How you organize your files is more than helpful, as you can now work remotely and, more importantly, access files from any device, anywhere. The organization does not come easily to all of us, so I was prompted to write this article since I’m always helping clients get organized.
Structure It
Knowing that your business universe has a structure is essential for hierarchically organizing your computer files. I typically show clients how to manage their accounting department files, so let’s use this as an example. However, please note that it would not be a first-tier folder; the first-tier folder is named after your company. The second tier will be the department in the company, and one of those departments is your accounting department. In your accounting folder, you should have sections. The third tier is the type of documents. Sections are essential since they help you to head in the right direction for the document.
Example:
Jane Doe & Associates LLC (tier one folder)
Accounting (tier two folder)
Employees/Contractors (tier two folder)
Customers (tier two folder)
Marketing (tier two folder)
Receipts (tier two folder)
Financial Statements (tier three folder, in the accounting folder)
Tax Returns (tier three folder, in the accounting folder)
Signed W9 & W4 (tier three folder, in the employee/contractor folder)
Naming Documents
Naming your documents is just as important as where you store them on your cloud or desktop drive. For a financial document, I suggest using the last four digits of the account, the institution’s name, the document type, followed by the month and year as a clear file name.
Let’s break it down:
(1) 1234 is the account
(2) Chase is the institution
(3) BS means bank statement, CC means a credit card, LOC means line of credit, L means a loan
(4) Statement month and the statement year
For example: 1234_Chase_BS_0118
Aligning this sequence enables all the statements to be adequately grouped by account number, institution, statement type, month, and year. Keep in mind that details matter, as I once had a client who had a checking account and a credit card with the last four digits. While the odds of this happening are rare, it did, and the type statement came in handy in the event the anomaly appears.
Naming Receipts
Another critical category to have is for large purchases. While software like QuickBooks Online keeps a copy of your receipt with the actual transaction online, I like to have another copy on my cloud drive. So, naming these files is just as necessary, so you don’t have to go digging through them. Naming the receipt right keeps you from having to open the actual file. Here is the name thread recommended: month, day, year_store name_amount.
For example, 011918_Apple Store_$2101.45
A full visual detailed example if you were looking at your desktop or cloud drive files in list format:
The receipt folder is essential for many reasons. So, I recommend saving items here that you don’t know where else to put. The reason is that every document will contain information you might not even think to include in a receipt, such as the date, source file name, and sometimes no amount. However, rest assured that if you develop the habit of scanning all documentation and naming it as mentioned, it will be readily available in the receipt folder whenever you need it. Now, what date should you use? Naturally, the date on the document or receipt, not the date you scanned it! And always in the format of MMDDYY, not MMDDYYYY, since the third-tier folder will have the whole year on it. For example:
- 2018 Receipts
- 2019 Receipts
- 2020 Receipts
A complete, detailed visual example of what you would see if you were looking at your files in list format in the cloud or on a desktop:
Now, keep in mind that with technological advances, there are numerous apps and software to help you keep your files organized. Some are more specific than others, especially if they sync with our financial software and extend beyond that. Still, your master cloud drive and/or desktop file should resemble the above, allowing you to find whatever you need when you need it. How you organize your files can make or break your level of productivity and efficiency.
About the Author
Jacquéline Edwards is a Business Manager with over twenty years of experience for Business Pipeline, Inc, a business management firm designed to assist business owners with bookkeeping and business management needs.
