Record Keeping!

I do my income similar to expenses in Excel ... file called 'income for 20xx' and a spreadsheet in that file for each client to record amount billed and received, receipt numbers if cash was given or cheque numbers if cheque, any special attendance or bill notes and so forth ... ... I HATE math and like that it will auto sum in Excel as well as other equations as needed ... I also have clients who pay a lower weekly fee but than I accumulate vacation pay and personal day pay which it will also auto calculate for me so at the end of their care if they 'leave' before all my vacation time is taken I know how much they owe me to take off their security deposit and bill them for their 'last week' any remaining amount still owed ;)

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So last year my calculation used for determining children's portion of groceries is $2.17/meal/snack served and a minimum of 3 are served daily so I went with $6.50/day/child on enrollment for last year.

I was open 240 days x 6.50/ day x 5 children = 7800 ... which will seem like a lot to others however I offer an almost entirely gluten free and high % of organic food in my menu to my crew because I have Celiac ... we spent almost $20,000 on groceries in total and have the receipts to back that up in an audit.:o!

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I am wondering if you always have 5 children at once? I am starting this year with only 1 DCK and my own 2 kids but will hopefully have 2 more DCK's in a couple of months. I also have 1 part time DCK. So I think this is going to be much more difficult to calculate!

[QUOTE=I track all my expenses in an Excel spreadsheet for the following:
Food & Kitchen Supplies
Toys & Equipment
Craft Supplies
Field Trips & Outings
Gifts & Seasonal Celebrations
Office Expenses
Advertising & Website
Daycare area only Maintenance & Repairs
% of Household maintenance
Professional Development
% Vehicle Expenses
Business Liability Insurance
% of annual Mortgage Interest
% of annual Property Tax
% of annual Gas bill total
% of annual Hydro bill total
Rogers Internet bill for business
Cell phone bill for business
Bell - additional services for answering machine, call display[/QUOTE]

How do you calculate the % for mortgage interest, property tax, hydro, etc?

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Originally Posted by olivetree

How do you calculate the % for mortgage interest, property tax, hydro, etc?

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I use the CRA equation for this - we have a specific one for 'home childcare care' because we have 'shared space' generally verses entirely 'dedicated space' like a hairdresser or someone would have where the space is not used for 'home use' at anytime.

(Square footage of home used for business / total Square footage of home) x (hours worked / 24 hours) x (days open / 365 days) = % of shared expenses

So for example if you use 850 square feet of your 1500 square foot home, are open 10 hours a day of a 24 hour day, and your program is open 240 days a year out of 365 your equation would be 850/1500 x 10/24 x 240/365 x 100 ... and would 15.5 % of your 'shared expenses' being business related.

If you suck at math you can put your equation into google and hit search and it will do the math for you ;)

There is a calculation called "business use of home". You take all expenses for the house such as your mortgage interest, property taxes, heat, hydro, water, and I put my cable and internet into that one too and any repairs you did to the property that benefit the daycare and add those all up. Then the calculation involves taking the amount of space used for daycare over your total size (include basement here in total if you use it) times the number of hours of care you provide and I add a couple ie one either side for prep and late arrivals/clean up as well as a divided by 24 and if you only do weekday care you need to then multiply by 5 divided by 7 then you factor in the house costs you added up and that gives you the business use of home cost to claim.

Ok so what I wrote won't help you because it is too confusing I know. The actual formula is in that daycare booklet on the revenue canada website. But what you need to know to do the formula is:

total of the house expenses
total square footage of your house including basement if you have a playroom down there
amount of square footage you use for daycare (play, eat, nap,)
number of hours of care per day (time first arrives till last leaves plus 2 hours for prep/cleaning)
number of days out of 7 you do daycare (so 5 for Monday to Friday care)

Thanks everyone. There is just so much to consider!

I worked on my spreadsheets all day today and I think I've come up with something that I can use for the expenses! I'm so proud of myself for figuring out all the formulas!

Now my own kids DO use the toys and crafts supplies while the daycare is closed. Do you calculate that? Would you say hours/per day/days of the week sort of thing?

What heading do you put cleaning supplies and toilet paper under? Would you put that with food and kitchen supplies?

Do you calculate the km's driven to get supplies? How is that calculated at the end? How much per km? % for your own use of the groceries/supplies?

