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