Confused By tax calcualtions

Hard one Michelle - technically we can claim a 'reasonable amount' ... it depends on who is defining that reasonable if your business hours are 12 hours a day and you argue you cannot fit any prep/clean up time in that time frame and do it 'after hours'?

My first year I was open 7:30 - 5:30 and than claimed an 11th hour for prep ... I reduced my hours so last year I claimed 9 hour work day plus an 'hour' of prep time for a total of 10 hours .... even though I sometimes have a client in extended hour care before or after than 9 hour work day but I honesty DO do most of my prep during that extended period so my 'program hours' are 7:30 - 4:30 but I claim 7-5 on my taxes ... I have one child who comes before 7:30 and another who is here past 4:30 some days ... I was thinking of adding that hour back for the interview prep and advertizing cause I had not really thought of that and THAT takes a lot of time for sure.

Thanks Reggio, I was thinking it would seem too much. I can absolutely fit in cleaning up and lesson plans and what not during nap time and when its just the one little one left at 5:30; however, I always wonder what parents would think if I vacuumed while their little one was still here? Would they consider that not showing her proper care and not paying attention to her? I always felt that I had to do all the 'other' things after daycare hours.

I have been doing 13 for about 4 years with no question. 14 is only 5 more hours out of the 168 and in many businesses they are open weekends too so shouldn't set off any red flags.

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Originally Posted by playfelt

I have been doing 13 for about 4 years with no question. 14 is only 5 more hours out of the 168 and in many businesses they are open weekends too so shouldn't set off any red flags.

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True - and if your website and contracts all 'back' that you are already open 12 hours or work weekends and so forth so that you can 'prove' it is reasonable if ever audited and you are confident to defend that write off go for it ... that is the challenge with taxes and the 'reasonable expenses' cause what is reasonable to US might not be to CRA .... I had an argument with an accountant once who tried to argue with me that belonging to a 'professional association' was not a business expense nor was attending 'professional development' because all we do is BABYSIT and therefore CRA is going to say we do not NEED either of those to do business so therefore not a 'reasonable expense' for this business .... needless to say dude was never hired to be MY accountant and I even considered snatching a few of his hairs and getting a little Vodoo doll for his audacity - not to mention he felt that $2.50 a DAY was reasonable for food/supplies cause its not like they eat much ... I feel sorry for the poor people who do use him and are paying more TAX as a result of his 'unrealistic' views of what is 'reasonable' ... do not think dude has gone grocery shopping since 1960 when a loaf of bread cost $0.05 not to mention abreast of how children SHOULD eat cause $2.50 I would not be able to give them fresh fruit and even canned fruit would be 'one slice of pear' from a can :(

Reggio, I agree that that accountant hadn't been shopping in years! I can't imagine trying to feed the kids for $2.50/day that's crazy! I would say mine guys eat at least 3x that each. Its shocking just how much the little ones can consume in a day and I try to provide all healthy meals and snacks! I have one 18 month old who literally can eat the same amount if not more than her 6 year old brother!

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Originally Posted by michellesmunchkins

Reggio, I agree that that accountant hadn't been shopping in years! I can't imagine trying to feed the kids for $2.50/day that's crazy! I would say mine guys eat at least 3x that each. Its shocking just how much the little ones can consume in a day and I try to provide all healthy meals and snacks! I have one 18 month old who literally can eat the same amount if not more than her 6 year old brother!

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Yup - I would use a $2.50 a DAY budget at morning snack and have to give em water for the rest of the day if I had to follow his rules ... for morning snack my crew will eat two tubs of Activia Yogurt - cause I like the pro-biotic yogurt for their growing bellies ... so $3.99 x 2 so $8.00 and two pints of blueberries or raspberries which this time of year are at least $3.00 a pint so $6.00 ... so that is $14 for the morning right there or $2.80/child ... still got a lunch and afternoon snack to feed em :rolleyes:

Due was so 'conservative' with his advice it was scary ... I am not aggressive in my booking keeping in any means but I want every possible 'reasonable' deduction out there!!!!

WTH?? I would say I spent (haven't done last years numbers yet) around 20k in food last year alone. I haven't done the math on that, but methinks it's a wee bit more than $2.50 a kid!!!
That guy is/was out to LUNCH (and a cheap one, at that, I'll bet)!!! :rolleyes:

Has anyone ever been audited before? What do you think 'red flags' are that they look for?

I was told a couple of years ago that if we consistently make "no" income, or are in the negative, as it sometimes happens during the first few years of a business, the government smells a rat. The idea being, if you have been doing this for 5 years and still earn ZERO income, you probably aren't going to keep at it, so something must be up. Basically, we have to show a little bit of profit, even if it's only 5 grand or so.

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Originally Posted by mom-in-alberta

I was told a couple of years ago that if we consistently make "no" income, or are in the negative, as it sometimes happens during the first few years of a business, the government smells a rat. The idea being, if you have been doing this for 5 years and still earn ZERO income, you probably aren't going to keep at it, so something must be up. Basically, we have to show a little bit of profit, even if it's only 5 grand or so.

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AGREED ... nobody is going to stay in a business where their income is ZERO specially one that requires such emotionally and physically demanding tolls on them ;)

We can earn up to $10, 500 and not pay 'tax' on it anyway not to mention you want to earn something to pay into CPP for so that when retirement time comes you have something in the POT to draw from - assuming there is CPP still there when it comes time for us to retire :rolleyes: