Backing up of business files:
USB Pen Drive Yes. The USB stick is the primary data store. It is an encrypted device.
Ext HD Yes. Also, home PC and workshop PC.
Internet Backup No way, man!!
Other Paper invoices: 1 to customer, 1 to file. PDF file to backup just in case accounts software keels-over and dies. A mate of mine got caught-out by not doing backups or keeping hard copies of invoices.
Regarding the backup method, my preference is to just copy all the folders & data files to the target backup device. Storage costs are low and decrypting of files by backup software is not required. The method is a bit basic, but it works.
And do people stil keep paper backups in filing cabinets etc Yes. Life is too short to scan supplier documents and manage them on a PC. Software is available to manage this, but for a small business the costs outweigh the benefits. Taxman, VATman and accountants find it harder to argue with, or pick holes in, a followable paper trail.