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The Importance of Having a Productive Electronic Filing System

written by: twhatley•edited by: Ronda Bowen•updated: 7/6/2011

When setting up a home office, many people put their time and energy into their paper filing system. The electronic files are just as important and without a proper filing system, your electronic files will be disorganized and scattered. Learn why it is important to have a proper electronic system.

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    A sign of an effective filing system is that it fits your needs and it is functional. The problem that many home office users have is that they don’t know an effective way to create and maintain a proper electronic filing system. The filing system should reflect the way you plan to organize your business and projects. Organization of your paper files should depict how your electronic system should be organized; just keeping electronic documents in alphabetical order isn’t always sufficient when the system grows to more than a hundred files.

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    Planning out the Filing System

    Planning out the filing system is the most important step creating an electronic filing system. This is when you will have to decide how you will organize your files. There are three choices when deciding the organizational structure of the files; by year, by project, or by clients. It is possible to use all three structures, but first you must first decide what will drive the saving and retrieval of files. Keep in mind to choose a structure that suits you.

    I run several businesses out of my house. For each one of them, I have a different filing structure. The group that drives my main area, or the top folder, is names of the businesses. I first needed to separate the files for each business into their own system. Depending on the business, the next level is either by year, by the companies I write articles for, or my virtual assistance clients. Setting each business with their individual filing system and try to duplicate the same system several times help me because I run each business differently. The filing system reflects the business and how I run it. The main goal is to find the file I am looking for as quickly as possible.

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    Disadvantages of a Messy System

    The more complicated your filing system is, the harder it will be to find files. One of the biggest mistakes that people make when saving electronic files is to over saturate the system with unnecessary folders. The deeper your files are buried into a multitude of folders, the slower your computer will be when searching for and retrieving files. Plus, when folders are buried, there is the added threat that files will be forgotten and recreated multiple times. Redundant files only bog down the system and take up unnecessary memory.

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    The Importance of Purging and Archiving

    Regularly archiving and purging files will keep your electronic filing system clean and convoluted. Even with the most effective electronic filing system, after a while files will pile up and disorient the system all over again. Removing unnecessary files and archiving old files are essential to keep the system clutter-free. Remember to keep the archives on a different file system and out of the way. The archiving system needs to be date-driven if it is going to be effective.

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    Example of an Effective System

    An accounting firm has several years of taxes for all of their clients. Because their business is client-based, so should their electronic filing system. The main structure of the files should be sorted by clients, then years. Within the ‘years’ folder is the folders for types of files. Here is how the organizational structure looks for this system:

    • Company A
      • 2008
        • Taxes
        • Receipts
        • Fees
      • 2007
        • Taxes
        • Receipts
        • Fees
      • 2006
        • Taxes
        • Receipts
        • Fees
    • Company B
      • 2008
        • Taxes
        • Receipts
        • Fees
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    Your system may be similar to this if you have a service-based business. For product-based business, it will be quite different. Instead, products or years may be the driving force behind your business. Just stay true to your business and filing needs.