To preserve your sanity and your tax deductions, you must have a good record keeping system. Any system will do, so long as it works for you. Take the time to process your receipts every week, every two weeks, or at least monthly. Don't leave it all to the end of the year when the task will be overwhelming and you may not even remember what you purchased. Careful tracking of your expenses will help to keep your taxes as low as possible. Even if you haven't started caring for children yet, keep track of the costs involved in getting your business started.
As you process through your receipts, you need some way to record and categorize them. For this, I highly recommend Minute Menu Kids Pro record-keeping software, which is designed specifically for family child care providers. The software is based on Tom Copeland's Calendar-Keeper system. You can try the Calendar-Keeper or a simple envelope record-keeping system, if you prefer to do your record keeping by hand, but I think your life will be much easier if you learn to use some kind of software.
Minute Menu Kids Pro includes many business management features. Besides categorizing your business and home expenses, it also lets you invoice parents, track attendance, time worked, and meals served. It also generates great reports that you can give to your tax preparer at tax time. Daycare providers who aren't using some kind of software generally spend many hours determining their expense totals at the end of the year.
Tracking time worked at home is particularly important. Maintain daily attendance records to document actual child care time. For at least two months of every year, keep a detailed log of time spent on business-related activities outside of your regular child care hours. This can include business-related cleaning, meal and activity planning, record keeping, business phone calls, etc. Don't count personal household chores, only extra work required for the daycare.
Take a look at my Day Care Record Keeping 101 quick reference guide for more record-keeping suggestions.
Last updated on 11 January 2012
Posted on 2011-09-18 00:16:30