Tax Tip Number Six

Hi Everyone! Time for the next tax tip! This week's tip involves record keeping. One of the most important things you need to keep track of as a daycare provider is the income you earn. This not only affects your taxes, ubt it also affects the taxes of your daycare parents. As a licensed child care provider, you are supposed to keep a sign-in/sign-out book for your child care business. As the parents drop off their child each day they sign the child in, including the time of drop off. When they pick up their child each day, they sign the child out, including time of pick up. It is really important to have the parents put the times for drop off and pick up for two reasons. First of all it useful for you when calculating either how much they owe you or how much you made that year. Secondly, it is helpful if there is a dispute between you and the parent regarding how much is owed or whether a child attended care that day. Having said all of this, I strongly urge you to keep an additional log of hours and income. There are three reasons this is a good idea. First, you can compare the sign in book with your other record to make sure they both agree. Second, you have double records to show parents in case of a dispute. Third, you have double book keeping to show the IRS in case of an audit. My suggestion is to keep a calendar handy. I always kept one hanging on the refrigerator, but you can use a pocket calendar or a wall calendar. As parents drop off each day, take a second (that is all it will take) to put down the drop off time. Do the same thing as parents pick up each day. Then if there are discrepancies between the sign in book and your records, you will be sure that your calendar is accurate and should go by that. Finally, I recommend giving parents a receipt each time they pay you. I used a generic carbon receipt book (available almost anywhere)which gave me a copy to keep and a copy for parents. Most of my parents admitted that they threw away their receipts since I gave them tax records for the year, but I gave me one more way to keep track of my income. So I always had three ways to triple check my figures for my income for the year. It was also a great way to keep track of figures for families that may quit care before the end of the year. You will always be able to go back and check these record keeping devices for accurate tax figures. Happy record keeping!