Do you ever wish you could get more done in less time and have more time for you? Check out these productive solutions for daycare providers-taxes!
Productive solutions for daycare providers taxes
We are going to spend the next few months talking about ways we can get more done in less time and have more time to enjoy what we are doing. Being a daycare provider can be all-consuming. Your home is your workplace so it may feel like you are always open. But you can make an arrangement that makes you feel a separation between work and home and give yourself more relaxation.
This is my 25th year in home daycare so I’ve made a ton of mistakes and learned a lot of hacks for getting things done along the way.
In home child care provider taxes
Today we are going to work on taxes because the time is at hand for them, but also check out other productivity zones such as handling paperwork, handling housework, scheduling out activities, supply management (and there are a lot of supplies), and preparing resources for your home daycare business. I want to help you live the life you want and not be overwhelmed by this busy daycare life! Stayed tuned to the blog for more posts!
We all know that long hours and a lot of commitment makes some of our days boring and overcome with chores. But if you work smarter and not harder, you can have more time for you!
Productivity zone 1-daycare taxes
Anyone who has been a daycare provider for more than one year knows that tax time can be a stressful one. Check out the must-haves for organizing your daycare taxes and getting them done for the past year. But before you do that, since the year is just beginning, let’s set up a system to give you more success in the coming year.
First of all, let’s start with receipts and find a plopping place. Paperwork can pile up around your ears. You need a short term and long-term plan to manage it all. If your receipts and bills are not all in one place, you won’t be able to find what you need when it’s time to start deducting.
Everyone won’t file every piece of paper as soon as they bring it into the house, so we need to have a plopping place to put it until we can get to it. Save a drawer or a shoebox or whatever works for you and have it in a convenient place.
Small business management
Don’t set your plopping place in the back 40 of the house, put it front and center near where you keep your purse when you come in so you are compelled to properly plop all receipts in that area.
Also, remember that you’ll need your monthly bills and other tax forms so have a good drawer to set them in until you have a chance to file them if you know you aren’t going to file as they come. I am a very organized person, but I know myself and know I won’t.
If you start out with a place for everything, everything will eventually get in its place. If you have a junk pile and you go through it, you’ll at least know where to put the things you find in there. Go clean out your wallet, your purse, and your car and put all the receipts in the plopping place until you have time to log them.
Keep all the receipts you think you might need and then later you can throw out the ones that aren’t needed for a tax deduction. Err on the side of caution. If you’re a seasoned provider, you’ll already know that if you use the standard deduction for car expenses and standard mileage, you won’t need gas receipts.
As far as food goes, you are supposed to keep food receipts for family food and eating out so you can prove you didn’t eat all the food you’re trying to deduct as an expense for feeding the kids. So, keep that in mind.
Productivity improvement for daycare taxes
Once you have a well-established plopping place and get used to using it, now you need a plan for what to do with it. I suggest you mark on your calendar the first of every month to take a few minutes to log receipts for your daycare taxes.
You can use a notebook with categories at the top, or make a spreadsheet on the computer. I like to use excel, so that’s what I do. I have a category at the top of the page for each deduction.
Daycare tax categories
Advertising, office expenses, 100% business supplies, shared supplies, household expenses, yard expenses, activity expenses, toys, and extra food (food for regular food program meals can use a standard meal deduction, but special meals such as party food or a special dinner you make for a family, etc. is a separate expense) are some of the categories I have on my daycare providers taxes.
For a full list, I suggest checking out Tom Copeland’s book Family Child Care Record Keeping Guide. Tom is the expert and I divert to him for all things daycare tax.
This post may contain affiliate links; I’ll earn a small commission if you choose to make a purchase.
Once you have studied what categories you need and have made your sheets, on the first of each month record all of your expenses for that month. If you have receipts from a store like Walmart that has toilet paper and cheese on it, divide the expenses into regular food and supplies.
Toilet paper, for example, is a shared expense and you can deduct the cost at your time-space percentage. But for me, having no young kids of my own at home, if I buy crayons, they are obviously 100% business expense. If you have kids at home, they would be a shared expense. If I buy a swing set, obviously it’s for the business only since my daughter is an adult.
