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Childcare Finances - Some Money Basics
Author: Melissa Newby, Ms, Bob Sawicki, Cpa  | Posted: 15-09-2005 | Comments: 0 | Views: 86 | Rating: (52)  (?) 
Sole proprietor, Inc, LLC, - What does it all Mean? Your
childcare is a business. While you may not need to formally
create a legal business, there are options to consider if you
have an especially large operation, or employ more than one
person. From a legal standpoint, different types of entities
provide limited liability. This is something you would want to
discuss with a lawyer. Different entities also provide different
tax advantages and disadvantages. The type of entity really
depends on the business and how many people own the business. An
accountant should be able to advise you on the best entity for
your situation. What can you deduct on your taxes? Any why would
you want to? Each time you claim something as a deduction on
your taxes, you reduce the amount of money the government can
tax. By reducing that amount, you can reduce how much tax you
pay, letting you keep more of your money.
A simple rule of thumb to remember is any ordinary and necessary
business expense is deductible. Keep in close contact with your
accountant, and find one if you don't have one. Regular meetings
or discussions with the accountant will help in working through
what is considered ordinary and necessary for your business. Be
sure to keep in mind all the expenses you incur when doing
business - ie., don't forget things such as mileage on your
vehicle. Trips to the bank to deposit your weekly daycare
income, for instance, is an ordinary and necessary business
expense that is deductible.
Who has time to file receipts after a day with the kids? Even
though resting from your busy day sounds better than filing you
receipts for groceries that week, stay on top of your paperwork
and make sure you keep records of all the money you spend on
your business. From the IRS point of view, the more records and
documents to substantiate your position, the better. Invoices,
receipts, credit card statements, bank statements and cancelled
checks are all good evidence of the expenditures incurred. There
are also several accounting programs - available at any store
that sells computer software - that are inexpensive and work
great for tracking expenses and providing useful financial
reports. Several online companies sell software specifically for
childcare providers. Be sure to set up a filing system for your
records. It doesn't need to be fancy, as long as it makes sense
to you and you can find your records once tax time comes around.
Keep work and personal expenses separate Having a separate
checking and savings account for your business will make keeping
track of your finances a lot easier. Sure, you have to balance
another checkbook, but you'll know that all money in and out of
those accounts has to do with your business. Also, consider
getting separate credit cards for the business. When you use all
of these accounts exclusively for business, it is much easier to
put all your records together, rather than trying to separate
out what is business and what is personal. Ahh, taxes. Where do
we start? Tax laws are so specific to your state and city, that
it's hard to give even general guidelines. You may want to check
with a local accountant or state and local tax authority to find
out if there are any special rules, permits or taxes that you
may need to run your business. Paying your taxes quarterly might
be an option, so you can spread the payment out over the year
instead of paying it all at one time
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Article Source: http://www.articlesbase.com/home-business-articles/childcare-finances-some-money-basics-1637.html
About the Author:Melissa Newby is the cofounder of www.daycarematch.com
Bob Sawicki is a CPA practicing Tax and Financial Planning in
Madison WI. He can be reached at sawicki@tds.net.
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