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If I am charging myself an expense that is a flat rate for food rather than going through my grocery bill, do I need to keep my grocery receipts for taxes?
What is a reasonable flat rate to charge myself for an expense? I was thinking for 1 full-time child $5/day....is this too expensive?
Yes, you should keep any receipt that pertains to your business. I am one of the ones that goes through my grocery bill and itemizes what the daycare uses. After doing my taxes I fiqured I spent about 10.00 a day on food for 5 f/t kiddies.
only $10 total a day for all 5 kids?
Is that a typo Mimi? I spend between $4 to $7 per kid. If not, I'm curios what do you do to keep your costs that low?Quote:
Originally Posted by mimi
I am doing flat rate for next tax year and calculating $6 a day per child. I am keeping all my receipts and if I get audited...I figure they can add it all up and calculate it all themselves lol.
This is what I figure my food costs per child are.Quote:
Originally Posted by Artsand crafts
Age of child makes a huge difference. A cup of veggies feeds several infants/toddlers but only a couple of preschoolers and up. Also if parents provide for the infants in care then the money is really being spent on the other 3 for the most part and just snacks for the infants. Mom continuing to send homo milk makes a huge difference in cost of milk served.
I buy dry goods in bulk, shop the sales (I have a big freezer) and most everything I serve is home made so I save alot that way. My meals are simple and nutricious with lots of fruit and veggies mixed in.
This does not include craft supplies, tissues, cleaning products etc.
My food expenses equal to an average of $8 per child throughout the year. i buy grains in bulk and meat in bulk all organic, no refined carbs so more expensive and my meat is abf or organic. I do not buy frozen or tinned veg only fresh veg and fruit and make all baked goods from scratch. I cook in advance and do not make my menus up weekly based on sale items in the flyers as I find that the amount of actual "healthy" food in the flyers is limited. I know my expenses for food are likely higher than average, but i charge more for this, parents send there children to me because of this and I write it all off. I dont understand why you write of a flat rate. If you get auditted you will have either paid to much tax or not enough. The cra are not looking for a rough estimate of this expense but the actual cost incurred for the years food. I know it may seem easier but really it could bite you in the ass later on down the road. Just write off what it costs. Some meals are way more expensive than others so its not effective or accurate to just "guesstimate"
I think it actually would be fine to make an estimate as long as you know you are within reason. If you have a set up where you buy groceries separately, store them separately, cook separately from your family then it would be easy to calculate an exact cost on your tax return. If you don't then it would be very time consuming to come up with exactly how much you spent. For me, my time is worth more than a bit of extra money I may be able to claim, so I make an estimate that I know is reasonable.
The CRA says this:
"Other reasonable expenses
It is often difficult, for example, to separate the cost of feeding your own children from the cost of feeding children in your daycare program when groceries are bought together or if your
own laundry is done at the same time as laundry used during the course of business.
As long as the expense claimed associated with these daycare related activities is reasonable, it will be allowed."
I caluclated $6 per day per child on average. I actually did cost out an entire week's menu...it took me a long time and I went through the reciepts and figured it all out and now I have that if I ever get audited.
thanks for that SongSparrow! I got a little stressed reading some of the above comments as I just do a fixed rate because I tried to shop separate for my family and daycare and it was impossible. I have my own 2 children in care and I am not going to make them a different meal while I feed the daycare children something else. I also wash daycare bedding with my own families, etc. I think a fixed rate for food is totally okay for all the reasons you stated above and what the CRA says. It is much easier to calculate this way I find.
Using a fixed rate is ok as long as you have some way to back it up as to why you chose $7 a day over $10 a day or whatever and your grocery receipts will do that. It will show if you are buying more expensive items like all organic or out of season fruits, etc. too.
I buy separate groceries. It doesn't really matter if there is a bit of back and forth between the 2 groups of food. I can show reasonable expenses for both daycare and personal use. My daughter may eat a daycare banana one day and I may use our apple for daycare the next.
How much of that total can you right off? I thought it was 50% of your total daycare grocery bill no?
If that question is for me Skysue.....
The whole daycare food/supply bill is put on my taxes. I simply add up the years worth of receipts and enter the total.
Like sunnydays, I also sat down and calculated the cost of my regular meals and snacks and divided it into an average cost per day per child. This was a few years back and I have increased it a bit each year to reflect the rising cost of groceries. I also keep all my grocery receipts for the year in case I ever need them.
I wish I could do things separately, but I am very short on space and have yet to figure out a way to make it work.
I was taught to do the calculation based on number of meals served. So for daycare it is 5 lunches and 10 snacks times 5 kids ( a snack equals one lunch) so that would be 10 meal units. Then do the same for your family including your own school age kids if you send food to school but not meals that say your husband or teens bought at work and aren't on your food bills. Include weekend meals for your family too. That will determine what percent of the grocery bill feeds the daycare and what percent feeds the family. Now mine is pretty much 50-50 but was more lopsided when my own 3 older kids still lived at home but then my bills were bigger too so the amount I wrote off was about the same. You only need to do the calculation once and use a typical week. Then at the end of the year just add up all the grocery bills and use the percentage. Remember to include your bills for pizza etc since those meals have been included in your totals based on the percentages.
I don't include major meals out to a restaurant because that totally messes with the averages but at the same time I don't sweat it if one of the girls comes and eats at the house as it balances out at the end of the year.
I used to calculate my daycare food cost based on a percentage per child of the total grocery cost (I just estimated it... my best guess). After I read one of your posts I did it your way. Surprisingly the results were very similar... I think I will keep doing it your way since I think it would be easier to explain if I get audited.Quote:
Originally Posted by playfelt