How to Effectively Manage Your Budget in your Childcare Business
How to Effectively Manage Your Budget in Your Child Care Business Presented by Shiketa Morgan
Money is the life line in your business and if it isnot effectively managed, you could go out ofbusiness.
Topics we will cover…..1. Why you should create a monthly budget2. Your budget determines what you and your employees will be paid3. If its not in the budget, dont buy it4. If you dont like your budget...change your Income or your Expenses5. Choosing a Financial Software6. Maintain receipts/business Expenses7. Do you need an Accountant?
Why should you Create a Budget?A Budget helps you to create a plan for your money and it is a overview of how much income is flowing into your business and where your funds are being spent.Let’s take a closer look at a Budget….
Rainbow Child Care Monthly Budget Month: February 2011IncomeParent Income: 2,000/moSubsidized Child Care Fees: 4,000Total Income: $6,000ExpensesYour Salary $2,500 ( to pay bills for the home, etc)Teacher salary $1,200Payroll taxes (soc, med, state taxes) $130Telephone $150Advertising Cost $100Website fees $10Food Cost $600Gas for vehicles $200Business Credit cards $100Liability Insurance $75Business supplies (office, classroom, events) $200Postage $15Total Expenses: $5080Total Profit: $ 920Subtract Expenses from the profit and you will get your profit!
Your budget determines what you and youremployees will be paidWhen considering your salary and your employee’s pay consider your budget. If your gross income is $6000/month, your payroll should not be more than $4000 or less to leave room for (unexpected)expenses or a loss of income.If you want to pay yourself more, then you will need to cut from the budget, pay your employee less or charge more for services.Tip: When parents ask about your prices, they should know that your prices are based on the cost of operating the business along with employee wages.
If it’s not in the Budget…Don’t Buy it!!!Example:You have a desire to buy tables and chairs, however, you have created a budget to only buy crayons, markers construction paper, scissors and paint for February. If you buy the additional items….. You are at risk of over spending!!!Wait until the next month to create a budget for other supplies.
If you don’t Like Your Budget…. Change It!!Don’t Like the Income that You see? Here are ways to increase your Income: Raise rates for new families Hold 2-3 fundraisers a year Collect annual registration fee Offer occasional weekend or evening careAre your expenses too high? Evaluate what you are spending your money on and make necessary changes. Where could you save money and reduce the monthly expenses?
Choosing a Financial SoftwareHaving a Financial software is a great way to manage your income and expenses.Recommendations: Quick books ($99-$199) Book Keeper ($24-$30)Both Softwares are great for payroll and profit and loss reports! Quick books offers free trial online
Maintaining Receipts and Financial Records Create files for receipts (parent Income, food, gas, supplies, etc) Enter Income into a computer software along with expenses each week Plan a time to enter income/expenses into the computer Back up financial records to your computer or flash drive (can be purchased for $10) Keep financial records for at least 1o years in the event of an auditKeep accurate records for accounting and tax filings toprotect in case of audit. ~Libock & Associates
Do You need an Accountant?Just because you are a business owner, does not mean that you love to keep financial records.Signs that you need an accountant: Record keeping is not your favorite thing to do You are not willing to maintain your income and expenses on a regular basis You prefer that someone else maintains your financial records
Questions/Answers???1. Do you have a Monthly budget?2. Did you consider your Budget before setting your salary and/or your employee(s) salary?3. Do you tend to over spend?4. Do you need to make changes to your budget?5. Do you use a Financial Software?6. How is your record keeping?7. Do You need an Accountant?Feel free to post your questions….
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