Record Keeping!

How do you all organize all of your receipts?

Especially grocery receipts?

I am new to the business. I grocery shop on Sundays only for my family and the daycare. I shop at Superstore so a lot of misc supplies are also bought there. For example kids plates, crafts, toys, toilet paper, cleaning supplies, food etc. Does this all need to be separated? What categories should I keep them in? How do I separate the food from what is for the daycare, what's for my own kids, and what is for my family meals? Things like toilet paper, hand soap, paper towels etc? I'm feeling so overwhelmed LOL! Some of the food I make is for dinner one night and lunch the next. How the heck to separate that?

Some of the supplies I bought were at the end of last year for my business that is not technically open until this year. Can I still claim those expenses? How do I sell myself things like the playpen that is being used for the daycare now?

I bought a bookshelf for the daycare, I think I read somewhere that you can't claim furniture?

How many of you do your own taxes and how many have someone to do it for you?

Sorry for so many questions! I really just want to have a good understanding of my business!

Thank you!

Go to the revenue canada site there is a booklet that you can download. It is only somewhat helpful though as it isn't very detailed.

Anything you buy specifically for the daycare like the bookshelf is claimable and you use the depreciation chart for most furniture or major purchases. However when you sell the bookcase or stop doing daycare you also need to claim the sale amount as income.

Groceries you separate from other supplies. Even though once figured out it all gets lumped together on the same line on the tax form. Toys, craft supplies etc for the daycare are 100% unless you have your own kids that will be using them while daycare is closed and then you do a percentage. For meals you add up the number of meals being served and divide out your grocery bill. That takes care of the supper tonight and lunch tomorrow thing. It isn't as daunting as it sounds. Just keep a record for a month and use that as your guideline unless things change drastically. Remember to count family meals on the weekends. Just popping in quickly so can't go into detail right now.

Things you bought before you opened you sell to your business - for supplies use the actual cost. For things like a playpen you already had in the house you sell it to yourself as if you had bought it at a garage sale. So if you put it out for a sale and someone came to buy it put a price on it and that is what you use to claim. Just write down the items and the date the use changed to business.

Some childcare associations arrange for tax workshops if you are lucky enough to hook up with one of those that would be very helpful.

Thank you Playfelt.

I have read the booklet, not enough detail for me! Plus I like to know what other providers are actually doing. I need experience!

How do I figure out the depreciation chart for furniture? When I stop doing daycare do I need to sell it to myself?

As for toys, well yes my kids will be using them after daycare hours... Again how do I figure out the percentage? Hours/Days of the month sort of thing?

Thanks for the tip on the associations. I'm going to have to check the MB childcare association. Unfortunately until I'm licensed I cannot become a member, and I am waiting on the government for that :( Hopefully soon though...

Thanks again for all your advice!

I believe all furniture is 20% deductable. (But you can claim for 5 years I think??)
But things like an appliance is 100% deductible for the amount of time it is being used by the daycare.

I am not experienced, just some things I have read into recently as well.

I use quickbooks. after the cost is entered i put my receipts in an envelope under their appropriate heading such as food, daycare supplies, hydro, etc. soooooooooooo simple. you dont even have to add up all those stupid receipts at the end of the year.

Quote:

---

Originally Posted by KingstonMom

I believe all furniture is 20% deductable. (But you can claim for 5 years I think??)
But things like an appliance is 100% deductible for the amount of time it is being used by the daycare.

I am not experienced, just some things I have read into recently as well.

---

I bought my couch 2 years ago and didn't claim it last year, can I claim 20% of it every year for the next 4 years?

If the couch is in the playroom then it is claimable. Not if it is in the livingroom and not used by the daycare specifically.

The 20% refers to the depreciation chart. Major expenses are claimed at a percent I think it is which is 20%. But also remember that it is only based on 50% of the cost the first year so the trick although too late for this year is to buy anything you want for the next year in the fall of the previous year so that you are using the full price in the year you actually use the item. The chart for the claim is in your tax package.

How do you seperate what's your families groceries and your daycares?

Quote:

---

Originally Posted by FlexFunCare

I use quickbooks. after the cost is entered i put my receipts in an envelope under their appropriate heading such as food, daycare supplies, hydro, etc. soooooooooooo simple. you dont even have to add up all those stupid receipts at the end of the year.

---

Quote:

---

Originally Posted by olivetree

How do you seperate what's your families groceries and your daycares?

---

Just highlight what you use for the daycare. We also put this on a spread sheet (for each month).

For groceries I do a total of the bills and then portion it out according to how many family meals I serve and how many daycare meals I serve.

Once again playfelt, you ROCK!

The KEY to claiming anything is that you have the RECEIPTS and MATH to back it up in an audit - how you do it is ultimately up to you whatever makes sense and you feel you can argue to a CRA representative should the case ever arise!

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


I grocery shop for both family and daycare at the same time generally cause it is easier than 'keeping separate receipts' so to figure out how much I use the following equation for figuring out my groceries:

Quote:

---

Kids % = # day you are open x # meals/snacks per day x # kids in care = # meals/snacks served

Our % = 365 days x 5 meals/snacks x 2 adults = X meals/snacks we eat

Total meals served = add them together

Total grocery cost = $xx, xxx.xxx divided by total # meals/snacks served = $X.XX is the average per meal/snack per person eating as we eat the same things and often the kids eat more than my spouse will at a sitting:rolleyes:

---

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

I will admit that hate this time of year doing up my taxes and seeing my 'income' shrink from the reality of how much it costs do offer this service for clients!

