Basic child care business practices don’t have to be hard or frustrating. At this session, learn some simple tips about using contracts and policies; how to get the most out of your marketing strategies; and how to be prepared when tax time comes (and save money)!

1. Business Basics
for Family Child Care
Welcome!
Presented by: Janet Peterson B.A.
Revised 2012

2. Contracts & Policies
 Contract
 Time
 Money
 Legally binding
 Signed & dated
 Policies
 Expectations
 Basic procedures

3. Marketing
• Describe your business benefits
• Features give the basic facts
• Benefits describe why a particular feature meets
the needs of children and parents
• Determine fees
• What is your time worth?
• What do you offer / what is the value?
• What are the average rates in your area?
(find out at www.iacommunityaction.org)

4. Marketing
 New clients:
 Business cards (www.vistaprint.com)
 CCR&R listing
 1st impressions
 Existing clients:
 Regular communication
 Displays of children’s projects
 Parent involvement
 Ongoing professional practices

5. Main record keeping objectives
 Record all income from all sources
 Save receipts of all business expenses, and
expenses related to your home
 Record attendance and the number of snacks
and meals served
 Track all the hours you work in your home
 Record mileage for business trips

6. Income
 Parent fees
 Food program reimbursements
 Grants
 Child care assistance payments
Keep a detailed record of all deposits to your
account: income, gifts, prizes, etc.

7. Gifts & Grants pg. 11-12
 Cash gifts or gift certificates from parents are
income and must be reported
 Gifts of personal items or toys for the
program are not reported as income
 Grant money received is income – unless it is
received because you qualify as a low-
income household

8. Tax information for parents
 End of year receipt or
statement
 IRS Form W-10*
 Your EIN* (Employer
Identification Number)
* www.irs.gov

9. Expenses
 For every $100 in expenses you can
track, you can save $30-$50 in taxes
owed
(from Family Child Care Record Keeping Guide
7th edition pg. 16, Redleaf Press)

10. Expenses - Is it deductible?
 Yes! IF it is it “ordinary and necessary” to
your business
 You must have an “adequate record” of the
expense
An item is an expense or not depending on
how it’s used; not why it was purchased

11. Record it according to how much is
deductible
 Personal use only = 0%
 Business use only = 100%
 Shared between business and home

12. File it!
 Save receipts by
categories such as:
Toys
Household items
Office supplies
Equipment
Repairs
Etc!

13. Quick review:
 Record all income (also tracking all bank
deposits)
 Save receipts for all expenses
 Determine how much of the expense can be
deducted
 Record amounts in the Calendar Keeper
 File by category

14. Deductions for Shared Expenses
 Determining your
Business Use
Percentage
1. Time-Space %
2. Actual Use %

15. Time/Space percentage
 Time (page 54-68)
Record all hours you work in your home
The average is 68.4 hours/week
 Space (page 68-74)
Calculate the amount of space you use in your
home by room
Rooms must be used “regularly”

16. Actual use percentage
(page 76-77)
 Beneficial for calculating expense for costly
items that are shared by the child care and
the family.
Such as computer, outdoor play structure, dishwasher
 Business Use / Total Use =
Actual Use Percentage

17. Actual Use expense example
Play Structure use: June-July
 Business Use: Sally & Billy use M-F 2 hrs per day for 43
days = 86 hours each, or 172 hours
 Own child: Jonnie 2 hrs per day x 43 days = 86 hours
PLUS 3 hrs per 9 weekends = 27 hours, or 113 hours
 Total hours used by all children: 172+113=285
 Business Use Percent: 172 / 285 = 60%

18. Food expense
 Deductible Food
• served to daycare children
• served to paid employees
 Not Deductible
• Food eaten by provider, and
family
• Meal leftovers served to your
family

19. Food expense
 Standard meal allowance (pg 36) requires you
to track number of meals and snacks served,
and the hours children were in care.
 Actual cost method requires that you
calculate actual cost of snacks and meals
that you serve (page 41)
You must use this method for employees and if
you provide care outside of your residence

20. Food Expense
 Standard allowance for food expense (2012):
Multiply the number of meals/snacks by
 Breakfast = $1.24
 Lunch and Supper = $2.32
 Snack = $ .69

21. Car expense
(page 96-103)
 Record mileage for business trips, and use
the standard mileage rate ($.555/mile for 2012) to
deduct your expense (pg 100).
 OR Calculate the actual cost (pg 101-102) by
comparing business mileage to personal
mileage; and tracking all expenses related to
your vehicle

22. Car Expense
 Deduct part of your
vehicle property tax and
car loan interest
By tracking the total miles
your car is used for the year
and the business miles;
determine how much is
business use.
Example:
Your van is driven 16,000
for the year. 400 miles
were for business.
400 / 16,000 = 25%
Deduct 25% of interest
and tax as a business
expense.

23. Depreciation
chapter 7, pg. 125-142
 Items that cost under $100 or that lasts less
than 1 year, deduct in the year you
purchased it.
 Items that cost over $100 and will last a
number of years should be depreciated
 A portion of the cost will be claimed each
year for a number of years
 Keep an “inventory” of these items with the
cost and year purchased

24. Depreciation example
 Washing machine purchased for $400
 Business Use % is 38%
 38% x 400 = $152 business expense
 Recovery period = 7 years
 $152 / 7 = $21.71 annual deduction for
7 years

25. Liability Insurance
 Not required for registration – but important to
have
 Inquire to your current insurance agency that
you are “just looking into the cost”
 Find a new insurance company if yours
refuses to cover home child care
For more information, see “Family Child Care Legal and
Insurance Guide” by Tom Copeland at www.nafcc.org

26. Employees (pg. 150-159)
 Paid helpers are your employees
 Pay minimum wage
 Cannot hire anyone under age 14 who is not your child
 Hiring your own children who are under age 18 reduces
the amount of federal and state paperwork you will have
 Check with a tax professional to determine which state
and federal procedures you need to follow.
 “Family Child Care Tax Workbook and Organizer”
(www.nafcc.org)

27. Thank you for attending
Business Basics for Family Child Care!
Janet Peterson, B.A.
www.everydaymiraclesfcchome.com
Helpful Resources
• www.irs.gov (Internal Revenue Service)
• Employer Identification Number with form SS-4
• Publication 587 “Business Use of Your Home”
• Paying estimated taxes, payroll taxes
• www.nafcc.org
• Publications, articles and on-line training