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