an introduction to family child care record keeping
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An Introduction to Family Child Care Record Keeping. Presented by Tom Copeland, JD Family Child Care Trainer and Author Hosted by the AFSCME Department of Education. Welcome. This class will help you – Understand what business records to keep Learn to identify business deductions

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an introduction to family child care record keeping

An Introduction to Family Child Care Record Keeping

Presented by Tom Copeland, JD

Family Child Care Trainer and Author

Hosted by the AFSCME Department of Education

welcome
Welcome

This class will help you –

Understand what business records to keep

Learn to identify business deductions

Calculate your Time-Space Percentage

Claim your proper car and food expenses

instructor
Instructor

Tom Copeland, JD

Partnership with National Association for Family Child Care

Call Tom: 800-359-3817 ex 321

Email Tom: [email protected]

after this class
After this class…
  • You will be able to download the materials from this class on www.afscme.providerprograms.
  • You will get a certificate after you submit the quiz at the end.
  • CEU credits vary by state. Contact your local CCPT or AFSCME affiliate office. We are working with crediting agencies to have the workshops approved.
  • Questions on AFSCME programs: Kate Headley [email protected] or (202) 429-5092
afscme and child care workers
AFSCME and Child Care Workers

AFSCME is uniting child care workers!

AFSCME

CCWU (in NJ)

CCPT

CCPUNITED

VOICE

business resources
Business Resources

www.resourcesforchildcare.org

Hundreds of free articles, newsletter, tax preparer directory, and other resources

www.minutemenu.com

Minute Menu Kids Record Keeping Software program 

Books by Tom Copeland from Redleaf Press (www.redleafpress.org; 800-423-8309)

Family Child Care Record Keeping Guide

Family Child Care Tax Workbook and Organizer

Family Child Care Tax Companion

Family Child Care Inventory-Keeper

Redleaf Calendar-Keeper

poll 1
Poll - 1

How long have you been in business?

Not yet in business

Less than 1 year

1-5 years

6-10 years

More than 10 years

poll 2
Poll - 2

Do you love record keeping?

Yes

No

record keeping
Record Keeping

You may not love record keeping but …..

Keeping good records means big rewards! 

The better your records, the lower your taxes

For every $10 of expenses you claim, you’ll save $3-$4 in taxes

want to make more money
Want to make more money?

Three ways

Raise your rates

Care for more children

Reduce your taxes

You’ll earn more per hour doing

record keeping, than you’ll earn per

hour caring for children

three key rules of record keeping
Three Key Rules of Record Keeping

Save all receipts for expenses associated with your home

Record all meals and snacks served to the children

Track all hours you work in your home

track your business income
Track Your Business Income

Parents

Food Program

Subsidy program

Grants

protect yourself
Protect Yourself

Record sources of all deposits into your business/personal bank accounts

Spouse’s paycheck, checks from daycare parents, transfers to/from accounts, gifts from mother, etc.

Get signed parent receipts at end of year

Keep a copy

child care tax credit
Child Care Tax Credit

Most parents can claim the child care tax credit when paying for child care

Parents should give providers Form W-10 to obtain provider id#

Providers a can give parents Form W-10 and an end-of-year receipt, but are not required to do so

employer identification number
Employer Identification Number

Get an EIN to avoid identity theft

Use EIN in place of your Social Security Number

www.irs.gov (Search for EIN)

When asked why you want EIN, enter “Started a New Business”

Or call IRS at 800-829-4933

track your business expenses
Track Your Business Expenses

Keep “adequate records” of all expenses

Mark all receipts

Organize your records by category of expense, not by month

Save all your business records for at least 3 years

adequate records
Adequate Records

Receipt

Cancelled Check

Credit/Debit Card Statement

Written Record (created by provider)

Photograph

mark receipts
Mark Receipts

100% Business

Shared

Put into folders with other similar expenses

supply expenses
Supply Expenses

100% BusinessShared

$800 + $1,000 = $1,800 x 40% = $720

x 40%

$400

Correct deduction for supplies: $800 + $400 = $1,200

car expenses
Car Expenses

Claim car trips that are “primarily” for business purposes

Don’t need to keep odometer readings

Keep “adequate” records of business trips

Receipts, mileage log, cancelled checks, debit/credit cards, written records, calendar notations, photographs

poll 3
Poll - 3

A provider goes to grocery store to buy business and personal food

Can provider claim this trip

as a business trip?

Yes

No

I don’t know

standard mileage method
Standard Mileage Method

2008 standard mileage rate

Jan - June 50.5 cents per business mile

July - December 58.5 cents per business mile

Can also deduct parking, tolls, business portion of loan interest and property tax

actual expenses method
Actual Expenses Method

Claim business portion of:

Gas, oil, repairs, car insurance, parking, tolls, depreciation on the car, car loan interest, etc.

