Does anyone actually like to do paperwork? But like it or not, when you own a business, you have to keep records of income. Today I want to help you get a handle on it just a bit by sharing what I use to keep myself on track. I think it might also make my daycare parents love me a bit more.
Step 1. Get an EIN.
Why do you need an EIN? To protect your Social Security Number.
When it comes time to file income taxes, most parents want to claim child care expenses on their tax return.
Without an EIN, you have to give out your SSN for them to use.
Now, I’m not a financial genius, but I do know that you can never be too careful with your SSN.
So go register for an EIN, which is basically a SSN for your business.
I recommend saving your EIN document as a PDF so you can just print a copy anytime you need one.
Since you’ll use this paper when registering with other businesses that might pay your daycare, as well, you’ll need a few copies. This includes programs like your county assistance program, food program, or licensing system.
Step 2. Keep Track of Payments.
I’ll be honest, this year I have pretty much sucked at this. That’s pretty great for you, though, since I’m going to share a ton of ways for you to keep records. If you’re feeling motivated, I’ve got a solution. If you’re lazy on paperwork, I have another solution. I kind of use a combination, personally.
Excel. This method is for the elite of organizing and keeping records. The good thing is, you really don’t even have to know how to use Excel to use this method. I made a really FREE template that you can download here.
When you get paid, just keep track on the Income/Expense tab by entering the date, family that paid you, and amount.
Then go to the Family Tab (double click the tab name to rename it the last name of your clients). Here you can enter the date, amount, and payment method there to keep track of income per family. This will make it so much easier on you at tax time.
You can also easily add tabs if you have more than 6 families you provide service to throughout the year. Just click on the “Help” tab for more information.
Paper method. If you’re not tech savvy or starting up the computer is too inconvenient for you every time you receive a check from a family, you can use the paper method.
Scroll back on up and download that Excel document, and just print off the sheets you need. Then stick them into a binder or folder and just log them manually when you get paid.
Calendar method. I actually prefer this method. It’s the perfect combo of lazy + organization.
I picked up a large calendar planner at Walmart last year and I used the month calendar page to record the family name and amount each time I’m paid.
Then, at the end of the year I can go into my Excel document and record everything onto one page at one time.
This year, I purchased this epic teacher binder from Teachers Pay Teachers that you really need to check out! I got this for lesson planning, but being able to keep track of my income and expenses on the calendar pages is a bonus! (No affiliation, I just love this product!)
Click here or on the picture to go to the seller’s store.
Step 3: Give your parents a receipt.
You don’t by law have to give your daycare parents a year-end statement. However, I believe in customer service and I really like the clients I have at the moment.
So I go the extra step and give them a receipt. You have to keep records for your own tax purposes anyway. Why not just print them out a quick receipt to make things a little easier on them? They’ll appreciate not having to go through all their bank statements.
This shouldn’t be too hard if you’ve kept track during the year, but to make it even simpler on you I made up a form I’ll share. You can get this FREE form here.
You can edit it right in the PDF, print, and pass it out to your parents at pick up. Maybe even include a thank you card – after all, they do support you financially!
You might also want to check out my post on How to Manage Your Money When You Have a Home Daycare.
Your turn! Comment below and share your best tips to keep on top of paperwork and record keeping.