Taxes and Record Keeping
Child care providers who work out of their homes are considered self-employed, independent business owners. You will owe taxes on all income you receive from your child care business. This includes: parent fees, Child Care Assistance fees, food program reimbursement dollars, and grants received to purchase items. Keeping good records of your child care business will save you money. For every $100 of business expenses you track, you will save approximately $25–50 in taxes.
You will also be able to deduct the cost of items used exclusively for your business and you may also be allowed to deduct a portion of items used by your business and your family. You'll want to keep track of your car mileage for trips that are primarily for your child care business. You can begin deducting expenses as soon as your business begins. It begins when you are ready to care for children and are advertising that you are ready. This may come before you are officially licensed.
It is very important to obtain adequate insurance to protect against major risks. Do not assume that you are automatically covered by your current auto and homeowners policies. Here are some tips on making sure you have adequate coverage:
Click here for a copy of our Insurance Resource Guide.
What is a Contract?
A contract is a legally binding agreement between two parties involved in the exchange of services. A Child Care Contract states that the provider agrees to care for the child and the parent agrees to pay for that care.
What are Provider Policies?
Provider policies are a set of rules that explain how the provider will care for the children. Things such as daily activities, schedules, discipline, special needs, emergency processes are covered in this document. Policies communicate everything from how your program will operate, to who is allowed to pick up the children, to how you will handle certain behaviors. It is important to have the parent sign a copy of the policies after you have reviewed them with the parents so there is a clear understanding of the expectations.
There are several great resources can recommend when developing your contracts and policies:
• Follow-up calls
• Benefits flyer
• Finder’s fee/free days
• Bulletin board, newsletter, celebrations
• Business cards, newsletter
• Keep in touch with birthday/holiday cards.
• Incentive coupons
• Door hangers
• Distribution of materials in the neighborhood