15 simple steps to create a filing system for your accounts paperwork

These 15 simple steps to create a filing system for your accounts paperwork are aimed at self employed sole traders. You need to keep paperwork for at least 10 years in case you ever get an enquiry from HMRC. Being organised can help your accountant turnover the work faster and also resolve HMRC enquires faster, if you were ever in that situation.

Things you will need:
  • Lever Arch File
  • Plastic Wallets
  • A4 Paper
  • Hole Punch
  • Black Marker Pen

Steps to take:

1.       Use the plastic wallets as dividers

2.       Insert A4 Paper and write on the paper what is behind each section.

3.       The sections you will need are:

  • Sales
  • Expenses
  • Bank
  • HMRC
  • Tax Returns
  • Notes

4.       Hole punch and file all your paperwork in the correct sections. For small expense receipts it might be easier to file them inside the plastic wallet. Alternatively, you can get an envelope and hole punch the side of the envelope and keep the receipts in there. This will keep them together.

5.       Once you have done this, you need to transfer all this information onto a spreadsheet.

6.       Open a new spreadsheet and label the tabs sales, expenses and bank.

7.       Go through each section and enter each section onto the spreadsheet. A sample of a spreadsheet can be found here: income-and-expenses-for-bloggers

8.       Once all the information is entered you can sort this by date.

9.       Enter the bank transactions.  Most banks let you download directly into a CSV or spreadsheet which means that you don’t need to manually enter your transactions.

10.   It’s a good idea to keep a log of every HMRC correspondence you undertake. This includes phone calls, emails and even internet transactions if possible.

11.   File any hard copies of your tax return in the relevant section.

12.   Notes is a good place to keep anything you’re not sure about with as much information about it as possible.

13.   If instead of having physical records all of this can be created in a virtual file in the cloud, using folders for each section.

14.   There are also lots of accounting apps you can use to do this automatically for you.  Some of them can be found on this post here: My Favourite Accounting Apps

15.   Once this is done, it is ready to send to your accountant.

For some reason, even the easiest filing system can be the hardest thing to do.  If it doesn’t excite you, nothing in the world can motivate you to do it.

Here are some ideas to help you get started:

1.       Block out some time in your diary to do it.

2.       Find a lever arch that is bright and colourful and makes you happy to use and look at. A bit cheesy but it can really help!

3.       Use colourful pens to label your section.

4.       Put some music on and have fun.  Filing doesn’t require too much thinking so you can have fun – dance, relax, meditate as you file.

5.       Finally, as you log your expenses, you can have a trip down memory lane. What happened at that place you had a coffee and the last train journey you went on? Think of all the interesting people you met on the way to work.


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