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Archive for the ‘Taxes’ Category

Getting Organized To Issue Tax Information To Parents

I’ve been preparing and issuing yearly Child Care Payment totals for parents since 1999 and I have found that it is vital that I keep track of parent payments to assure that parents are issued accurate totals for their tax return.

In 2011, two parents questioned the payment totals that I issued to them (for 2010 childcare payments) and I thought that was impossible, because I was using Quickbooks to keep track of my weekly parent payments.

Moreover, I discovered, that I failed to record several payments in my payment receipt book, which resulted in two payments not being entered into the computer. I  praised those parents for doing such a great job on keeping track of their childcare payments and thanked them for bringing the tax error to my attention.

In fact, I was so grateful for the error, because it inspired me to be more diligent about recording payments that I receive from parents.

Tom Copeland writes a great blog for Child Care Providers and I strongly suggest that you check out his blog post titled: A Family Child Care provider asks:Is it income if I don’t report it?

As I was preparing to issue Child Care Payment totals for 2011, I was reminded again of the importance of keeping track of parent payments and how time-consuming the process is.

According to Tom Copeland, “In any situation, however, money you receive from parents for child care is taxable income and must be reported on IRS Form 1040 Schedule C. If you fail to report all of your income there are several ways you can get caught:

* A parent who previously agreed not to claim the child care tax credit may decide later to go ahead and claim the credit when she realizes how much it can be (the maximum is $1,050 for one child).”

Furthermore, be sure to give parents a notice that indicates the following information:

  • Your Tax Id number
  • The Name and address of your business
  • The amount that the parent paid you for childcare services
  • The name of the child or children that you cared for
  • Your phone number
  • It’s also a good idea to add the following words on the Tax Letter Please keep with your “Tax Year” Records

The IRS does not look for any form in particular from you to issue to parents, however, the parent will need the information above to claim a child and dependent tax credit.

My final tip to you is to have a back-up system for keeping track of childcare payments and this includes:

  • Creating a back-up file on a flash drive
  • Keep a copy of the written payment receipts issued to parents
  • Have payments stored in your computerized financial software for easy access

Have you prepared your tax statements or letters to issue to parents for 2011 yet? If so, how was the process for you? I look forward to your comments and tax payment ideas.

With your Child Care Business in Mind,

Shiketa

Are You ready to expand your business? Frustrated with the level that you are on?  Check out the Going to Another Level, 21-Day Mastermind e-Club.

Category:

Business Management, Family Child Care, Record Keeping, Taxes

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Simple Strategies For Maintaining Receipts and Financial Records


The year was 1998 and I was only caring for one child. In fact, having one child enrolled, only brought in over $300 a month in income for my childcare business. That was not very much money to manage, however, it was a humble beginning and a start to managing income and expenses in my business.  Moreover, as the business grew, I realized the importance of managing my income and expenses.

In the start-up days of my childcare business,  I maintained my business expenses on a hand written ledger and I must say that I am so grateful for financial software today!

Over the years, I realized that if you did not keep a close eye on the financial status of your business and maintain your records, that you will not be prepared at tax time.

I am going to share with you six practical ways to maintain your receipts and financial records:

  1. Create folders for Business Income, Car expenses, food expenses, payroll taxes, credit card payments, utilities, classroom expenses, maintenance,etc. I think you get the picture. This system is great, in the event you need to review your expenses.
  2. Schedule a time once a week to enter your income and expenses into a computerized financial software program. When you enter receipts into the computer, the computer does the calculating and generates financial reports for you.
  3. Back-up financial records to a back-up hard drive. In the event of a computer, you will not be at risk of losing your financial records.
  4. Keep Financial Records for at least 10 years in the event of an Audit.
  5. Review your bank statements at least once a month, to assure that you have deducted  every possible business expense. This is a great way to find more expenses.
  6. Keep Your Payroll and Tax Return Records in a Locked file cabinet. This protects your employees identity and assures that no one has access to your tax information.

I look forward to your feedback on the record keeping strategies in this post. Be sure to leave your comment below.

Shiketa

Do you feel that you need to go to another level in the area of Business Management? Check out the mastermind e-club

Category:

Business Management, Finances, Record Keeping, Taxes

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