The term documentation refers to the processes and items which serve as evidence for the validity or truth of a certain claim or statement. As the name suggests, this involves the use of documents or tangible records, whether in physical or electronic format.

Documentation is necessary in the conduct of any business, transaction, or project. It serves as a record of every official action taken and may come in very handy in the future, should a chronological account of events be necessary for legal or business purposes. It is also an indispensable tool which actually allows transactions to take place, assets to be recorded, profits and obligations to be tracked, and for transactions to be validated, among many others.

In one business alone, there are several areas in which documentation is necessary. In fact, this should be present in every aspect of the company’s operation. To begin with, it must have the necessary documentation proving that it has been registered with the Securities and Exchange Commission. The number of stocks as well as their value must likewise be recorded. As the business operates, its assets, liabilities, and other similar information should be documented in the company’s balance sheet. A financial statement should then be released at the end of each business cycle in order to provide investors with relevant information about the company’s financial health.

No matter which area of the business is involved, one of the main requirements of good documentation is that it contains accurate and truthful information. Since documents may take on a legal function, tampering or distortion of facts contained in them may carry serious legal implications for either the company or the individual involved, if proven.