Daycare Tax Tips

Question about categorizing shopping receipts

What categories should you use?

A family child care provider writes:

> I am about to start scanning in all my business receipts and need to create folders/categories for them. As long as I'm setting it up, I'd like to do it right. Do you have a list of the categories you would like my expenses listed under? (cleaning supplies, office expenses, etc.) I can keep doing them as I did in the past, but not sure if that is exactly how you would like them. Thanks in advance for any advice you can give!

This is a very good time to be organizing your receipts and your scanner sounds like fun. You should use categories that help you, as the business owner, to keep tabs on where your business dollars go.

What goes on the tax return is a more limited set of categories, especially since I find it beneficial to put as many expenses as possible on the front of the Schedule C (Form 1040). I try to limit the custom expense categories on page two, because I have noticed that reporting a large dollar amount on the Schedule C "other expenses" line 27 can attract the attention of Internal Revenue Service auditors. Several of your categories could get combined under "Supplies" or "Office Expense" on the tax return, but that's okay. Those are the two biggest catchall categories on the front of the Schedule C.

Will your scanner learn to differentiate between 100% and shared expenses? Whether in automated fashion or by doing it manually, it is important to identify your part-personal/part-business shared expenses.

Last updated: 1 December 2009

Posted on 2009-12-02 05:58:49