First off, I strongly recommend reading Tom Copeland’s books, especially the Family Child Care Record-Keeping Guide. The more detailed records you record, the better. The Redleaf Calendar-Keeper 2017 or the software KidKare are two excellent ways of doing that. Here are a few basic things to keep track of:
- Income, including any from the food program.
- Number of breakfasts, lunches, dinners, and snacks served to daycare children. Include any “extra” ones that you cannot count for the food program. You may be paid for your own children by the food program; however these payments are not counted as income and the meals cannot be deducted for tax purposes.
- Amount of time spent at home for daycare. This means the time from when the first child arrives, to when the last child leaves. Also add in time before and after this period that you are doing work for daycare, such as preparing activities, cleaning, record-keeping and interviews. I recommend keeping exact records of your time each day.
- Space Percentage. Square feet of your house separated into three categories: Space used ONLY for daycare, Space used PARTLY for daycare, and Space NOT used for daycare. Include your garage space.
- Amount spent for daycare licenses and training. Keep receipts!
- Amount spent for items that are used 100% for daycare. Keep items over $100 separately. Keep all receipts!
- Amount spent for items that are used partly for daycare. Keep items over $100 separately. Keep all receipts!
- Amount spent for repair and maintenance to your home. Keep receipts!
- Amount spent for improvements to your home. Keep receipts!
- Cost of all utilities, mortgage interest (or rent), property tax, and insurances.
- Miles driven for daycare. Include miles driven when shopping primarily for daycare purchases and whenever a daycare child is in the vehicle. Keep a mileage log for every trip.
- Start-Up Inventory. When you start daycare, you should inventory everything in all of the rooms that children will be in. This includes furniture, pictures, appliances, toys, electronics, etc. Include the item description, the fair market value, and what percentage it will be used for business.
If you don’t use The Redleaf Calendar-Keeper 2017 or KidKare for your record-keeping, here are a few simple Excel spreadsheets that some clients have used. (If you don’t have Excel, you can download OpenOffice.org for free.) They are NOT meant to replace keeping receipts, mileage logs, meal logs or other details. They are ONLY tools that you may find helpful. Your tax preparer will need all of the information on the “Daycare Worksheet of Expenses” and any applicable information on the General Tax Worksheet filled out. Your preparer will only need the total amount for the year, but most day care providers find it easier to fill it out monthly. Remember, for items costing over $200, keep receipts separate and fill out the section for “Major Purchase”.
*** If your program tells you it’s in “Read-Only” mode, then save the spreadsheet to your computer, close the program, and open the saved spreadsheet. ***