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  1. #1
    Shy
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    Food expenses for taxes - HELP!

    Hi,

    I'm just about to tackle my taxes after my first year of home daycare.
    The most daunting part to me, is what to do about my food expenses? (and I'd love to not have to record each day the quantities of what was served at meals and snacks)

    Since I'm not a big menu planner (it's usually the day before, or prior to the week when I do groceries) I'm not sure I can cost out every "typical" menu day like those would with a rotating menu with the same items.

    I've seen the calculation that takes your total food costs (for all food purchased regardless of whether it's for family or daycare friends), then counts the number of meals, people at each meal, etc... to find a per-person and per-meal cost. (I tried to make it sound simple, but hope you get the jist )

    Is there an easier way? Can I really do a careful costing of a typical weekly menu, then say that I spend $x/day/child and use that for every daycare day of the year?

    Thanks in advance!!!

  2. #2
    Euphoric ! Inspired by Reggio's Avatar
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    IMO aside from keeping all the receipts separate which is also a PITA there is no hard and fast way to do this that does not include some sort of 'mathematical equation' - basically you can write off any 'reasonable' expense for business as long as you have the receipts to back it up and feel you can argue in an audit it was 'reasonable' and win ... and sadly some big business employ lawyers full time arguing with CRA around the definition of reasonable tax write offs so it is not so black and white in any industry you might work in .... everyone hates tax time

    Do you know how much you spent on average per week BEFORE you opened the daycare cause that would be very helpful?

    Have you kept ALL your receipts for groceries to prove that you fed your family as well as the daycare children?

    Because the easiest way to determine how much is 'daycare related' is that if you know before daycare you spent an average of $150 a week on groceries and now with daycare you are spending $230 a week that means that on average $80 a week daycare related and the rest is family ... so you could just multiple $80 a week by the number of weeks you ran your daycare this year ... and be done with your math if you are happy with an 'average' amount

    If you want to figure out how much per child and you have had 3 children on enrollment on average each day that means you are spending $5/day/child on food ... so some days you might spend more and some days less but 'on average' is reasonable.

    IMO as long as you have 'receipts and reasonable math' to show why you claimed the way you did and can argue it was reasonable ... aka that you spent X on daycare to feed this many children and you spent Y on your own personal groceries to feed this many adults and children to prove your own family ate a financial equivalent lifestyle to the daycare children ... aka they ate same quality or better meals than the daycare children did you should be fine in an audit!

    My understanding is that providers who've gotten into trouble in an audit over food did so because they A) did not have a reasonable argument as to why the chose the amount they did it was just an 'arbitrary number they had heard from other providers' or B) they did not ensure they had the receipts to back up the amount they claimed ... so for example you often hear people stating that they write off as high as $10/child/day for their equation which could very well be if they are eating really high quality meats, organic fruits/veggies and have hearty eaters in their group .... however it get away with writing that off that means that assuming they have 5 children all year long and only take two weeks vacation that they better have at least $12,000 in grocery receipts for the daycare AND they better be able to prove that they fed their family SAME OR BETTER so if they are a family of 4 themselves than they better have at least $14,600 in additional grocery receipts and that would assuming their family only at two snacks and a lunch typically served in daycare ... if they are eating breakfast and suppers as well you'd have to have my guess TWICE that in receipts to prove that the families 'expenses' were not mixed up in the daycare equation .... so you are looking at having over $30,000 in 'grocery receipts' to be able to reasonably back up that math in an audit ... and if you DON'T have receipts like that than time to reconsider the math
    Children construct their own intelligence. The adult must provide activities and context, but most of all must be able to listen. Children need proof that adults believe in them. Their three great desires are to be listened to, to understand, and to demonstrate that they are exactly what we expect."
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  3. #3
    Euphoric ! mimi's Avatar
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    Monthly I highlight on my grocery receipts what food/maintenance/craft etc. items and do a tally. It is a huge pain and tedious but I feel more comfortable doing it this way instead of a estimate daily child rate.

  4. #4
    Euphoric !
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    Over the years I have done food a couple different ways. One is making out a 3-4 week sample menu of typical foods and costing that out to get a per meal cost.

    The other was doing the total food bill and total meals served to get a number and in reality there was only a couple hundred dollars difference between the two methods. For me doing the total bill and average people fed is the easiest. This allows you to take into account that you are serving last nights supper to the daycare for lunch as in that meal served one family plus 4 kids.

    I just add up all the grocery receipts for the year to get a total. Then look at a typical week of how many family meals are served - take into consideration do you or hubby eat a full breakfast or is it more like a snack not a meal, does he buy lunch at work or take one from home. Do that for one week. Once you know how many times you serve per week it is easy to divide it out. And it is the easiest way if your own kids are also in the daycare since their meals served during the week don't count as a daycare expense.

  5. #5
    Expansive...
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    I do one shop per week, but divide the items for home/ daycare and get two receipts. I am not a meal planner so costing per day doesn't work for me. There will be some overlap/ swapping between the 2 lots of groceries but basically works. Then I just have to total the receipts for the year. Hubby is an accountant and this suits us.

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