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TAX YEAR
2019
Daycare Providers
Income and Expenses
Daycare Providers Income and Expenses • Daily time log for the hours you spend in preparation,
planning, recordkeeping, food preparation, clean-up,
Employer Identification Number (EIN) etc., in addition to the actual hours you are available
Even if you operate your daycare business as a sole pro- for daycare.
prietor or have no employees, you should obtain an EIN. • Attendance, rates, payment history, and meal and
• Instead of your Social Security Number, use your EIN snack log for each person in your care.
on Form W-10, Dependent Care Provider’s Identification • Mileage records for the use of your car in the daycare
and Certification. business.
• Use your EIN for your business bank account.
• Home-related expenses.
Business Bank Account Daycare Income
Have a bank account that you use exclusively for depos- As a daycare provider, you generally receive income
iting daycare income and paying daycare expenses. from several sources. Examples include:
• Keep track of deposits from your personal funds and • Direct payments from parents or guardians.
of reimbursements you make to yourself. • Direct payments from the employee benefit plan of a
• Deposit all daycare income, including cash payments, parent or guardian.
into the business bank account. • Subsidy payments from state and local agencies or
• Use a check or debit card to pay for business expenses from charitable organizations for specific children or
instead of withdrawing cash.
adults in your care.
• Sales of assets used in your daycare business.
Business Credit Card • Grants from state, local, or private agencies.
Some options for tracking business expenses that you • Reimbursements for expenses you incur, such as food
pay for with a credit card are: program payments through the Child and Adult Care
• Using a business credit card exclusively for daycare Food Program (CACFP).
business expenses.
• Dedicating a personal credit card to the exclusive use Reporting Income
of the daycare business.
All the above items are included in your daycare gross
If you don’t have a separate credit card, keep careful income.
track of daycare business expenses that you charge to • Grants made directly to your business are generally
your personal card. included in business income. If you spend the grant
money in your daycare business, you can deduct those
Daycare Business Records expenditures.
You may use any recordkeeping method that clear- • Most tax professionals recommend that you include
ly shows your daycare income and expenses, such as reimbursements in your business gross income. You
handwritten ledgers, spreadsheets, and business soft- can then claim a deduction for the expenses included
ware. You should keep the following additional records. in the reimbursement.
