The first step to paper management

Papers seem to be all over the place during tax season. As soon as you finish submitting your information to the tax man, make your life easier by setting up a paper-flow system.

There are three main groups of papers in the stream that flows through your home or office. Notice how we used the word through? There will always be some flowing in- mail, bank forms, personal records- but don’t let it become the Dead Sea. It needs to flow out as well.

When you’re sorting your papers for the first time, there will be three main groups:

  • Action
  • Reference
  • Archive

The Action papers are those that are currently in use; things you need to Act on. This would include bills to pay, forms you need to fill out, invitations for upcoming events; a general stack of To Do. These will be near your desk for quick access. A desktop file such as this keeps these in order:desktopper 2If the word file sends shivers down your back, check out last week’s post Hate filing? for alternate ideas.

Reference papers are those that don’t require action, but you may need to check. These live in your filing cabinet or bin. Paid bills, banking and mortgage information, current income tax documents, memberships, hobbies, and identification all belong here. Most papers will pass through this category in two years.

Papers older than two years generally belong in the Archives. Previous tax returns, employment records, financial and investment records can go in this box. If you do an annual clean-out of your reference file, moving last year’s keepers to the archives, take a few minutes to see what older papers can flow out into the shredder or recycling. Check with your accountant whether your tax records need to be saved beyond seven years.

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