Adding Collections
At the top left of your Zotero program is a folder button with a green plus sign. Click this to create a new "collection."
Create collections to organize your references. Collections are like file folders on your computer, but a reference can be in more than one collection at a time. In other words, a book on the Civil War could be filed in your "Civil War" collection, your "Alabama History" collection and your "19th Century America" collection without having to make three copies of the reference.
Adding Subcollections (or Subfolders)
Within a folder, you can further organize your items by adding subcollections (or subfolders). In the left panel, click on the folder you want to add a subfolder to. Then right click the folder, and select "Add Subcollection" from the menu. (Note if you are on a Mac, hold down the control key while clicking to access the right-click menu).