Balance sheets, bank cards and bylaws, oh my!
Yes, we ask for a ton of documentation as part of your certification application, especially the first year. Why? Because believe it or not, there’s a lot we can read between the lines, like who is exercising signature power and who really has the expertise to run the business.
Here are the 7 deadly documents that applicants often omit:
1. Profit loss statement and balance sheets
What you think: I just started my business and don’t have any profits, losses, or balance sheets.
We say: Send over that profit loss statement and balance sheet in a simple template with those big fat zeroes on them anyway. We require both of the documents each year from every business.
Need some templates?
2. Proof of investment
What you think: I only put 5 dollars into my business bank account when I opened it. I didn’t contribute any capital.
We say: Send that statement! It’s proof of capital contribution, no matter how small.
What you think: I’ll just send over brief bios about myself and my directors.
We say: Please send us resumes in a traditional format as requested for all owners and directors.
4. Tax returns
What you think: This is sensitive information. I’ll just send over one schedule.
We say: If it’s a personal tax return, we must have both the first two pages (the actual return) and the Schedule C profit/loss from business. If it’s a corporate tax return, we must have the full return, all schedules included. Everything is kept in the secure, encrypted portal online, and is only reviewed in full confidentiality by your trained reviewer.
4a. Tax returns part 2
What you think: I just started my business. I don’t have any tax returns for my business.
We say: Send us the first two pages of your personal tax returns (plus any schedule C-profit loss of business). You can redact any sensitive information about you and your family. We require 3 years of tax returns for every business, so if you have one year of corporate returns and 2 years without, you can send us personals for those 2 years prior.
5. Operating agreement and/or bylaws
What you think: I don’t think I have one…
We say: Every corporation will have bylaws, and every LLC or partnership should have an operating agreement, as these documents outline how the business will be managed and governed (with the exception of sole proprietors). If you do not have any governing documents, there are plenty of templates available online that can help you get started, just make sure to read them over to make sure there are no unanimous consent clauses that could limit your decision making authority, and that whatever title you hold (CEO, president, managing member) is listed as the highest authority in the officer’s section (most standard templates say president- not helpful if your title is CEO). Ultimately, this is something you really should draft with a lawyer to make sure you are protected as the owner of your business.
What you think: I don’t have one of these either!
We say: If you own your space or work out of your home, obviously you wouldn’t have one and can check N/A. But if you are leasing an office or additional space such as a warehouse, please include the signed agreement. If there is a verbal lease, please upload a statement telling us about the terms of this verbal agreement, especially if you are sharing space with another business.
7. Debt Instruments and Loans
What you think: I’ll just consolidate all my long term debt into one line on my balance sheet so I don’t have to dig up all of those signed loan agreements.
We say: Sneaky, but we’re going to ask you to break down your debt instruments for us and produce those signed agreements.
What about any other documents that I don’t have?
If you’re a new or small business, you may not have items like personnel lists, payroll, W2s, or board minutes. For any documents that truly don’t apply (you don’t have any employees, aren’t taking payroll, don’t have board meetings, etc.), we always recommend submitting a word document with a simple one sentence statement like “I don’t have any employees.” This way your reviewing officer won’t have to ask!