If it takes you several hours to gather your tax return paperwork, it may be time to invest in a couple of used office file cabinets. A well planned and thought-out organization system saves you time and reduces stress.
Invest in Separate Business and Home Files
Keeping your home and business files separate makes it easier to manage your legal and financial affairs. Courts will more easily accept business expenses that are clearly separated from your personal matters. In the event of an audit, you want to direct the inspector to the relevant material. If the audit involves your business, there is no reason to give the inspector access to your child’s grade school report cards.
Develop a Logical File System
Make a list of the kinds of papers that you plan to store in your file cabinet. From this list, form broad categories that encompass the items you wish to store. These categories will correspond to the hanging file folders.
You want to strike a balance between broad categories that you can search through quickly in the drawer and narrower terms that more specifically name folder contents. If your terms are too specific, you will wind up with a folder for each sheet of paper. When you pull your 2017 tax returns, you probably prefer to have all related documents in the same folder. On the other hand, a folder labeled “stuff” becomes a catch-all dumping ground and defeats the purpose of file organization.
You may want to borrow the technique of card sorting from user experience design to help you make logical groupings. In this method, you write your items individually on index cards. Then, you sort the index cards into categories that make sense to you. If more than one person will use your filing system, ask other people to perform card sorts as well.
Keep your sanity and work today on a file organization system that works for you.