Disguise your filing system as part of the furniture. For example, a wardrobe that houses a desk and filing cabinets is an option, as is a file drawer that resembles a rolling stool or small cabinet. These types of filing items help hide office files in the living room. Other types of furniture items that can double for this purpose include ottomans, tables with drawers and old-fashioned desks.
Work upward instead of outward as much as possible. Taking up floor space for your office stuff leaves you with less floor space for furniture that actually belongs in the living room. Consider a large wall-unit bookcase. You can buy baskets large enough to hold file folders and store them on the shelves. They'll look decorative, but still be functional.
Move items back and forth using furniture on rollers. For example, if you've created an office space in a small closet in the living room, store the file cabinets under the desk and tuck out of site by closing the closet door. A chair for this setup can be positioned outside the door for extra room seating, but provides double duty as an office chair when the need arises.
Hang files using hanging racks on the backs of doors. This includes doors on armoire-type desks, converted closets, or the inside of the doors of decorative cabinets. Although these do not hold large numbers of file folders, if you refer to a few files a lot, this will keep them within reach but out of the way.
Create a shelf on the area of the wall closest to the ceiling. Store collapsible file folders on the shelves above your living room office work area. This solution allows you to utilize space that would otherwise be wasted and can be quite decorative if you pay attention to the types of shelves and file folders you buy.