Delegate, Focus, and GROW Your Business

How to Keep Your Business Files Organized

Young business man talking on the phone and writing down at his working place

Young business man talking on the phone and writing down at his working place

One of the most basic parts of running a business is bookkeeping. Unfortunately, it can also be one of the most dreaded chores for business owners. When TD Bank asked 500 U.S. small business owners to name their least favorite part of running their business, 46 percent said bookkeeping, a number that rose to 58 percent among entrepreneurs working more than 60 hours a week. One reason business owners find bookkeeping so unpleasant is the amount of time and tedium involved. Fortunately, you can make your bookkeeping tasks easier by using a good file management system to organize your records. Here are four steps for developing an effective filing system that can make running your business easier.

Collect Your Paperwork and Electronic Files

Start by collecting all your loose physical paperwork, as well as identifying any business-related electronic files. Then create physical and electronic folders for items that do not need to be filed. These include items that you intend to discard and items that are current active projects which you will file or discard when they’re completed.

Review the items you collect before you file them so that you can discard ones that don’t need to be filed. A key guideline for deciding what to discard is realizing that the purpose of filing is retrieval. If you don’t need to retrieve something later, you don’t need to file it. To determine if something is safe to discard, ask yourself what the purpose of keeping it would be, whether you could retrieve the information again if you discarded it and what would be the worst thing that could happen if you got rid of it.

Organize Your Files in Categories

The next step is creating categories and using them to organize your files. You should use categories that are based on the way you use files, not their origin. When using accounting software, a major part of the filing process is creating a chart of accounts, which organizes your income, expenses, assets and liabilities. You can group related categories together into subcategories.

For each category, create physical, digital and email folders and file them alphabetically. Within those folders, file items in reverse chronological order, with most recent items first. Use cross-reference notes, tabs and color coding to make retrieval easier.

If you have too many files for the space you have, you can segregate them into current use, occasional use and long-term storage groupings. Consider storing the occasional and long-term groups in a separate location.

Certain special financial, tax and legal documents should be stored in a fireproof safe or bank safe deposit box. These include business bank and credit card account numbers, tax returns and insurance policies.

Index Your Files

To make file retrieval easier, it’s important to create an index. Here are a few tips for organizing your index:

  • Keep a list of files you put in long-term storage in your current use folder.
  • Create a spreadsheet index for each file drawer and store it in the first folder in the drawer.
  • Include file category, name and drawer location. Use a consistent naming structure for files. Do the same for digital and email folders and files.
  • Sort your index spreadsheet alphabetically, and label each physical drawer by category.

Maintain Your Files

To maintain your files, you should schedule regular automated backups using an online service. For physical files, keep a “To File” basket where you collect files to be stored each day. Schedule a regular time to file your email inbox each day. Keep your index updated. Schedule an annual cleanout day, and revise your index after you discard files that are no longer needed.

Posted on August 25th, 2016 by Rachel Braam, Office Manager

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