| Sole proprietor, Inc, LLC, - What does it | | | | make 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 may | | | | to 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 an | | | | bank statements and cancelled checks are all |
| especially large operation, or employ more | | | | good evidence of the expenditures incurred. |
| than one person. From a legal standpoint, | | | | There are also several accounting programs - |
| different types of entities provide limited | | | | available at any store that sells computer |
| liability. This is something you would want | | | | software - that are inexpensive and work |
| to discuss with a lawyer. Different entities | | | | great for tracking expenses and providing |
| also provide different tax advantages and | | | | useful financial reports. Several online |
| disadvantages. The type of entity really | | | | companies sell software specifically for |
| depends on the business and how many people | | | | childcare providers. |
| own the business. An accountant should be | | | | |
| able to advise you on the best entity for | | | | Be 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 why | | | | find 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 money | | | | Having a separate checking and savings |
| the government can tax. By reducing that | | | | account 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 any | | | | those accounts has to do with your business. |
| ordinary and necessary business expense is | | | | Also, consider getting separate credit cards |
| deductible. Keep in close contact with your | | | | for the business. When you use all of these |
| accountant, and find one if you don't have | | | | accounts exclusively for business, it is much |
| one. Regular meetings or discussions with | | | | easier to put all your records together, |
| the accountant will help in working through | | | | rather than trying to separate out what is |
| what is considered ordinary and necessary for | | | | business 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 deposit | | | | Tax laws are so specific to your state and |
| your weekly daycare income, for instance, is | | | | city, that it's hard to give even general |
| an ordinary and necessary business expense | | | | guidelines. 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 day | | | | special 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 sounds | | | | spread the payment out over the year instead |
| better than filing you receipts for groceries | | | | of paying it all at one time. |
| that week, stay on top of your paperwork and | | | | |