Business portion =

Business miles

Total miles

poll 4
Poll - 4

Are you enrolled in the

Food Program?

Yes

No

food program
Food Program

Join the Food Program!

You are always financially better off

You are always eligible for the lower Tier II rate

Can receive higher Tier I rate if you are low income, serve low income children, or live in a low income area

Reimbursements for children are taxable

Exception: reimbursements for own child

benefits of food program
Benefits of Food Program

Joining the Food Program is like winning the lottery

You’ll receive about $500 or $1,000 per child/per year

If paperwork for Food Program takes 3 hours a week, you’ll earn about $12.80 or $26.66 per hour (for 4 children)

standard meal allowance
Standard Meal Allowance

All providers eligible to use this rule

Can claim up to 1 breakfast, 1 lunch, 1 supper, and 3 snacks per day/per child

Never count meals for own children

standard meal rate
Standard Meal Rate

2008 rate

$1.11 breakfast; $2.06 lunch/supper; $0.61 snack

2009 rate

$1.17 breakfast; $2.18 lunch/supper; $0.68 snack

keep food records
Keep Food Records

Keep daily record of all meals and snacks served

Use monthly Food Program claim form

Track non-reimbursed meals daily on a calendar

actual food cost method
Actual Food Cost Method

Estimate your actual food costs

Many different methods to use

Must keep all food receipts - business and personal

three step process for claiming expenses
Three-Step Process for Claiming Expenses

1) Is it Deductible?

2) How Much is Deductible?

3) When Can I Deduct it?

(Follow the above 3-step process of all expenses, except the car and food)

step one is it deductible
Step One – Is it Deductible?

“Ordinary and necessary” for your business

Typical, helpful, appropriate, useful

Your home is an educational environment for children

Parents expect you to maintain your home as a home

Expense to clean, maintain, or repair home is probably at least partly deductible

common deductions
Common Deductions

House

Property tax, mortgage interest, utilities, house repairs, house insurance, house depreciation

Outdoors

Trees, snow shovel, rake, new siding, paint, etc

Living room

Couch, table, chair, blinds, curtains, rug, lamp, etc.

Bathroom

Towels, toilet paper, light bulbs, soap, etc.

step two how much can i deduct
Step Two – How Much Can I Deduct?

100% personal purposes

No business deduction

100% business use

Deduct 100% of the cost

Both business and personal

Use the Time-Space Percentage

the time space percentage
The Time-Space Percentage

Number of hours your home is used for business = Time Percent

Total number of hours in the year

Number of square feet of home used regularly for business = Space Percent

Total number of square feet in your home

Time Percent X Space Percent = Time-Space Percentage

time percent
Time Percent

Count hours

When children are present in your home

From when first child arrives until last child leaves

When children are not present in your home and you are conducting business activities

Cleaning, activity and meal preparation, parent interviews/calls, record keeping, Internet, etc.

Track these hours for at least 2 months/year

counting hours
Counting Hours

11 hours/day caring for children (M-F) = 55 hours/week = 33% of year

14 hours/week business activities when children not present = 8% of year

Typical Time Percent = 35-45%

space percent
Space Percent

Count rooms that are regularly used for your business

“Regular use” means two-three times a week

Count basement and garage as part of home

Most providers use all rooms in their home on a regular basis

time space percentage
Time-Space Percentage

40% Time x 90% Space =

36% Time-Space Percentage

45% Time x 100% Space =

40% Time-Space Percentage

exclusive use room rule
Exclusive Use Room Rule

Allows providers to claim higher Time-Space Percentage

Room must never be used for personal purposes!

Examples: playroom, storage room, crib room

poll 5
Poll - 5

Do you have an exclusive

use room?

Yes

No

step 3 when can i deduct it
Step 3 – When Can I Deduct It?

If an item costs less than $100 – deduct it in one year

If an item costs more than $100 – depreciate it

Depreciation - spread deduction over a number of years

what can be depreciated
What Can be Depreciated?

Office Equipment

Computer, printer, fax, copier, scanner

Personal Property

Furniture, appliances, play equipment

Land Improvement

Fence, driveway, playground equipment

Home Improvement

Remodeling, new furnace, deck

Home

tax consequences of this webinar
Tax Consequences of This Webinar

Count the hours spent on this webinar as part of your Time Percent

Depreciate a portion of the cost of your computer/printer and monthly Internet fee

summary
Summary

Three Key Rules of Record Keeping

Save all receipts for expenses associated with your home

Record all meals and snacks served to the children

Track all hours you work in your home

closing
Closing

Taking care of children is only half your job

The other half is taking care of your business

It takes a special person to be business-like in a caring profession

You can do it!

contact tom for help
Contact Tom For Help

Call: 800-359-3817 ex 321

Email: [email protected]

Visit www.afscme.org/providerprograms for more programs like this one.

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