The computer filing system is a great alternative to a physical filing system. This digital or online method is fast becoming the way to file and store all business documents, or as a personal filing system.
Here we focus on how to use a digital or online system to store all documents relating to the bookkeeping of a business.
The system for saving onto your computer’s hard drive, or saving to an online storage facility are the same – the only thing that is different is the location.
You will need a scanner for all the physical documents you receive so you can scan and save them onto your digital system. For smaller receipts you can take a photo of it with your smart phone and load or email it to your computer or online storage provider such as Dropbox or Onedrive.
Tips for filing on your computer:
you have enough storage space on your hard drive - 1GB is a good
starting point but that will fill up fast if you save a lot of photos or
always back up your hard-drive every day for business purposes
using a removable device such as a flash drive or a portable hard drive
(and keep them in a separate location to the business). Or, back-up to
an online facility. Most anti-virus providers have the option to back-up
your folders to their storage site so check it out.
A computer filing system (on your hard-drive or online) contains folders like in the graphic above – no doubt you’ve seen them already.
Inside these folders, you can open more folders, and inside those, more folders – so you can have several layers or tiers of folders all with their own names and within those folders you will store your documents, photos and videos.
You can be super organised!
For a computer filing system diagram, scroll down to the bottom of this page and click/tap on the thumbnail.
This diagram is a good visual for explaining the computer filing system described here specifically aimed at bookkeeping.
This computer filing system is based exactly on how your data is laid out in bookkeeping software and makes it very easy to find any document you require really fast.
Tips for filing online:
There are many online
document storage providers. A reputable one you can start with is Dropbox.
Dropbox is free up to 2GB and you can invite users to access or view any
particular folder you want – so it’s great for document sharing with clients or
your accountant etc.
So now we get started. Keep in mind that the example folders provided here are just that... examples, and there is no restriction to how many folders you can open.
Open your main folder. Give it a name, perhaps the name of your business.
Inside the main folder open the following three folders:
Bookkeeping Documents Reports General
Inside the Bookkeeping Documents folder open these five folders:- Assets Liabilities Equity Income Expenses
Inside the Reports folder you can open sub-folders for whatever reports you will need – the main ones are: Balance Sheet Profit and Loss Accounts Receivable Accounts Payable Cashflows Inventory Payroll Employee Productivity ...and more
In the General folder you could have folders where you keep: Account applications Marketing plans Budgets Property title deeds ….. whatever relates to your business that does not directly affect your financial data (meaning whatever is not entered into the bookkeeping software).
Inside the five main bookkeeping folders we need to open more folders:-
Assets Bank for bank statements and reconciliations Equipment for copies of invoices for the purchase of equipment over the value of $500 Land and Buildings for any financial documents relating to the purchase of land and buildings Inventory for invoices for the purchase of inventory items using the name of the supplier Accounts Receivable keep copies of unpaid sales invoices here. Once they are paid move them to the Income folder. Another option - you could keep one copy here and one copy in the Income folder and then when paid just delete the one from this accounts receivable folder.
Liabilities Loans keep copies of loan documents and regular loan statements here Credit Cards for your credit card statements Tax for any tax advice notices or other documents relating to the calculation and payment of your business tax Accounts Payable here you can keep copies of your purchase invoices and then when they are paid move them to the relevant expense folder. An alternative, just like accounts receivable, is to keep one copy here and one copy in the expense folder, and then when the customer pays remove the copy from the accounts receivable folder.
Equity Drawings for receipts or invoices that you paid for with business funds but are for personal use. Capital keep any documentation relating to funds you introduce to the business. Tax for any tax advice notices or other documents relating to the calculation and payment of your personal tax using business funds
Income Sales file each invoice using the name of the customer or the invoice number (or both) Misc for storing any documents relating to miscellaneous income
Expenses List folders in alphabetical order – see deductible business expenses for an example listing, and then in those folders file each document using the name of the vendor/supplier, however, if you have a big load of expense documents you can manage them more easily by opening files for each month inside each expense folder and store the vendor documents in month order
If you enter invoices into your bookkeeping software using the date of the invoice, file the documents in that same month.
If you enter them into your bookkeeping software at the date you pay them, then enter them into the computer filing system in the month you paid.
Now, Go get Organized!
Now your computer filing system is ready. What remains is for you to
move your scanned or emailed documents into the folders after you have
entered the necessary information into the bookkeeping software.
A computer filing system makes it very quick and easy to search for a document you need.
You simply enter the name of the document you require into the search bar and hit enter on the keyboard.
Your results window should be populated with a list of similar named
documents for you to choose from.
As long as you have filed each
document with an appropriate name, you will find what you need a lot
faster than rifling through a physical/paper business filing system.