It does seem like a lot to offer the service but do remember that if you went out to work and made the same amount it would be totally taxed on the full income so you save there with deductions. And there are a lot of things we are deducting that we would have spent anyways like mortgage, utilities that you would have paid anyways while you were at work.

Quote:

---

Originally Posted by playfelt

It does seem like a lot to offer the service but do remember that if you went out to work and made the same amount it would be totally taxed on the full income so you save there with deductions. And there are a lot of things we are deducting that we would have spent anyways like mortgage, utilities that you would have paid anyways while you were at work.

---

Oh for sure ... I definitely know the pros as to why I do this outweigh working outside the home - I do not have any wee ones at home and am still home doing this cause I love it ... I also know I could make more on my bottom line if I chose to serve up a 'centre style' menu every day where cheese and crackers in reality were 'cheese whiz' verses real cheese and not do so much creative art or field trips and so forth ... I invest that in my business cause it makes ME happy to see the kids enjoying it and thriving and well an investment in my happiness is worth the smaller bottom line just that seeing in 'on paper' makes it that much more of a reality as to what that happiness costs me - I would prefer if I were able to live in oblivion of my bottom line ;)

You wouldn't be willing to share this spreadsheet would you? I am absolutely NO good with excel!! If not don't worry about it, I totally understand that you probably put a lot of work into it!

I really appreciate the detail, Thank you!

Quote:

---

Originally Posted by Inspired by Reggio

The KEY to claiming anything is that you have the RECEIPTS and MATH to back it up in an audit - how you do it is ultimately up to you whatever makes sense and you feel you can argue to a CRA representative should the case ever arise!

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


I grocery shop for both family and daycare at the same time generally cause it is easier than 'keeping separate receipts' so to figure out how much I use the following equation for figuring out my groceries:




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

I will admit that hate this time of year doing up my taxes and seeing my 'income' shrink from the reality of how much it costs do offer this service for clients!

---

I do not know how to share a file on here :(

It is nothing fancy though - I just a file saved as 'Expenses 20xx' with a worksheet for each of those headings created within it and that I have column on each sheet for the date, description of expense, amount of expense and any KM driven associated with the receipt and than it auto sums the total of the expense and the KM columns for me at the bottom of the page. At the end of the year you can print them out for taxes or you can create another 'sheet' where you just put the 'tallies' of each expense heading and print that out. I also have a 'final tally' spreadsheet that I add up all my 'business KM' with for the vehicle equation in the car.

Thanks again for the info.

Now another question about record keeping but not about receipts. Do you also use a spreadsheet for income earned? What sort of format do you use for this?

Thanks
S

For re cord keeping I have monthly sheets that record what parents pay and I give weekly receipts when they pay so it records receipt number too. It is just a word document with dates ex Feb 13-17 in first column, changes in second column (this would be where I record things like overtime, late fee, anything that explains why the amount in column 3 is different - which is the amount paid, and column 4 is the receipt number given. That I manually add up at the end of the page - takes 4 pages for the year - one per quarter. And I always plan to use excel the following year and never do. I also have a two page spread again in word of a chart. Page one is room for names and I can fit about 10 names on there so room for new kids to start mid year. First column is name, then months Jan - July ie 7 months. Second page is names and Aug-Dec plus total from page 1, then total page 2 then annual total. I have a separate row at the bottom of the sheets to do my monthly totals so those two sheets is all I need at the end of the year to do parent annual receipts as well as my total earnings for taxes.

I do exactly what play and learn said. I highlight what I've use for the daycare and enter that amount into my quickbooks. I don't provide lunches (only snacks and the odd lunch if someone really isn't feeling what they got from mom) at my daycare so dividing it up according to how many meals I serve would be pointless.

Quote:

---

Originally Posted by olivetree

Thanks again for the info.

Now another question about record keeping but not about receipts. Do you also use a spreadsheet for income earned? What sort of format do you use for this?

Thanks
S

---

Hi! I have a very simple excel spreadsheet for each child. 4 columns....date, cheque number, amount and notes. Amount column adds itself so at the end of the year I just print a copy for the parents and attach it to their receipt!!! So easy!

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 ;)

Quote:

---

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!

---

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?

Quote:

---

Originally Posted by olivetree

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

---

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!

Ok one more question:

For the toys and crafts that are shared. What would the calculation be then? The daycare uses them for 11 hours and my children use them for another 1-2 hours after. How do you find the percentage there?

OK so maybe that wasn't the last question :)

Do you claim km's driven to buy groceries? Even when they are shared groceries? And supplies?

My kids are grown so I have not had to do that calculation - but my understanding is it is the same as your household expenses... so if you bought the toys for your kids only 100 percent of the cost would be yours regardless of if they only used them 2-4 hours a week for personal use .... but because your are sharing with your busIness you can write off that portion the rest of thectime you are not open gardless of your kids actual use is "personal use" ... does that make sense?

Sorry typing on my phone and missed those typos :(

So would you say a reasonable % would be 11(hours open)/24 = 45% ?

Thanks!

Are you open 365 days a year ? Cause otherwise you have to factor in weekends and vacation too where they are not being used for business ;)

Of course I never thought of that too! I'm wondering if it's even worth claiming...

11/24 x 240/365 for example ... Assuming you work Monday to Friday and take 2 weeks vacation and the 10 stat holidays

Every $1 you can write off lowers the tax you have to pay by $0.17-$0.25 depending on your taxable income ...so every things is worth it to me ;)

Specially if the toy expenses puts you into the lowest tax bracket ... It can add up for sure:)

I think I am going to owe you professional fees!! I really appreciate the help, I hope I can pass it along one day!

I find this business is so specific that it's difficult to find the answers.