Business Basics for Family Child Care
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Transcript of Business Basics for Family Child Care
Business Basicsfor Family Child Care
Welcome!
Presented by: Janet Peterson B.A. Revised 2012
Contracts & Policies
Contract Time Money Legally binding Signed & dated
Policies Expectations Basic procedures
Marketing
• Describe your business benefits• Features give the basic facts• Benefits describe why a particular feature meets
the needs of children and parents
• Determine fees• What is your time worth?• What do you offer / what is the value?• What are the average rates in your area?
(find out at www.iacommunityaction.org)
Marketing
New clients: Business cards (www.vistaprint.com) CCR&R listing 1st impressions
Existing clients: Regular communication Displays of children’s projects Parent involvement Ongoing professional practices
Main record keeping objectives Record all income from all sources Save receipts of all business expenses, and
expenses related to your home Record attendance and the number of snacks
and meals served Track all the hours you work in your home Record mileage for business trips
Income
Parent fees Food program reimbursements Grants Child care assistance payments
Keep a detailed record of all deposits to your account: income, gifts, prizes, etc.
Gifts & Grants pg. 11-12
Cash gifts or gift certificates from parents are income and must be reported
Gifts of personal items or toys for the program are not reported as income
Grant money received is income – unless it is received because you qualify as a low-income household
Tax information for parents
End of year receipt or statement
IRS Form W-10* Your EIN* (Employer
Identification Number)
* www.irs.gov
Expenses
For every $100 in expenses you can track, you can save $30-$50 in taxes owed
(from Family Child Care Record Keeping Guide 7th edition pg. 16, Redleaf Press)
Expenses - Is it deductible?
Yes! IF it is it “ordinary and necessary” to your business
You must have an “adequate record” of the expense
An item is an expense or not depending on how it’s used; not why it was purchased
Record it according to how much is deductible Personal use only = 0%
Business use only = 100%
Shared between business and home
File it!
Save receipts by categories such as:
ToysHousehold itemsOffice suppliesEquipmentRepairsEtc!
Quick review:
Record all income (also tracking all bank deposits)
Save receipts for all expenses Determine how much of the expense can be
deducted Record amounts in the Calendar Keeper File by category
Deductions for Shared Expenses Determining your
Business Use Percentage
1. Time-Space %2. Actual Use %
Time/Space percentage
Time (page 54-68)
Record all hours you work in your homeThe average is 68.4 hours/week
Space (page 68-74)
Calculate the amount of space you use in your home by room
Rooms must be used “regularly”
Actual use percentage (page 76-77)
Beneficial for calculating expense for costly items that are shared by the child care and the family.
Such as computer, outdoor play structure, dishwasher
Business Use / Total Use = Actual Use Percentage
Actual Use expense examplePlay Structure use: June-July
Business Use: Sally & Billy use M-F 2 hrs per day for 43 days = 86 hours each, or 172 hours
Own child: Jonnie 2 hrs per day x 43 days = 86 hours PLUS 3 hrs per 9 weekends = 27 hours, or 113 hours
Total hours used by all children: 172+113=285
Business Use Percent: 172 / 285 = 60%
Food expense Deductible Food• served to daycare children• served to paid employees
Not Deductible• Food eaten by provider, and
family• Meal leftovers served to your
family
Food expense
Standard meal allowance (pg 36) requires you to track number of meals and snacks served, and the hours children were in care.
Actual cost method requires that you calculate actual cost of snacks and meals that you serve (page 41)
You must use this method for employees and if you provide care outside of your residence
Food Expense
Standard allowance for food expense (2012): Multiply the number of meals/snacks by
Breakfast = $1.24 Lunch and Supper = $2.32 Snack = $ .69
Car expense (page 96-103)
Record mileage for business trips, and use the standard mileage rate ($.555/mile for 2012) to deduct your expense (pg 100).
OR Calculate the actual cost (pg 101-102) by comparing business mileage to personal mileage; and tracking all expenses related to your vehicle
Car Expense
Deduct part of your vehicle property tax and car loan interest
By tracking the total miles your car is used for the year and the business miles; determine how much is business use.
Example: Your van is driven 16,000
for the year. 400 miles were for business. 400 / 16,000 = 25%
Deduct 25% of interest and tax as a business
expense.
Depreciation chapter 7, pg. 125-142 Items that cost under $100 or that lasts less
than 1 year, deduct in the year you purchased it.
Items that cost over $100 and will last a number of years should be depreciated A portion of the cost will be claimed each
year for a number of years Keep an “inventory” of these items with the
cost and year purchased
Depreciation example
Washing machine purchased for $400 Business Use % is 38% 38% x 400 = $152 business expense Recovery period = 7 years $152 / 7 = $21.71 annual deduction for
7 years
Liability Insurance
Not required for registration – but important to have
Inquire to your current insurance agency that you are “just looking into the cost”
Find a new insurance company if yours refuses to cover home child care
For more information, see “Family Child Care Legal and Insurance Guide” by Tom Copeland at www.nafcc.org
Employees (pg. 150-159)
Paid helpers are your employees Pay minimum wage Cannot hire anyone under age 14 who is not your child Hiring your own children who are under age 18 reduces
the amount of federal and state paperwork you will have Check with a tax professional to determine which state
and federal procedures you need to follow.
“Family Child Care Tax Workbook and Organizer” (www.nafcc.org)
Thank you for attending Business Basics for Family Child Care!Janet Peterson, B.A. www.everydaymiraclesfcchome.com
Helpful Resources• www.irs.gov (Internal Revenue Service)
• Employer Identification Number with form SS-4• Publication 587 “Business Use of Your Home”• Paying estimated taxes, payroll taxes
• www.nafcc.org • Publications, articles and on-line training