Do you keep your business filing system in a box or plastic bag?
Do you get frustrated trying to find a specific receipt or bill that you just don’t know where in the mess of papers it is and you have to find it right now!
It’s time to straighten your paperwork!
These are my best tips on how to file your bookkeeping and accounting documents so it is easy to find whatever you need, fast and avoid the messy paperwork.
The number of folders or binders you need will depend on how many transactions your business carries out.
Very small or new businesses can start off with one folder filled with dividers for each section.
As the business grows the sections can be split out into new folders.
For bookkeeping purposes you will need some of, if not all, the following sections OR dividers:-
Creditors (unpaid and paid invoice)
Sales Invoice and Debtors (unpaid and paid sales invoice)
Bank Statements and Reconciliations
Credit Card Statements
Payroll and Employee Information
Tax
Loans
Assets
Business information
Correspondence
Unpaid and Paid Creditors
Inside the unpaid bills put a-z alphabetical dividers so that the bills can be filed in alphabetical order which makes them easy to find, especially if you have a high volume of bills.
In the paid bills file put Jan-Dec monthly dividers (**Please refer your financial year end)
When the bills are paid, pull them out of the unpaid bills, keep them in alphabetical order but this time file them into the relevant month in the paid bills file.
What do I mean by relevant month? If you entered a bill into your accounting system at the date that is on the bill then file it into the paid bills file at month OR date of the bill.
This all depends on whether or not you accounting system has a creditors OR bills option.
If you are only keeping a cash book, then your bill is entered into the accounting system at the date you paid the bill, so you will file it into the month of the payment.
Another method is to simply file all the bills away into one file, whether paid or unpaid, and keep track of the ones you haven’t paid using a excel or Accounting System.
Sales Invoices and Debtors
When you produce an invoice, file it into the unpaid sales in alphabetical order and then move it to the paid sales into the relevant month once payment is received (file it into the month you produced the invoice or the month payment is received).
Another method is to file the sales invoices in order of invoice number whether paid or unpaid, keeping track of unpaid ones using a excel. That way there is only ever one file or section for sales invoices.
Of course, if your accounting system has the capacity to track accounts receivable and show you which invoices aren’t paid, then you don’t need a excel and having only one file for sales invoices is the better option.
Bank Statements and Reconciliations
If you have more than one bank account it will be easier if you keep the statements in separate dividers for each bank account and also keep the reconciliation reports in separate dividers for each bank account, and separate from the bank statements.
So bank account No 1 will have a section for the monthly OR weekly statements, and a separate section for the monthly OR weekly bank reconciliations. Bank account No. 2 will have its own sections.
You can head these up with either the bank account type - daily transactions account, savings account, tax account etc., or use the account number.
Credit Card Statements
You can keep the credit card statements in their own section or you can keep them with the bills OR Invoices.
Some accountants enter the credit card statements into their accounting system as a creditor, listing out each transaction on a separate line so it is coded correctly, and then pay it off like a normal bill.
Some accountants enter them into the accounting system as a bank account and reconcile them like a bank account so therefore you can treat them in the business filing system the same way you would a normal bank statement.
Tax
A business will have different types of tax to take care of, the main ones being payroll tax, sales tax and income tax.
File documents relating to these different types of tax into their own tax sections within the business filing system.
Payroll and Employee Information
Keep the two types of information separate in your business filing system.
Your employee information will contain their job applications, resumes, tax/pension forms, personal details etc.
The payroll section or file will contain the management reports for each weekly, fortnightly or monthly pay that you process for your employees.
Loans
It is important to keep a separate section for any business loans or business mortgages that are taken out.
In the Loans section you should keep all the loan documentation, payment schedules and loan statements etc. because your accountant will want to see these when preparing your annual accounts and compiling your tax.
Also, for loans that relate to vehicles, buildings or some other type of equipment (opposed to a straight forward cash loan) keep copies of the vendor invoices with the loan documentation.
If you are working from your house with room set aside as an office, then you might also like to keep copies of your personal mortgage statements in the loans section too because you can claim a percentage of the interest payments as an expense in the business to reduce tax.
Assets
This is for any equipment you purchase that is deemed as an asset (property, office equipment, machinery or vehicles etc that cost more than RM500.00 or RM1,000.00). You should keep copies of the invoices OR receipts in the assets section.
You generally will have the invoice in your creditors folder, but you need a copy of the invoice in the assets folder as these are documents that your tax accountant will also want to view at the end of the year and it will be far easier to find them if you have copies ready in your assets folder.
Business Information
This will be all the documents produced when you incorporated the company OR registered the business, NGO and other related entity.
You may also have annual renewals to file in this regard.
Correspondence
Most correspondence these days is done by email so you will probably have very little to keep in this section of your business filing system. Keep your emails in a systematic way within your email program by opening folders underneath your ‘Inbox” folder.
If your bills arrive by email, still print the bill off and put it in your filing system, but then move the email containing the bill to a folder which you can call ‘Creditors’ or the name of the vendor or some place you know you can find it inside your email program.
For correspondence you receive in the post you may be able to simply file it in date order in the correspondence section putting the most recent document at the top.
For important correspondence that you receive a lot of, such as letters from your lawyer, keep a separate section called Legal along with copies of invoices from your lawyer.
Every time you receive a document file it into its appropriate section or folder right away!
Don’t have a basket on your desk that starts filling up with everything received because you will become overwhelmed with papers.
Your business filing system is an important aspect of your business.
An orderly system will keep you sane.
It does take effort and some pre-planning and preparation, but once it is set up you will be ecstatic you did it and it will lift a huge weight from your mind.
WHAT WE CAN HELP YOU??
Adam Management Services ‘AMS Malaysia’ will provide you proper filing. We do understand is quite troublesome for company or business owner to keep proper filing while focus on business operation. Do contact us at +6019-477 6788 or email at info@amsgroup.my. Book your filing section with us today!
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