accountant that supervises and supports the accounting and preparation and filing of the tax form statements ?.

One of the problems that I faced at the beginning was how to organize and file all the documentation of the company. I remember finding a lot of posts on Internet explaining, for example, the legal steps to incorporate a company, but there is almost no information on how to organize and file its documentation. I guess people think it’s all about common sense, right? And so I’ve never dared to ask because, you know, I did not want to look silly…

If you’ve also wondered how to organize all the documentation of your startup, I’ll tell you how we do it, in case it can be useful. I will only refer to the information on administrative, accounting, or management aspects. (Notice some of the information about jurisdiction described below only applies to our country, since we’re located in Barcelona).

Before We Get Started…

Time Period for the Retention of Documents

First, you have to learn the law requirements in your country on the information to be kept and for how long. Here’s how it works in Spain:

• Accounting Documents: Business Books (Daily Book, Inventory Book, and Annual Accounts including Balance Sheet, Profit and Loss Account, Management Report), Audit Reports and reports of the Administrator or Board of Directors must be kept at least 6 years after the last recording in the books.
• Employment Documents: for employment contracts and other employment documents, the minimum is 3 years and the recommendation is 10 years. For Social Security documents the minimum is the statutes of limitation (4 years), and the recommendation is 10 years. And in the matter of occupational health and safety measures, the minimum is 6 years.
• Tax Documents: for all documents that justify declared taxes (contracts, invoices, receipts, delivery notes …) and all types of tax returns, the minimum is again the statutes of limitation (4 years) and the recommendation is 10 years.
• Commercial Documents: for issued invoices, contracts with merchants, suppliers, individuals, real estate, banks, etc.,  the minimum is the statutes of limitation after its termination (5 years, although it used to be 15 years) and the recommendation was to keep if for longer.
• Corporate Documents: it’s recommended to keep deeds of constitution and by-laws, for shareholders agreements, for the sale of shares, for the sale of assets, for shares, for dissolution, etc., Books of Minutes of General Meetings and of the Board of Directors, Registration of Members, other Books, and other type of corporate documentation throughout the life of the company and at least six years after its dissolution.

More details in Noticias Jurídicas (in Spanish).

The first time I read these deadlines at the incorporation of the startup, I thought it would be better if my partners didn’t see them. For sure, they would have got in a panic of being faced with a commitment of the type “till death do us part.” ? Jokes aside, the bottom line is that, as long as we can and it makes sense, we will keep all business documents for a long time.

Format: Electronic Document vs. Paper Document

The next point to consider is the format in which you have to keep the information. If it were for us, we wouldn’t use paper files—digital files allow us to save the information in a structured way, save physical space, material, and resources, locate the right document with a simple and quick search, provide access from anywhere and at any time… and it helps us with our goal of being an environmentally friendly company. But it doesn’t matter what we want—we’re legally obliged to keep documentation on papers.

As regards invoices, in Spain, there is no obligation to file paper invoices issued or received electronically, either via EDI or email. In the case of invoices sent in paper, it is not necessary to save them because, being files produced by our computer system, it suffices that we can generate them again at the request of a tax inspector. But if you want to get rid of the invoices received on paper, you should use scanning software certified by the Tax Agency to assure the tax inspector that the digital copy that he is seeing is identical to the original. In our case, we receive very few paper documents and, therefore, it does not seem appropriate to complicate our lives by using certified scanning software.

Our criterion on the format in which we store the documentation is the following:

• All documents whose original are on paper (deeds, paper invoices, etc.), are stored on paper. We also scan them so that we can find and access them faster if we need to.
• Every document that we receive electronically or can be generated automatically from our systems, we store it only digitally. We do not make unnecessary paper copies or prints.

Organization of Paper Documents

As I said before, we don’t print anything that we already have recorded in electronic format. We keep the papers, such as originals of the deeds, the invoices or any other document that we receive in paper in filing cabinets.

We have the following folders:

• Corporate Documentation Folder: in this folder we chronologically order, on the one hand, the Deed of Incorporation, shareholder agreements, and powers of attorney and deed (such as the deed for transfer of the shares). Separately, we also have the minutes of the corporate meetings and the Book of Registration of Shareholders. Finally, there are other sections with other information such as the registration of the CE mark, etc.
• Folders of Commercial Documentation: also ordered chronologically and separated by years, we have invoices received in paper (local rent, suppliers, utilities…), and some other contracts signed on paper.

We do not have other folders, since the rest of the documents are digitally organized.

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Organizing Digital Documents

As I said, all the documents of the company (including the ones we receive on paper, which we scan) are stored in digital format. We store them in a folder on Google Drive named Management and Administration, which is shared among all partners. Its subfolders are:

Company

This folder contains the following subfolders:

• Articles of Incorporation
• Bylaws
• Book of Registered Members and Shares
• Corporate minutes and consents Year 20XX (a different folder for each year).

Accounting

As I said, the accounting of our company is very simple. I manage it directly with a SaaS software program. All books and accounting reports can be generated at any time from said software, but I keep a copy of these documents (organized per year) as follows:

• Year 20XX: includes the Journals (Opening, Closing, Monthly) and the annual accounts (Balance Sheet, Profit and Loss, Sums and Balances, Major,  and Management Reports).

I also keep some personal notes on how to do the accounting and another with the questions to ask the accounting advisor at the next meeting.

Commercial

This folder includes the following subfolders:

• Contracts with suppliers: includes copies of contracts with all suppliers. When these imply more than one document, we have a sub-folder for that provider.
• Contracts with clients: copy of our Terms and Conditions.
• Year 20XX: a subfolder per year in which we have three sub-folders: Invoices issued, Invoices received, and Banking.

Taxes – Tax Agency

In this folder, we keep all the information of the documents that have been filed with the tax authorities. Again, these are organized per Year 20XX, each of which in turn includes the following subfolders:

• 20XX VATs (Forms 303 and 390)
• 20XX Personal Income Tax Law (Forms 111 and 190)
• 20XX Transactions with third parties (Form 347)
• 20XX Intra-Community Transactions (Form 349)
• 20XX Corporate Income Tax (Form 200)
• 20XX Fiscal registrations (Form 036)

In each sub-folder there’s a copy of the corresponding PDF documents that have been presented to the Tax Agency.

Employment

Nelio’s team is currently formed by three co-founding partners: David, Toni and myself, each one with the same equity (33.3%). We contribute to the Special Social Security program of our country for self-employed workers. We do not have any employee in the General program. For the time being, we avoid the complexity of payrolls that this entails. Therefore, in the Employment folder, we just have the documents regarding self-employed workers of each of the partners and other identification information.

In addition, we have, for each year, a sub-folder Year 20XX where we keep the Certificate of income and withholdings of each of the partners. This information is needed for our Individual Income Tax declaration. It is clear that as soon as we have ordinary workers, this folder will become much more complex.

Trademark

In this folder, we have all the documentation corresponding to the application and registration of the Nelio brand.

And we also keep information about the domains of the company.

Data Privacy

Finally, in this folder we have the documents filed and recorded with the Spanish Agency of Data Protection on the ownership of the files of personal data. It also includes the Security Document for automated personal data files and a copy of our Privacy Policy & Cookies.

And that’s how we organize our “legal paperwork”. I haven’t mentioned this, but you should also organize all documents related to the development of your product, its commercialization, sale, etc.

It never ceases to amaze me how complex managing a simple startup can be, don’t you think? So I’d really appreciate any comments or suggestions you may have on this subject ?

Featured Image by Samuel Zeller.