End-of-Year Record Keeping
As we near the end of the year, this is a good time to review your record-keeping practices and make sure you are saving all of your business receipts.The work you do now will make it easier to prepare your tax return. Use the following suggestions for next year as well.
Save all of your canceled checks (from personal as well as business checking accounts). If you only have carbon copies, save these.
Establish a consistent location where you place your business receipts. Some family child care providers use a kitchen drawer, basket in their entryway, or file folder on their desk. This "holding file" is used to initially capture all records before they are lost. Later you can sort out the records in more detail.
Put all of your tax records in a sealed plastic storage box (to protect them from water damage). Save your tax records for at least three years after you file your return.
If you have lost receipts for some business expenses earlier in the year, take pictures of the items you purchased and make a note of when you bought it and how much it cost. This method can also be used to track expenses at garage sales.
Get parents to sign a receipt indicating how much they paid you for the year. Have each parent sign your copy of the receipt and put the receipt into your tax files.
Record the odometer readings on all your vehicles as of December 31st.
If you use a tax preparer, ask for copies of all backup worksheets or forms used to prepare your tax return.
Carefully track for at least two months the number of hours you work after the children are gone.
Try to establish the habit of reviewing your records at the end of each month during the next year.
Save receipts for all business expenses for the rest of this year. Some examples:
Yard expenses: garden tools, garbage bags for leaves, snow shovel, snow blower, wood for a wood burning-stove, heater, or fireplace
Marketing expenses: business flyers, business cards, fee to register your business name with your state, or classified ads.
Office expenses: parent newsletters (such as Parent Pages Newsletter and Growing Together), business forms and contracts, calendars, training classes, magazine subscriptions (such as Sesame Street, Totline, Parents, Child)
Household items: cleaning supplies, kitchen supplies, children's toys. Toys purchased for your own children (as holiday or birthday presents) that are then used in your business are partly deductible.
Holiday expenses: cards and presents to parents and children, holiday decorations and food for children, film
A modified version of this article first appeared on Think Small's website, www.thinksmall.org.
Tom Copeland - www.tomcopelandblog.com
Image credit: https://www.alamy.com/stock-photo-young-woman-is-sitting-at-home-and-sort-out-bills-receipts-and-other-56693715.html
For more information on record keeping, see my book Family Child Care Record Keeping Guide.