Divide the receipts up and record the items on 100% business and shared expense categories for your daycare providers taxes. Then later when you total the shared expenses and figure your time/space percentage, you can just divide it out to have the total of what to deduct.
Sort expense receipts quickly
Don’t put too much into dividing everything up right now. Just make sure you have a plopping place and that you have a regular schedule for dealing with what’s in it. If you wait too long, you’ll forget most of the expenses. Believe me, I’ve used the tally it all in January method many years and always I regret it. I see Tom Copeland saying, don’t do that, and wish I hadn’t.
Now that you have this year’s system in place, let’s look at what you have for last year. You either have everything done and tallied through December 1 and just need to go put December’s expenses on your sheets. Or, maybe you made it through July and have half a year’s worth. That’s okay too.
Don’t look at it with dread. Just set a timer for 15 minutes and see how much you can get done. It’s always more than you think. You can even set a reminder on your phone at a certain convenient time every day so you don’t get off track.
Wherever you’re at in your daycare providers taxes, just take small bites. Commit to doing 15 minutes a day and you’ll be surprised how fast you get it done.
What if you didn’t make a plopping place and all of your things are all over the house car and planet? That’s okay too. Now you just have to see what you can do to gather it up. If you have most of it in a few places, commit to scheduling 15 minutes a day cleaning those places up and gathering it all in a box to do the steps above.
There’s no shame in not being organized, this is the first step towards the rest of your life and better decisions and more organization. The more organized you learn to be, the less overwhelming things are.
Now that you have all of your paper receipts managed, don’t forget to check your bank statements and see what you ordered online. Obviously, amazon could be a big one, but what about a new mirror you got off Wayfair for the living room, or a big order you put in with lakeshore?
Get those totals from your bank statements, off amazon, your online receipts from the Walmart grocery pick up line, whatever you have. Check your check register too. Anywhere that could jog your memory. Don’t forget housekeeping or lawn services you hire are partially deductible too.
For this year, you could put a small notebook in your plopping box and add a note there for expenses so you’ll know where to look.
Reporting daycare income
Once all of your expenses are recorded, it’s on to income for your daycare providers taxes. You should have food program receipts or deposits on your bank statements. And you should have been recording parent payments as they come in. I use the Tom Copeland calendar keeper.
I cut the pages out of it so I can have my calendar to plan on for the month, and the opposite page is the sign in and out forms. Then, I record payments right on that so I have everyone’s time and payments together at the end of the year.
Make a paper sheet or spreadsheet for those as well and add up the totals for your yearly income. Then you can make receipts for each family, if you’d like, to use for preparing their taxes with the total they paid to you.
Additional business expenses for daycare
Now the last step for preparing for taxes is to record the rest of your expenses. Did you have a major remodeling project or home repair? Check out Tom’s advice on how to record that. I use the Family Childcare Tax Workbook each year to prepare my taxes. If you hire a tax preparer, just make sure that stuff in is the information you give them.
You’ll also need, house payment information such as premiums, interest, and insurance, rent receipts, all utility bills including cable, Netflix, cell phone, etc. for your daycare providers taxes. You can record these payments on a sheet and total them up as well.
Now you’re prepared for tax time. Your totals are ready and you’ll be able to just wait for all the remaining forms to arrive in the mail. Doesn’t it feel good to be ready?
Don’t forget, if your stuff is in a big mess, don’t get overwhelmed by the big picture. Just make a list of these steps and mark one off at a time after you tackle it in 15-minute increments. No job is too big or too bad to get done. Just go easy on yourself and plan to do better next year.
I can’t tell you the number of years I thought I left too much, but I always end up getting it done. Dreading it was the biggest waste of time and energy. Once I started doing it, it was never as hard as I thought, even when I didn’t file or organize anything all year. You got this!
Don’t forget to check for more posts about increasing your productivity in your daycare such as paperwork, finding time, housework, supply management, decluttering your finances, preparing activities, and preparing food for daycare and family.
For more tips to make running your home daycare easier, click here.
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