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January 2010

Dear Family Child Care Provider,

The holidays are over and the tax season is here. I am hearing from lots of day care providers who are trying to navigate their record-keeping and tax preparation, many for the first time as a business owner. Today a provider asked, "Does it matter having a tax preparer know the in's and out's of the business or is it all the same in the end?"

It definitely does make a difference having a tax preparer who is familiar with day care taxes. I see lots of mistakes on day care tax returns, some of which cost the provider money and some of which saved the provider money, but all of which created an audit risk. It also matters that you educate yourself regarding family child care taxes, because you are in the best position to look out for your best interests. I expect my clients to be a partner in preparing an advantageous and accurate income tax return. To get the best result, we have to work together.

If you are a California family child care provider and wish to have me prepare your 2009 income tax return, please read my Frequently Asked Questions and then send me your mailing address to receive a new client packet. It is not necessary that we meet face-to-face. I work with providers from all over the state.

Keep in mind that the deadline to provide your complete tax records is Sunday, March 21, 2010. Earlier is better to guarantee completion of your tax return by April 15.

I will not be taking any new clients between March 21 and April 15.

If you have further questions about family child care record keeping and/or tax issues, please contact me by email or by phone at 800-616-1268 (California residents) or 510-745-7275 (all others). Email generally gets my quickest attention.

Yours truly,

I Help Family Child Care Providers With:

• Income Tax Preparation
• Employee Issues / Hiring Helpers
• Payroll Tax: Quarterly Returns, W-2s, Etc.
• Estimated Tax Payments (Form 1040ES)
• IRS Notices and Audits
• Prior Year Tax Returns
• Advice regarding Business Licenses
• Direct and Shared Expenses
• Daycare Grocery Costs
• Standard Meal Allowance Rates
• Time / Space Percentage
• 100% Day Care Rooms (exclusive use)
• Home Inventories and Depreciation
• Business Use of Home (Form 8829)
• Record-Keeping
• Auto Expense
• Start-up Costs

Remember:

• Use a Form W-10 to provide your tax id number to parents.
• Don't give out your social security number - get a tax id number for your business.
• Save all grocery receipts (even for personal food) unless you use the standard meal allowance rates.
• Track all meals served to day care kids, even those not reimbursed by a food program.
• Track hours you (and your spouse) work when kids are not present.
• Always depreciate your home if you own it; depreciation will benefit you and it is not optional.
• Avoid a big tax bill and penalties on April 15 by making estimated tax payments.
• Do an inventory of your home furnishings when you start business (or even within a few years of starting).

The Professional Provider from
Sharon Coleman & Associates

Visit the website of Sharon Coleman & Associates to download high-quality professional forms to assist in the daily operation of your family child care business.

SCA also publishes "The Professional Provider." This book covers strategies and techniques that providers use daily to operate a child care business, including the types of relationships to have with families enrolled in your program and making record keeping simple for yourself by utilizing the forms that are included.