Filing is one of those all-important jobs that none of us like to do. When setting up a new filing system, you will want to make it in a way that it is easy for you to use. Some people like to set up their system by the alphabet and some by numbers. Others set it up by category and then by the alphabet. Choose what works for you.
Organize your categories such as rent or mortgage. Set aside files for your building, utilities and supplies. Go through all of your paperwork. Give each subject a category. Try to make your categories coincide with IRS categories, it makes it easier at the end of the year.
Make a divider for each category. Write on the divider what category it is. Put them aside.
As you pay a bill, write the date that you paid it on the part of the bill that you keep or the receipt. If you are using checks, write the check number and amount paid on the receipt. If you pay electronically, write the confirmation number and amount paid on it. Date all of your paperwork for the date you worked on it even if it's not a bill. Examples of other paperwork may be bank reconciliation, invoices for orders and bills sent to customers. Then document each receipt or piece of paperwork in your bookkeeping system. Quickbooks and Microsoft Money have excellent programs for small business bookkeeping.
Set up a manila folder for each separate part of the category that you listed in step 1. An example would be, the category is Utilities and the folders would be ABC Electric, CITY water and sewer, and INT internet connections. If your business has vendors, set up individual files for each vendor. Set up files for each of your customers. Go through each category and set up all the individual folders.
Set up a file for each employee. Since most small businesses don't have personnel departments to handle employees and keep records on them, you will need to keep at least a simple file on them. Place their pay records. Document any training they have completed. Keep copies of licenses if they are required. You will also want to document any disputes they may have had with you. Write down what the dispute was about and what was the result.
Keep a separate file for your receipts when you buy something for your business. Document them in your ledger first. You want to then put them in the file. Once a month, go through the receipt file and place them in the correct file and category. You can staple the months receipts together and write the month on them. Even if you use a credit card, this is extra documentation if you were to be audited by the IRS.
Place the category dividers in the filing cabinet by alphabetizing them. Alphabetize each of the folders within that category. Place them behind the divider. Go through each category and file them.
You can customize any filing system to make it easy for you to use. As long as you can find the information quickly, it is a good filing system.
- Mark Preston