How to Organize Your Business Financial Documents

If you are like most business owners you probably receive massive amounts of paperwork each and every day, invoices, bills, sales receipts, banks statements, etc... Many decide to go paperless in an effort to reduce paperwork, but sometimes we find clients that are unprepared at the end of the year, especially for tax time. We have found that small business owners many times are not well informed regarding which paperwork they should keep and how to properly organize their files in the event of an audit or review.

Keeping records organized will not only save you time but also money, think about the time savings your accountant of CPA will have as a result of having properly organized records, doing this will not only help your accountant or CPA, but also reduced your billable time. In this article I wanted to share with you some bookkeeping and file organization tips and tricks, following these simple steps will allow you to properly organize your financial documents so that your paperwork is ready for any potential audit or tax review. Also, consider applying these tips not only for your business but also personally, organizing your paperwork both from the business side as well as personal side only helps solidify your position in the event of a tax audit. Once you have entered all financial transactions in your favorite bookkeeping software like QuickBooks, you can start breaking down all financial documents by month and categorize them using the following criteria:

• Monthly Profit & Loss Statement
• Bank Statements
• Invoices
• Bills
• Sales Receipts
• All other documents

You can then place each month's paperwork in a 12 month tabbed binder which can be easily purchased at your local office supplies store. This filing system helps tremendously during a tax review or audit because it allows for easy research of specific information.

Want to go paperless? No problem! One option is to use the same organization process and then each month digitally scan the entire batch of paperwork. Once the documents have been scanned, save each batch in a folder related to the month you are working on. Just make sure to back up your scanned documents. Consider perhaps purchasing a small home server or placing all files on the cloud, just make sure that all information is properly secured and protected. Create backups in different places in order to establish redundancies in with your documentation, which allows you to easily retrieving all financial information in the event you accidentally lose your original financial records.

By Joseph A Serrone  |   Submitted On August 29, 2012