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Article #131: Childcare Finances - Some Money Basics

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






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