Chapter One: The Basics of Record Keeping
Operating Under a Business Name
You may wish to work under a business name—such as “Dee’s Day Care” or “Tender Care
for Kids”—and have it printed on your checks, advertising, parent contracts, and so forth.
Not only can a business name help you set a professional tone with parents and the IRS,
it can also help you keep track of your business expenses. For more information about
obtaining a business name and using it to market your program, see the Family Child Care
Once you select your business name, you should register it with your state, which you can
usually do through the secretary of state’s office. If you don’t register your business name,
another child care provider could register that name for their business and stop you from
using it. Consult your state, county, or city licensing office to see if there are any regulations
about using a business name or if you will be required to get a business license (in addi-
tion to a child care license). See page 114 for a discussion of deducting the fees that may be
involved in this process.
Tracking Your Income and Expenses
Keeping good records is not as difficult as it may appear. Essentially, all you have to do is
track all the money that comes in and goes out of your business—specifically, your child
care income and your business expenses. Your goal is to have a receipt for every penny of
income and expense that is associated with your business.
Your net income (or profit), the money you’ve worked long and hard to earn, will be the
amount that’s left after you subtract your business expenses from your business income. This
is also the amount that Uncle Sam wants to tax.
What Is Business Income?
Business income is all the money that you receive in exchange for providing family child
care. It includes the following:
Payments from parents (whether for child care services during the day or for evening •
babysitting while the parents enjoy a night out)
Reimbursements for your food expenses from the Child and Adult Care Food Program. •
Save all your monthly claim forms for the Food Program; this will show the yearly total
of your Food Program reimbursements. The reimbursements for the children in your care
are taxable income; the reimbursements for your own children are not. See chapter 2 for
Any payments from a state or private agency for caring for low-income children. Any co-•
payments that you receive from low-income parents are also taxable income to you. (If
you offer a scholarship or reduce your fees for a low-income parent, you can’t claim the
discount as a tax deduction.)
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