Folders are created within the directory on your computer/intranet.
Consider all the files required for your work and then arrange them in groups that make sense, e.g. all files for each semester, all documents for one project. Consider a nested folder structure if there are a lot of files and they can be further grouped.
For classwork:
For research projects:
Name the folders following the same best practices outlined for naming files.
Document how you organized files within folders in the README file (see tab on README files).