Daycare Recordkeeping

Making all the Paperwork Simple

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Daycare recordkeeping is necessary for keeping track of all the paperwork involved in running an in home daycare. Oh, I know, it's mundane and can feel like a real chore. If however, you begin organized in the first place, it makes everything about the job much easier.

You'll need to get a large file box (or two) and folders to keep all the information in one place. Keep the receipt for the file box and folders. These are items that are tax deductible.

Daycare recordkeeping is easy when you give each child their own folder. The entire file should be easily accessible. Inside each child's folder you will keep copies of the signed parent contract, and policy handbook, pricing sheet, emergency and immunization forms, transportation and field trip forms, and any medication/sunscreen and/or insect repellent forms.

In another section of the file box, keep extra copies of the daycare forms above. That way you will always be prepared for new enrollee's. Setting up a file box for daycare recordkeeping before you open for business will make the whole process flow more smoothly.

In a separate folder, if you join one of the food programs, you should keep copies of all monthly menus turned in, and a running tally of how much you are reimbursed for meal costs.

A side note: There are computer programs available for those of you who are computer savvy. These are a good way to keep track of both income and expenses. In this way daycare recordkeeping is made a little easier, because you can see the whole month/year at a glance. You will however, still need the file box and folders for all the papers.

Keep a separate bank account for your day care business. Your checks then become your receipts. This also makes the end of the year totals easier to figure out. On the duplicate part of the check make a quick note as to what was purchased.

Daycare Recordkeeping is a Must

Daycare recordkeeping means you will need to track all income and expenses. Save ALL receipts, even for those items you will not be deducting on your tax forms. When I was audited several years ago I was asked to provide information that was not on my tax return. They wanted proof of expenses for items I did not claim. Luckily, I had all the receipts and my audit was finished without any problems at all. Good records are your best defense. Save everything for at least three years.

Save all utility bills along with proof that they were paid. A portion of your utilities are tax deductible. If you buy something at a yard sale, get a receipt.

Have separate envelopes for different items, such as food, household cleaning supplies, gas and repairs on your car, etc. At the end of the year, tally up the totals in each envelope, write the total (and the year) on the outside of the envelope, and seal it shut.

If when shopping, you buy items both for your daycare and your own household, make sure it is clear on the receipt. For daycare bookkeeping purposes, keep a highlighter handy and highlight the daycare items. Do this as soon as possible after shopping, while everything is still fresh in your mind.

Keep everything inside the same file box. Having a file box for the children's forms, a shoe box for receipts, and a folder for the food program forms means these items could wind up being scattered about. Keeping everything in one place will make your job that much easier.

Always give the parents a receipt. Buy the kind that makes a duplicate copy, so you have one for yourself. At the end of the year, you will give each family a statement showing how much they paid you during the year. This is the amount they are able to use on their tax forms and it must match your daycare records exactly.

If you are one of those people highly gifted in accounting, you may well be doing your own taxes. For the rest of us, myself included, finding a good accountant is paramount. You'll need to find one that is well versed in daycare deductions.You must report ALL income you receive. It doesn't matter in what form it comes. All cash, checks, child care subsidy payments, food program reimbursement, or grants you receive must be claimed.

Although your income tax preparer can give you the best information, here is a list of some items that are considered tax deductible for daycare providers. Some are fully deductible, others you will be able to claim a portion of:

  • Food
  • Insurance
  • Utilities
  • Transportation - Mileage, Gas costs, car repairs
  • Equipment purchases - highchairs, cribs
  • Cleaning supplies
  • Toys
  • Art and Craft Supplies
  • Advertising
  • Office Supplies
  • Field Trip Costs
  • Cost of any classes you take related to child care
  • Home improvement and repair - when I painted and re-carpeted the playroom, I was given a tax break for it.

Organization in the recordkeeping area cannot be stressed enough. Get into the habit of keeping up on paperwork on a regular basis. Doing a little bit on a regular basis will save untold hours at the end of the year. Recordkeeping can actually be one of the easiest parts of the job, if you start organized and stay that way.


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