10 Tips for Organizing Paper Records

by: James Adams 1

Most people realize the importance of maintaining records of transactions for evidence, tax purposes or other legal matters. Common paper documents include receipts, ATM slips, legal contracts, pay stubs, W-2s, 1099s, utility bills, mortgage statements and others. Over time, paper accumulates and becomes a major organizational issue. Many people are migrating to storing their documents electronically to save space and retrieval time. Electronic documents are also easier to organize.

Tip #1: Purchase a Scanner

Many companies will provide electronic copies of receipts and other pertinent paper documents, whereas other documents must be scanned for electronic storage. There are several scanners on the market that will help with the scanning process. Some individuals prefer a desktop scanner, while others will purchase a portable scanner that may be used while traveling. Both types of scanners will provide a legible copy of the document that may be later retrieved if needed by the Internal Revenue Service (IRS) or for another reason. There are even iPhone apps that will let you ‘scan’ documents using the integrated camera.

Tip #2: Purchase a Removable Hard Drive

Store all documents on a removable USB compatible drive, available inexpensively through any technology store. Additionally, the information may be stored on a DVD or CD ROM for further redundancy. Experts recommend not storing documents on your personal computer to prevent hackers from retrieving the documents. Saving all your data locally also leaves you vulnerable to corruption and data loss, which can be either very expensive to fix, or impossible.

Tip #3: Purchase a Shredder

Once you make an electronic copy of the documents needed for storage, thoroughly shred or burn all documents that you intend to discard. This will help you avoid identity theft or other invasion of privacy. Do not destroy documents that require the original form for verification such as birth certificates, passports, social security cards, appraisals or any document that requires a notary stamp.

Shredders range in cost and utility. A robust shredder may be purchase for $200 or less. Industrial strength shredders may cost significantly more. Fires, on the other hand, are practically free.

Tip #4: Keep All Documents in a Safe Location

Keep your information in a safe location that is secured from thieves, fire or water damage. A fireproof safe within the home will keep USB drives and CD ROM drives safe, as well as any original documents that need to retain. You may also consider storing your documents at an offsite storage facility to ensure that the documents will be safe and retrievable.

If you have a lot of documents and forms that must be kept, such as birth certificates, passports, insurance policies, property deeds, purchase a fireproof and lockable file cabinet in which to store them.

Tip #5: Retain Important Documents

Always save canceled checks, receipts, charitable donation receipts, child care bills, out-of-pocket medical expenses, mortgage related documents, property tax payments and other deductible business expenses.

Birth certificates, passports, social security cards, appraisals, property deeds and other documents of this type must be retained for the duration of a person’s life. See above for ideas to store these documents.

Tip #6: Keep Tax Related Documents for at Least Seven Years

No one likes to be audited by the IRS. However, audits will go a lot smoother if you are prepared. Audit preparation requires retrieving all receipts and documents from the past seven years. Examples of pertinent documents include capital gains documentation on the sale of a home or for investments such as mutual funds or stocks.

Saving the receipts for seven years may become cumbersome. Storing receipts and other documents electronically will allow for easy retrieval in the event of an audit. For easy retrieval, organize the receipts by month and year to retrieve them easily from an electronic file or a physical filing system. The auditor will appreciate your organization skills and the process will go a lot faster.

Tip #7: Organize the Documents

Make sure you develop a system that will enable you to easily retrieve the documents when necessary. This may include developing an intuitive file naming system, filing in alphabetical order, organizing file folders either electronically or physically and putting the files in a location where they are accessible.

Use color coding where necessary with physical filing. This will help you quickly identify the file folders for retrieval. File all paper documents instantly to avoid loss and to assist in making good organization habitual.

Tip #8: Be Systematic

The goal of filing and organizing paper is to touch the paper work as little as possible. The fewer times you must touch a document, the more time you will save. Pay a bill as soon as you receive it, then file the document electronically or physically to avoid stacks of paper on your desk.

Tip #9: Avoid Backlog

Once you are organized, take several minutes each day or one hour per week in order to file documents, scan documents and destroy documents. If you allow the documents to accumulate, you will become disorganized and overwhelmed. If you manage the process in smaller daily or weekly chunks, you are less likely to become discouraged or misplace an important document that is needed.

Tip #10: Keep Your System Simple

Organize your information in such a way that a spouse, relative or trusted business partner will be able to access your documents in the event of your not being able to should you fall ill or pass away. This will ensure that your heirs will have access to appropriate files to finalize your business plans.

James Adams writes comprehensive reviews of the latest Lexmark supplies for Cartridge Save, one of the UK’s premier online specialists. James also contributes posts to blogs about design, marketing and technology.

image: iBjorn