I’ve been presenting webinars “How to Use KidKare Accounting” over the past two weeks. Many family child care providers are unfamiliar with how the Accounting section works and posed many questions during the webinars. Here are some from the first webinar:
Q: When a parent signs out and then stays and talks longer, how do we include that in our logging time for T/S%?
A: You can go back to the Check IN/Out and push the OUT button again and it will record the later time. If you forget to do this that day, you can always go back later and enter the actual time the parent left by adjusting the OUT button time.
Q: Please speak about what the yearly operation button is for?
A: You want to keep track of all the hours you home is used for your business. The more hours you record, the higher your time-space% and the lower your taxes. You can either use the hours reflected by your daily attendance records, or your hours of operation. Attendance records are more accurate that your hours of operation. However, the hours of operation feature is currently not working properly in KidKare and will be fixed this fall. So, for now use the attendance records.
Q: Do we need to IN/OUT child’s time and meal attendance to get credit?
A: You track the hours you are using your home for your business you need to enter the IN/Out times for each child. This is important to track for your time-space% calculation. You want to enter daily meal records to show what meals and snacks each child was served each day, so they will appear on the Standard Meal Allowance Report so you will know how much you can deduct for food expenses using the Standard Meal Allowance method.
Q: Will the hours of operation be fixed in time for tax time?
Q: Why don’t we use the whole house?
A: As part of the time-space% calculation, you should look at each room in your home and determine if it’s regularly used for your business. Regular use means 2-3 times per week for some business activity. Children don’t have to be in the room for it to be considered regular use. Most providers are using the vast majority of their rooms on a regular basis. Many are using all of their rooms on a regular basis.
Q: if you have the Redleaf Calendar Keeper and have been keeping track of all this from January and you have the hours of operation can I edit it?
A: If you have been keeping track of all the hours you use your home for business purposes outside of KidKare, you can certainly use those records as part of your time-space% calculation. You can either enter these total hours into KidKare, or add them on a separate piece of paper when doing your taxes.
Q: What if we just built our extension for the childcare use only. How do you add that to the T/S because it was done in the middle of the year?
A: If you only use the extension for your business, you can count 100% of the cost and depreciate it as a home improvement over 39 years. You could claim half of this depreciation in the first year. If it cost less than $10,000 you may be able to use the Safe Harbor for Small Taxpayers rule and deduct it in one year. You could also count all of the time spent building the extension as part of your time-space % calculation.
Q: What is the actual business expense compared to the others?
A: In general, if you use an item for both business and personal purposes, choose the time-space% option. However, if your actual business use of a particular item is much higher than your time-space% and costs at least a few hundred dollars, you may be better off choosing the actual business use % option. If you choose this option, you’ll need to keep a separate record, outside of KidKare, tracking your business and personal use for a couple of months.
Q: Can cleaning supplies still be claimed at 50%?
A: There is no rule that lets you automatically claim 50% of cleaning supplies or any other expense. When an item is used for both business and personal purposes, use your time-space%.
Q: My time/space doesn’t change much and goes down instead of up. why?
A: That’s because KidKare tracks hours for the year each day. When you are closed on Saturday and Sunday, KidKare counts these 48 hours as part of the year, but because you weren’t caring for children you aren’t using your home for business purposes and thus your time-space % will go down slightly. It evens out at the end of the year.
Q: Do you count time-space% if your home is being used for care by substitutes?
A: Yes! You don’t have to be doing work in your home for you to be able to count hours in your time-space % calculation. Hours spent by your substitute while you are gone or are sleeping do count towards the business use of your home.
Q: Is mowing your lawn count as time in the time-space % calculation?
A: No, because you can only count time spent on activities that you wouldn’t otherwise be doing if you weren’t in business. Since you would still mow your lawn if you weren’t in business, you can’t count this time. Time spent shoveling snow at 5am would count because you wouldn’t be doing this at 5am if you weren’t in business.
Q: If the grass needs to be cut so your daycare kids can play in that area, can I count the time?
A: No. You would still be mowing this area even if you weren’t in business.
Q: Can I count the time and cost of playground upkeep and mulch and weeding?
A: I’d count the time for playground upkeep and mulching, if you wouldn’t be doing this if you weren’t in business. I wouldn’t count weeding time.
Q: Why would you use the time space percentage on the mulch in the playground, if you put it down because of the playground safety?
A: You can deduct the time-space % of the cost of the mulch if your own children used the playground. If you don’t have children of your own using the playground, count 100% of the cost of the mulch.
Q: My son in law takes care of my lawn. How does that work?
A: If you pay your son in law you could deduct the time-space% of what you paid him. He would have to report it as income.
Q: Can you count time for painting walls or assembling items?
A: Don’t count time spent on general household chores you would do even if you weren’t in business. However, if you are painting walls more often because of your business, count some of this time. If you are assembling items used solely for your business, count all of the time. If you are assembling general household items, don’t count any of the time.
Q: How do you count time on an addition we finished for the daycare?
A: If you only use the addition for your business, count all of the time. Otherwise, don’t count any of the time.
Q: How much time is too much time per day to clean 1-1/2 hours?
A: You can count all the hours you spend cleaning your home for business purposes. You can count all the time you are cleaning just before the children arrive and just after they leave. If you are cleaning in the evenings and weekends areas that are used for business and personal purposes (kitchen, living room, etc) don’t count all of your cleaning time. One and a half hours a day for cleaning is not unusual.
Tom Copeland – www.tomcopelangblog.com