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How to Organize Your Business Files

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Bookkeeping can be a pain, but bad bookkeeping can bring even bigger headaches. Large accounting firms typically estimate that 40 percent of their annual revenue comes from fixing poor bookkeeping by clients, Accounting Web reports. In other words, a typical company can cut its accounting fees nearly in half by adopting better bookkeeping practices. One way to improve the efficiency of your bookkeeping is using a better filing system. Here are some steps to help you get your business files organized.

Collect Your Files

The first step toward getting organized is collecting the files you need to organize. This includes paper and digital files you want to keep and ones you want to discard. Sort your files into paper and electronic folders identifying what needs to be filed, what items represent current active projects and what can be discarded.

Files requiring retention include accounting and fiscal records, personnel records, business and corporate records and tax records. When deciding what to discard, consider whether or not you will need to retrieve a given item at a later date. As a general rule, items you won't need to retrieve later can be safely discarded.

Use Categories to Organize Your Files

The next step is organizing your files into categories. Professional organizing service Absolutely Organized recommends starting with broad categories and then refining them. Create functional categories based on how your files are used in your business, such as accounts payable and receivable, payroll and taxes. To organize electronic files for accounting software, create a chart of accounts to categorize your income, assets, expenses and liabilities. Chart of accounts templates are available for popular accounting software programs such as QuickBooks.

Create folders corresponding to your categories for physical, digital and email files, and organize them alphabetically. Within each folder, organize files in reverse chronological order so that the most recent items are in front. To make retrieval easier, you can use cross-referencing notes, color coding and tabs. Don't make folders for miscellaneous categories, as these will simply create clutter. Leave some extra space in physical folders so you have room to insert and retrieve files.

If your files take up too much physical space, divide them into current files to be stored in your office and occasional and long-term storage files to be stored elsewhere. Use a fireproof safe or bank safe deposit box to store vital financial, legal and tax documents, such as bank account numbers, insurance policies and tax returns.

Create a File Index for Quick Retrieval

In order to make it easy for you to retrieve files, set up a file index. Create one index of files you put in long-term storage and store it in the front of your current use folder. Use a spreadsheet index for the contents of each file drawer, identifying files by category, name and location. Follow a consistent naming method for files, such as naming them by category, subcategory and date. Use the same procedure to index your digital and email file folders and their contents. Label each of your drawers by category and sort your spreadsheet index alphabetically.

Schedule File Maintenance Procedures

It's also important to keep your files maintained and up-to-date. For your digital files, schedule periodic automatic backups using an online backup service. For your physical files, collect new documents that need to be filed in a basket labeled "To File" that you sort through daily. Set aside some time each day to file new email and electronic files as well. Using email filters can help you streamline this task by automatically storing files from specific senders in corresponding folders. You should also schedule a cleaning day once a year where you discard files that are no longer needed and update your index accordingly.

Published Thursday, August 18, 2016 3:14 PM by David Marshall
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