Emily Mahr
Helping Entrepreneurs focus more on their passions, less on paperwork.

Bookkeeping Blog

FAQ about Bookkeeping related topics

How to: Organize Your Bookkeeping Papers

 Can you relate to this?

Can you relate to this?

Do you have a stack of paperwork shoved away some where, perhaps a desk drawer, or shoe box? 

I get it, you're busy working hard growing your business, pursuing your passion, and don't have time for boring bookkeeping related tasks. If you don't have a bookkeeper, that daunting feeling might be even worse.

Even if you do have an bookkeeper, you should be spending a little more time making sure you know where your money is going, and having a functioning filing system will help! 

Let me create some ease, here's a few tips to help you navigate your pile of papers!

If you'd like, take this quick, fun quiz to discover what kind of clutterbug you are. (I'm a Bee)

Establish your style.

When I worked for large companies, filing was alphabetical by the name of the vendor, customer, and employee, each getting their own file folder (or two) in respective filing cabinets. When invoices/bills/payroll were paid, the relative check stub was stapled to those documents and moved to a different drawer in that filing cabinet. Each year, boxes of documents were sent to an off-site storage facility to ensure we could bring them back if the annual audit required physical copies.

For small companies, this is still a valid idea, however you may instead choose to lump letters together (A-E, for example). Keeping the unpaid documents separate from the paid is important, unless you have a mind for the organizational method combining them (like I do).

Side note: I don’t miss working in the row of filing cabinets, requiring the use of a step stool every day (one company actually agreed to move my specific work documents out of the top drawer which another coworker could use since her documents only needed one drawer where as my documents needed three drawers).

If you’re reading this and work for a company that needs multiple tall filing cabinets, opt for the ones that have shelving for office supplies at the top, not the filing drawer most people can’t access.

How do you know what you purchased/sold?

I highly recommend labeling receipts/expenses with exactly what the items are, and their purpose, within one week. This will make categorizing a LOT easier, especially if the purchase qualifies for a tax credit, or needs to be reimbursed by a client. I upload reimbursable expenses to my bookkeeping software so when I send off the invoice, the related expense is attached to that job. All of my clients know my time purchasing those items is what they pay for, and reimburse me at cost for the item. My convenience to them is the ability to get it, and bring it to them without them hunting it down. (It’s a bit of a game of hide-and-seek here when looking for products in stores in Hawaii, so the time to find something is worth a lot of money)

Make copies of checks when paying bills, and attach to corresponding bill if you don’t use check stubs, this will make reconciliation a lot easier. If you opt for digital payments, write the last 4 of the card/account number you used on the respective bill along with the payment date, and verify on your next bank statement that this information matches.

Consider completing a personal expense report by each client either weekly or monthly depending on your preference and usage of company money. This will help analyze which categories your budget needs to be adjusted around, and for future increase/decrease in service/product pricing. If you have specific needs for prepayment, using this data to provide clients in project proposals should help you land more lucrative deals. 

Storage/Filing Solutions

You’ll need to easily access these papers, so finding a storage or filing system that works for you is the best solution. Here are a few suggestions to try out:

Use a three ring binder with slip sleeves, use dividers to separate into months/categories, and then into expenses/income/misc. I use one binder for each calendar/fiscal year for each of my clients.

  • Saves from spilling them all over such as if you were to use manilla folders
  • Allows you to find the receipt quicker if you need to find warranty information or make a return, or make a copy for a client.

My customers' invoices are in the back, sorted by last name and date.

Not a fan of binders? Try this concept using catalog sized envelopes, you can even color coordinate them if that makes sense for you. Make sure you get the clasp closing kind, so you're able to reopen them without compromising the envelope. Store these, labeled, in a file organizer or magazine holder for quick access. 

I've included Amazon links on a few of these photos for you.
I am an affiliate with Amazon, and may receive credit if you make a purchase using one of these links. Read more about that HERE.

Would you prefer to have a binder put together for you, so you just drop your documents into the categorized place? I'll do that, find out H E R E.

Big Picture Storage

Having a cabinet or closet specific for storing these items is necessary, but make sure it’s not somewhere that can get wet if a pipe bursts, or the ceiling leaks. Storing in a digital cloud is a great idea, but having the hardcopy backups for the longterm is needed. Consider using a professional file storing company if you are heavy into paperwork. Most small businesses generally don’t create that much paper work, so utilizing a plastic storage bin will usually work great. 

You need to store documents for a long time! Taxes should be kept as long as your tax preparer recommends (all tax situations are different), the utility bills can be tossed after your accountant says so (a publicly traded company audit needs up to 3 years of hard copies, at least), and there will be some documents you have for as long as you own property (house, car, etc).

Choose what's best for you and your business, then search for a local 'Off Site Document Storage' facility near you for options if needed.

Month-End Reconciliation

Which ever filing system you use, within the week following the end of the month you need to go through your accounts and reconcile them. This will make sure your income is what your sales reflects, as well as making sure you’re getting all of your expenses entered. This task is often dreaded, not many find it fun, but it is necessary to ensure you’re making a profit and have the ability to report that profit accordingly. 

Still unsure of all of this? I'm here to help, I do this for a living after all.

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