Filing System – By Category
This method is the most popular request by business owners. This is because business categories make more sense to business owners and executives. For example, it is generally understood that Automobile expenses will include lease costs, parking, fuel, auto insurance, car licensing fee, and maintenance. It is general not so clear when you refer to transaction number 23 in the purchase journal which recorded the transaction as credit in account payable, debit in fuel expense.
Organizing by category allows business owners to dive right into the category and retrieve records that make most sense to them without looking into the journals which mostly don’t make sense to a person who is not a bookkeeper or accountant, or go to the bookkeeper or accountant every time you want to retrieve something.
To set up a filing system sort by category, you can do:
With hanger folders:
- Use the practice tab for each hanger folder, mark each with main category. (e.g. Automobile, Invoice, Office Suppliers, etc)
With file folders:
- Mark the tab with sub categories (e.g. Parking, Auto Insurance, etc)
- Put the sub categories file folders into the main category hanger folder
- Paper clip
3 holes binder:
- Folder separator, mark with the name of different journals
Method:
- First sort your receipts using the folders by subcategories
- After you have done the first step, pull out each subcategories folder, sort by date, paper clip them by month if needed. Mark the month on the top receipt of each month so you can find the month easily.
- You can do the data entry while doing step 1, or doing step 2.
- Keep all the journals in the 3 holes binders
- Keep all financial statements in the 3 holes binders
That’s all there is to it. Very simple. If you are a business owner, I would highly recommend you to sort your receipts by category.
