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Tracking Expenses Better [Finance
Posted on May 2, 2013 @ 08:08:00 AM by Paul Meagher

Just finished up my taxes for another year. Every year it seems my taxes get more complex. As usual, I leave everything to the last minute and have to set aside 3-4 days to categorize all my invoices into the various expense categories.

This year I have decided to make some improvements to my accounting system. My invoicing system is ok. My problem is staying on top of my expenses. So, towards that end, I have created monthly expense folders (e.g., Jan 2013 Expenses, Feb 2013 Expenses, etc...) and have thrown all my relevant receipts into those folders. I usually sort my receipts into sorted piles when doing taxes (e.g., fuel, electrical, heating, small tools, planting, internet, etc...), but I will probably leave my receipts in my folders and maintain a separate journal of expenses sortable by date and expense category. I know a spreadsheet can do all this, but I'll probably hack up my own php-based application to do this because 1) I can, and 2) it might be useful to eventually interface it with my php-based invoicing system to create a business dashboard.

What I hope to get from my improved accounting system is a more up-to-date sense of my cumulative income and expenses. I'll be able to better calculate how much I need to pay the taxman in my quarterly income tax installments rather than relying upon an estimate based on last year's taxes. I should be able to figure out if I should be making business investments to keep my tax rate at a certain level. Rather than making those purchases towards the end of a tax season, I could be making them during the year with an eye to optimizing my taxes and cashflow better.

So far it looks like I'll need at least 3 database tables to track expenses: Expenses, ExpenseCategories, and Businesses. The latter table is required because I operate three businesses and expenses have to be assigned to the correct business. An expense will be tagged according the business it belongs to and the expense category it belongs to. Each business will have it owns set of expense categories (there is not much expense category overlap between my internet businesses and my farm business). I can export my banking and credit card data in Comma Separated Value which will make it easier to get a list of my expenses and input them into my expense tracking system. It will still require reviewing my downloaded expenses each month and getting them ready for input, but once they are ready, I should be able to develop a script to batch input my expenses for the month according to transaction date, description, and amount.

Hopefully this will be the year when my accounting system is finally mature enough to provide me with reports on year-to-date income and expenses along with monthly breakdowns of income and expenses. It should allow me to view these reports separately for my three businesses and also offer some ability to combine income and expenses across businesses as well.

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