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HOW TO SETUP A GOOD FILING SYSTEM 

Three easy steps to a proper filing system

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There is no doubt that a good filing system will save you time, money and a lot of frustration. Stop wasting time looking for papers by following these three simple steps:

STEP 1: Decide whether a document needs to be filed.
The first step when you receive a new document is to decide whether it needs to be filed away or thrown away. If you cannot decide ask yourself what the likelihood is that you will need the document in the next year and what the worst thing is that can happen if you throw it away. If it is unlikely that you will need the file and throwing it away does not have major consequences, throw it away. However, keep in mind that certain documents need to be kept for tax or legal purposes and should not be thrown away. If you are unsure, contact your accountant.

STEP 2: Categorise the documents that need to be filed
Once you have decided that a document should be filed, it need to be  categorised and filed together with similar documents. The documents that need to be filed will fall in two broad categories

  1. documents that will be used for reference purposes only.
  2. documents that require further action on your side, also known as action folders. Examples of documents that require further action would include supplier invoices that need to be captured into the accounting program and SARS returns that you need to complete.

Any one or a combination of the following systems may be used to categorise documents.

What filing system you use will depend on the size of your business and the amount of paperwork involved.
Company A, a small business that just started trading, may use a chronological system to file supplier invoices due to the limited number of invoices they receive.  Company C, a large company that has been trading for many years, may use a combination of the alphabetical and chronological system to file their supplier invoices as they receive many invoices per month. A separate file per supplier per month will work better for them.

The system you use is up to you. The important thing to remember is to categorize similar items together.

STEP 3: File the documents
Schedule a time each day or week to do the filing. The frequency will depend on the amount of paperwork you have to file. Unless you have very little paperwork, it is normally too time consuming to file documents as you receive them. At the end organising boils down to keeping up and there is no magic formula for that.

The following helpful hints will also improve your filing: 

HELPFUL HINT 1: Use different colour folders or files for different categories
Colour coding saves time as it reduces the number of files to look at. A blue label, for instance, can be used for customer files, a red label for supplier files and a yellow label for bank statements. You will be surprised by how much time colour coding will save you and how easy it will be is to find what you need.

HELPFUL HINT 2: Keep active and inactive documents separate
Some files will be used on a regular basis to do your bookkeeping and other files you may only need on the rare occasion, for example, when you get a tax audit. For that reason, it may be a good idea to have separate filing space for your active and inactive files. You want to file documents that you will only need on an occasional basis out of your way. At the end of the year after your accountant or bookkeeper has done his job you can transfer the active files to the inactive storage space.

HELPFUL HINT 3: Mark removed items
In larger companies it is a good idea to mark that an item has been removed from its original place. The removed file should be replaced by a marker of some sort. The marker should tell anyone looking for that item who removed it and when.

HELPFUL HINT 4: Identify or label your files properly
Label your files and write the subject of the file near the top of the file. To easily distinguish between current and historic files it is wise to always include the year on the label for example April 2008.

Filing equipment|

What filing equipment you use will depend on the size of your business and the amount of paperwork you have. Each business has different needs and will have to choose what works for them. 


No matter what filing system you choose to use, always ensure that it meets the following five requirements.

  1. Documents must be easy to find.
  2. The system must be easy to understand and easy to use.
  3. Documents must be handled as little as possible.
  4. The system must keep documents save from rodents etc.
  5. Documents must be accessible to all who is authorised to use it.

If you require any help in this regard please email or give us a call and we will set up a proper system for your specific business.