Taxes- 2care2teach4kids

Taxes & Record Keeping

Books

The Home Daycare Complete Recordkeeping System

Home Daycare Recordkeeping Journal: The Book of Forms 2007

Home Daycare Recordkeeping: Your Financial Guide to Success

I AM NOT A TAX EXPERT!!!

I did however attend a class given by Tom Copeland, and I will give you some tips and some pointers that I have learned through my own experience and also that I have learned from attending Tom's class. Please do not take this information and exclusively use it, there is a lot more to know about taxes and record keeping. This is just an overview to get you started!

Tom Copeland is a tax expert! In my opinion. He also the director of the Redleaf Institute. They offer many products and services for family childcare providers. Check out their web site! www.redleafinstitute.org They are the makers of the famous Calendar Keeper, which is a wonderful record keeping tool!

Taxes and record keeping really have to be grouped together because the two really go hand in hand. And what is the secret to making your taxes easier??? Keep good records!

RULES TO FOLLOW ON RECORD KEEPING

1. Save all your receipts!!!!!! That is the number one rule! If you purchase something at a garage sale then write yourself a receipt. When I say all I mean ALL! Save all your receipts for anything you do or spend money on, especially things for your house! It is almost all deductible in some way, from the garden hose to the carpet cleaning services! Not only should you save receipts for what you spend on food for feeding daycare children, but also YOUR OWN PERSONAL food expenses! Even from eating out! Your own personal food expenses are NOT deductible BUT you may need them in case you are ever audited to show to the IRS. ** Food deductions are often something providers get audited for, so you want to be able to show what you spent on food for your daycare children, and for your own family. You can also keep track of the miles you put on your car for business purposes. So keep a tally in your car on how many miles you drive (beginning odometer reading and ending odometer reading) when you are attending training's, shopping for childcare supplies, and such. Mileage is deductible at a certain rate each year so you will have to check with a tax expert for the actual amount each year. *** If you don't have a receipt for something does it mean you are out of luck? No! But having the receipt really makes things easier. So save them all!

2. Keep Attendance Records. If you participate in the food program then your attendance records are easily recorded on your meal claim forms. It is easy to go back and check them and see who you feed that day... so obviously they were here. If you do not participate in the food program keep daily attendance records. That way you will always be able to show how many children you were caring for at any certain time. Along this line also, if you have a family who has a change in the hours that you normal give care for them, for instance they were full time and change to part time, write them up a new contract documenting the change in hours! That way there is no way to dispute how much you were paid by any family. The IRS will assume the amount of care contracted for was the same over the whole year unless you show them other wise.

3. Record all of your income. Any time a parent pays you for your services record it! Easy enough right! Well do it right away, because you will forget otherwise what each parent has paid you. At the end of the year parents are going to want to claim that money to receive a childcare tax credit. You will want to be sure that they are claiming the same amount that you are. After the year is over make up receipts for each family stating how much they paid you for the year. Tom Copeland suggests having them sign it and you sign it, so that you have proof that that is what they paid you for the year. Make two copies of the receipt, give one to the parents and keep the original for your documents.

4. Track your hours! Well that's easy right, I am open from 7:00 am to 5:00 pm, Monday through Friday. That is 50 hours a week. Well are you sure that is the only time you are working? Most of us spend time after hours or even before hours in our homes doing business related stuff. That time can be counted when you are figuring your TIME SPACE PERCENTAGE. If you are not familiar with that term it is a percentage that you use to determine depreciation on things in your home to deduct from your gross income. These deductions can greatly help you reduce your taxable income and in turn save you a lot of money. The key here is that only hours in your home count, and you have to have some way to show this. So do you need to punch a time clock? No. Tom Copeland suggests tracking your hours over two months, document it on a calendar. After two months find the average number of hours you spend working in your home when there are no daycare kids present. Add that figure to your normal business hours per month. If you have a drastic change in the number of hours you do care or something you may need to recalculate your average for that time, for instance: if you take the summer off.

***I highly suggest taking the time to learn more about this either by talking to a tax expert or reading one of Tom's Books. Check out the Redleaf Institute site also, there may be a lot of info about it there too.

When doing your taxes there are many computer programs out there to help you! I highly suggest purchasing one but even more so you may want to just go see a professional tax person, at least for the first year or two!