Going Out Of Business Checklist: Non-Tax Issues

6a0133f3fc5805970b015436095e1e970c-300wiIf you are planning to go out of the family child care business, you may find that quitting your business is more complicated than you might imagine.

Here is a checklist of non-tax issues to consider when ending your business.

1) When you have decided to go out of business, you can stop at any time. At the end of a month, the end of the week, or on any day of the week.

2) Contact your child care licensor, your local Child Care Resource and Referral agency and your family child care association so they can update their records.

3) Contact your insurance agent for your home and car. You may be entitled to a reduced insurance rate, depending on your circumstances.

4) Contact your business liability insurance agent. You may get a refund for cancelling your insurance policy before the end of the year. Save a copy of your insurance policy until the youngest child in your program (at the time you closed your business) reaches age 21. Before then, it may be possible for a child to sue you for an injury that occurred while in your care.

5) Notify your parents, in writing, that you are closing your business. Keep copies of this notice for your records. If your contract requires you to give parents a two-week notice, do so. But, if you tell parents months in advance that you are closing your business, some parents may want to terminate earlier. Take this into consideration when deciding when to inform parents of your decision.

Part II – read my article about the tax issues involved in closing your business.

What other issues should be considered when going out of business?

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Categories: Record Keeping, Record Keeping & Taxes

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6 replies

  1. Going out of business is never really easy. Not only is it a tough decision to make, it’s also that exhausting if you’re to follow every procedure necessary. Thanks for having checklist.

  2. I was not able to make viable enrollment for this current contract year. So my ongoing programming with a group of 5 children, multi-aged from 2yrs to 5yrs is not in place as of Sept 7, 2011. Decided to use this current contract year (sept 2011 thur sep 2012) as sabbatical after running a program ongoing for 13 yrs.
    Am caring for children on an ad hoc basis, keeping my state registration and national accreditation compliant and up to date, maintaining professional relationships and exploring new collaborations, including using my facility for early care and educational research–including children being present from time to time.
    Any thoughts on how to mesh this with tax parameters?

  3. As long as you continue to care for children in your home, even on a part-time basis, you are still operating a business. Your time-space % will be lower for 2011 (and probably 2012) but you can continue to claim normal business expenses.

  4. What about selling your materials and equipment:
    Does the provider show that as income and can the provider purchasing the equipment write it off on their taxes? What documentatin do they need i.e. photo, original price, signature.

  5. If provider A sells her equipment to provider B, provider A must report the money as income. Provider B can deduct the equipment as a business expense. They should each sign a receipt indicating what the equipment was and the amount it was sold for.

  6. Thanks, Tom. Huge relief. Taking time to regroup. Providing programming for “alum” of my program on an “as needed” basis. Playing with ideas about school holiday camps. Thanks for helping me stay current with how to handle the documentation for IRS.

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