Would you consider a steamer a "capital expense". I bought one specifically to clean the toys. I also bought a carpet shampooer but my playroom is also my living room. The bookshelf I bought is for the daycare but in my living room. I have been trying to read more into the capital expense information but there is just so much that seems left to interpretation.

My home is 1710 sq ft. It's two levels. The main floor is the living room/dining room/kitchen/front entrance/bathroom/laundry room. So on this level only the laundry room is not used for the kids. On the upper level there is 3 bedrooms/hallway/landing/bathroom/ensuite bathroom. SO I guess I would need to calculate the bathroom/ensuite/laundry room that are not used? Does that make sense?

Sorry for so many questions. I'm always intimidated by the government cause you always just feel like your doing something wrong even when you are not LOL! I know silly :unsure:

I still need to work on my income spreadsheet... but at least the expense part is almost done!

Thanks again ladies!

At the tax seminar I attended they said that 'toys and equipment' used by your children after hours would fall under the 'shared expense' so you could write off the % your daycare is open and the other % is for the personal use of the children. If it is something you bought specifically for the daycare and is not used for the children during personal time - aka not age appropriate for them or whatnot than track those materials / toys separate and write off 100% as a daycare expense.

I buy extra wipes for 'daycare use' / toilet paper / Kleenex specifically for storage in the daycare space when I am at Costco and put it on a separate receipt. For cleaning things like bleach, vinegar, paper towels, the upstairs bathroom kleenex boxes and toilet paper and also paper towel for the kitchen on my normal groceries with the daycare stuff and it gets factored into the shared expenses cause the kids do use that bathroom too and the cleaning of the 'house' is a shared expense.

For calculating your square footage it is only 'living space' that you are allowed to calculate as used - so yes no furnace area / laundry / closets / bathroom even though you might actually need and use those to do business they are not allowed to be counted in the square footage used for business because the children are not really spending any quantity time in there.

The challenge with 'self employed taxes' is that the bottom line is we can right off any 'reasonable expense required to do our business' .... it is very GREY what reasonable can be determined is - the bottom line to choose to write off something or not is A) what is normal practice in your industry and B) regardless of what everyone else is doing do YOU feel you could argue in an audit that a 'questioned' expense was reasonable for your business!

So for example - the front door to our house when I opened the daycare was perfectly great shape however it had no window ... during my first 6 months in business I had several accidents where clients knocked and opened the door at the same time and took the skin off of fingers of children getting dressed for outside in my foyer ... for liability reasons I felt I needed a WINDOW in the door so that parents could SEE we were there because locking the door all the time was not an option, having to get up and answer the door meant time not supervising the children and so forth - we replaced the door and I wrote off almost 100% of that cost (I upgraded to a fancy stain-glass that i did not write off) but some would argue replacement of the door is a home improvement and NOT business - however I would NEVER have incurred the expense if not for the business and have documentation on accidents to prove this. Same with our front porch 'cracked' and we had to replace that as well cause if it fell and dropped on a child's foot - liability therefore business expense as well.

For your steam cleaner - I would write it off for sure ... IMU if it was under $250 (double check that is still the cut off amount) you can write the whole thing off if it was more than $250 than it is 'depreciated' over the course of 5 years.

I agree - I HATE tax time and trying to decide what you can and cannot write off ... I am one who likes to air on the side of 'caution' however if I am absolutely sure I have a valid argument and documentation to prove than I will write it off for sure!

Thank you again for such useful information.

I am working on my taxes right now, using Turbo Tax. Do you all use products like this or do you fill out the forms yourself?

Thanks again!

I use Turbo tax as well - just be careful with the business use of home because the equation used is NOT for shared space but dedicated space - it does not figure out the hours of business over hours of personal use and days open verses closed that we are required to do ... So to trick the software you need to figure out what percentage you are allowed to use using the CRA calculation for US and put in the square footage used over total that will give you that percentage ... So for example I'd your percentage is 23 that you would tell the program you use 230 feet put of 1000 feet - which would be the 23 percent of the total expenses input ....otherwise if we just put in our real square footage used it will write off way more than we are allowed cause it assumes we use that space 100 percent of the time -like a hairdresser or someone with a home office would ...hope that makes sense

yes that makes sense. Wow there is just so much to learn! Luckily I actually enjoy numbers... We will see though if I manage to get it all right!

Thanks!