It doesn’t have the most polite name, but a CYA file will cover your you-know-what in case of a problem related to your business venture. You never know what you’ll face — a financial inconsistency, a legal dispute, etc. — so you should keep backup copies of all of your important papers in the same place. And you should definitely call it your CYA file.
Of course, with an online business, it might be difficult to figure out what documents are essential to your CYA. You might not even have any physical papers on-hand at the moment since you do it all virtually. So, gather the following five documents in hand, place them inside of your CYA file and rest easy — you’re prepared for anything.
Here's How to Create Your CYA File and Protect Your Business
1. Insurance Documents
First and foremost, your small business should have the required insurance to keep it safe in case of a claim. Most small business plans will reimburse you in case of the usual: Theft, fire, wind, falling objects, etc. It’s a comfort to have this protection, but what happens when you actually need to make a claim and can’t find your policy anywhere? The last thing you want to do in the face of a crisis is panic because you can’t find the documentation of your insurance.
So, add a physical copy of your policy to your CYA file. Hopefully, you will never need to pull it out and use it, but knowing exactly where it is long before you need it will be a comfort to you and any employees you have, too.
2. A Master File
You’re probably thinking, “A file within a file?” But you can’t create a CYA without this, one of the most essential legal documents for entrepreneurs to have on-hand. The master file will outline all the processes required to keep your business running and give a full rundown of what you do on the day-to-day basis to maintain things as they are. Instructions should be as detailed as possible, so take notes each day for a week and turn your actions into a to-do list for the person reading. It will also indicate where all of your necessary documents are, and it’ll make things so much easier to have them all inside of your CYA — see what we did there?
The master file allows a colleague or even a temp to step into your shoes and keep the company afloat when you’re sick, on vacation or otherwise unavailable. Down the line, it could be vital to your successor or to the person who agrees to purchase your business from you. To that end, you might consider adding a will or living trust to your file, too, to delineate how you’d like to divvy up your assets when the time comes.
3. Other Legal Documents
The master file is its own project. Your CYA should include other legal documents, too. For instance, you’ll want a copy of your business’s formation papers. If you own your company with another entrepreneur or two, all of you should come together to write and sign documents that outline the agreed-upon processes for your venture. Having a hard copy will protect you down the line, should you ever experience a rift or notice a change in operations upon which you haven’t agreed.
To that end, you might eventually want to leave your business behind — same with your colleagues. So, draw up a buyout plan that’s fair for everyone, sign it, and stick that in your CYA, too. This simple step can keep you from drawn-out legal entanglements in the future, so get it done as soon as possible.
4. Employee Data
You might be the only person working for you. If so, take a deep breath and move on; you don’t need to keep paperwork on when you hired yourself or how much you make. You’re well aware of all that.
However, if you’ve hired others to work for you, storing their data will make things simpler down the line if you ever need to clarify their start dates, the terms of their employee agreements, etc. Keep a record of their starting pay and raises, as well as the insurance you’ve provided them over the years. Once an employee leaves, you shouldn’t toss this information. Save it as part of your CYA in case you need to reference these stats when verifying someone’s employment with you, for example.
5. Company Payments
The easiest way to get out of debt (there’s no shame in having it; every small business does) is to keep track of your repayments. On top of that, you should have a good idea of how much you’re spending. If there are potential savings, that money could be freed up and funneled into your debt, thus hastening the process of becoming debt-free.
So, add records of your debt payments to your CYA. With that, include any receipts, so that you can stay on top of your spending, as well as a record of your remaining balance.
Although all of the documents suggested for your CYA can have a digital counterpart, you might find it more straightforward to track your debts, repayments, spending, and bottom line on a computer-based spreadsheet. It might be simpler to read and easier to update, so go for it. Just make sure you’re regularly printing out a copy and placing it into your CYA, in case you ever need physical documentation of your business’s earnings and debts.
As a business owner, you’re likely already swimming in documents and unsure of how you can squeeze another manila folder into your filing cabinet. However, it’s critical that you make some room for the CYA in the safest corner of your office. You won’t know until you have it, but these pieces of paper will give you so much peace of mind, especially when you know exactly where they are at all times.
As for the rest of your CYA, use your judgment. Not every business is the same, so a vital bit of information to you might not have made the list. It’s better to be safe than sorry, so load up your file with what matters. That way, you can focus on the reason you’re here in the first place — running a business like the pro you are.
How do you protect your business? What other things should business owners consider? Drop us a note; we'd love to hear from you!
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Sarah Landrum is a freelance writer and career blogger sharing advice on finding happiness and success in life and at work. You can find her dishing out advice with a side of wit on Twitter and her career advice blog, Punched Clocks.