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Childcare Finances - Some Money Basics

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



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