7 types of digital documents your small business needs

Businessman analyzing financial report balance  with digital augmented reality graphics.

We know: You likely didn’t make the exciting leap to small business owner because of your love of paperwork. Nonetheless, business documentation is a vital part of running any operation, particularly when it comes to your finances and employees.

Thorough documentation is very much required, and digital advancements have greatly improved how businesses can handle their paperwork. However, according to research from Deloitte, some 80 percent of small businesses in the United States are not fully using the advantageous digital tools available to them. In other words, the majority of businesses are missing out on the benefits associated with digital document processes, including faster document processing, time savings, and increased employee productivity.

Simply put, you can transform your workflow with digital documents. Though you can digitize almost anything, some documents lend themselves to a digital format better than others. When beginning your own digital transformation, get started with the following essential business document workflows:

1. Streamline your invoices

As one of the foundations of your business, invoices are an ideal document to digitize. You have to produce an invoice for every single transaction, resulting in an abundance of paperwork that you need to manage. Digital invoices eliminate the need for paper, which makes them easier to store and organize, not to mention more environmentally friendly. Further, your clients and customers get to enjoy superior customer service and communications, improving their experience with your business.

Did you know you are more likely to get paid promptly if you send over digital invoices? For instance, if you use the right invoice software, it will instantly notify customers about upcoming payment due dates and provide multiple options for payment. You can avoid the delay inherent with snail-mail and also reduce the chance of invoice inaccuracies and errors.

The process of creating a digital invoice is, by and large, similar to that of a physical one. You need to include the same information — such as relevant contact information, an itemized list of what was purchased, the amount owed, and the payment due date — on all invoices. How your clients sign their invoices will likely be the biggest difference, as you will need to use a specific software solution to collect electronic signatures. Many of these solutions integrate with other finance and work software platforms, making it painless to create and share digital invoices with all of your clients.

2. Lock down contracts

Like invoices, contracts are another essential business document that can benefit greatly from digitization. Between agreements with your employees and customers, you will likely create a variety of contracts throughout your operations. You also need to hold onto all of those contracts for the duration of your agreement, if not longer, which can become difficult to manage.

By using digital contracts instead of hard copies, you can send contracts over to the other parties immediately and get real-time updates about when they have signed them. Many contracts are even valid when all parties use an electronic signature, further expediting the process.

Best of all, you can take care of this business from anywhere and ensure operations run smoothly and consistently. For instance, if you work in California and need someone in New York to sign a document, you don’t have to wait days or even weeks for it to make the trip across the country and back again. You only have to wait for all parties to sign digitally from their computers or smartphones.

In the case of some contracts and business documents an electronic signature will not be sufficient. Some still require wet signatures, or signatures that are physically written on the page. Rest assured you can still send and receive contracts digitally, but you’ll have to ask the signee to print out the document, sign it, scan it, and send it back to you if it requires a wet signature.

3. Maintain your articles of incorporation

Your articles of incorporation are, legally speaking, some of the most important business documents you will ever create. They are what make your business a business. If you structure your business as a corporation, you will need to file articles of incorporation (or a similar document) with the appropriate government agency in your state before you can begin operations.

If you are required to have them, you should consider making them digital. Typically, you don’t need articles of incorporation for day-to-day operations, but they are still vital documents that you must hold on to. If there comes a time when you need to reference them, such as if you apply for a business loan or engage in any legal action, you need to be able to find and share them.

With so much business conducted online, this is significantly easier to do when you have a digital copy of these documents. You can submit them with any electronic applications, send them to the appropriate party, and store them with other important business documents. When they are stored digitally, you don’t have to worry about losing the only hard copy you have of this important document — and if you need another one, you can just print it out.

4. Retain critical tax information

The Internal Revenue Service requires businesses to keep certain financial records for several years, including tax returns, business deductions, invoices, and employment taxes. This is not something you should cut corners on, since there can be serious financial, personal, and professional consequences if you can’t prove your business’s income and expenses.

Keeping track of years’ worth of financial records, while continuing to produce and accumulate more each day, is challenging. Managing these documents digitally is a far more strategic option for your business, freeing up time and physical storage space.

Further, many transactions and financial dealings now occur online. By going digital, you can record any new purchases, expenses, sources of income, deductions, and assets as soon as they occur. This can also make for seamless e-filing when tax time comes, as all of the documents you need are already online.

5. Preserve nondisclosure agreements

As your business grows, you will almost inevitably need to use nondisclosure agreements (NDAs) to protect yourself and your organization. You may need to use one when discussing your intellectual property, hiring new employees or freelancers, or sharing private company information. Depending on the nature of your work and the information that needs to be protected, you can use individual or company-wide NDAs to safeguard that information.

As with contracts, it is faster to use digital NDAs than their physical counterparts. You can obtain relevant signatures more quickly and avoid bottlenecks that interfere with your workflow. If you use NDAs frequently, this can result in significant and valuable time savings for your organization.

When using digital NDAs, you have to take care to send them securely. The information they contain is sensitive and — although you are taking protective precautions — it could damage your company or your reputation if it fell into the wrong hands. Avoid simple mistakes, such as using insecure email platforms, and instead use password protection, file transfer tools, and other secure methods to safely send and receive digital NDAs.

6. Update company policies

Every organization needs to determine and communicate its policies to all potential and current employees. Digital company policies are a natural evolution of ongoing HR and business trends. Making your policy available digitally, benefits everyone in your company, allowing them universal and constant access to an important resource. This also ensures that all employees, including remote workers, can look at the policy regardless of when or where they are working.

When your policy is stored digitally, you can amend it on an as-needed basis and share those updates with your entire company almost effortlessly. You do not have to go through the trouble of printing hundreds, if not thousands, of pages and handing them out to your employees individually. Instead, you can make the necessary changes and send out a brief email informing everyone of that update.

7. Keep track of employee records

You should also digitize your employees’ records, including recruitment and hiring materials, employee contracts, and information about their compensation and benefits. Keeping these files online offers many of the same benefits as digitizing other documents, but these benefits will compound over time. As your company gets larger, you will hire more people and accumulate even more documents with each new employee. With digital documents, you can obtain and organize your employees’ records before things get too chaotic.

Your workers trust you with identifying personal information relating to their finances and health, and as their employer, it is your responsibility to keep it safe. Of course, a security breach would be bad for your business, but it can also negatively impact your employees’ personal lives, leading to lapses in their privacy and even serious issues like identity theft. Take whatever steps are necessary to live up to that responsibility and only allow authorized users access to your employees’ files.

There is no limit to the documents you can digitize for your business, so continue to explore and adopt strategic digital workflows that work for your organization. In time, you will be able to keep scaling your business while preserving your time and energy for running those parts of your small business that you truly love.