Don’t let your child care business be run over by accounting problems that stop you short of your potential. Through outsourcing the bookkeeping, you can open up many possibilities.
Key Takeaways
- Child care business owners have a lot to do, and bookkeeping often falls behind
- Access to experts can be too expensive unless you use the outsourced model
- Find ways to save on taxes while still playing by the rules
- Bring down expenses to boost your year-end profits
Running a child care business is a major challenge, to say the least. While all business owners think they are busy, things are particularly tough for a child care business owner who has countless young people on hand each day. The boundless energy that those kids bring is sure to be fun, but it can also make it difficult to find a moment of peace to manage important things like business finances.
That’s why outsourced bookkeeping for child care is such a great option for owners in this situation. Rather than an in house bookkeeper, who might be too expensive for the business to manage or might have many other duties, outsourcing bookkeeping streamlines the process and makes it more affordable. Let’s review below how this could work in your childcare business. To get started as soon as possible, contact Swiftbooks now to learn more.
Why the Daycare Business is So Challenging
Simply put, the daycare business is a challenging but rewarding industry simply because kids are a lot of work. Any parent can report that it is not easy to take care of even a single child, let alone an entire building full of them. Yes, it’s important to have good accounting services in place to run the business side of this operation, but first and foremost you need to simply have a system in place to keep the kids healthy, safe, and entertained for the duration of their time with you.
Using outside bookkeeping services is a great strategy because it separates the important work of keeping accurate books and producing meaningful financial reports from the potential chaos of the day care center itself. Quiet moments are going to be hard to come by in this facility, and that’s okay – kids will be kids, after all. To make sure you manage cash flow correctly and don’t find yourself in a bad situation because you fell behind on bookkeeping responsibilities, just outsource the work and know that it is in good hands month after month.
The Advantage of Financial Statements for a Daycare Business
Many family child care providers think of their businesses as pretty simple and may not take the time or money to invest in advanced financial tools. That’s understandable, of course, as a daycare business is often a one- or two-person operation and there isn’t a lot of margin for extras that don’t seem essential. With that said, if you work with bookkeeping services that include financial statements as part of their service, you might come to love having this information on hand each month.
The accounting system you are using currently probably has the ability to generate financial reports, but that can take time and expertise that you might not have available. To see how your cash flow looks each month, and to get the most out of the accounting software that you are using, upgrading your accounting system to an outsourced bookkeeper is a big deal.
Get Help with Tax Planning Strategies
While it’s not all that pleasant to talk about, even small businesses like daycares have to worry about taxes. By using good bookkeeping services from a third party, you’ll be prepared for tax season and won’t have to worry about any unwanted surprises. And, if you happen to be audited, those same bookkeeping services will come in handy because they will have all of your documentation in order and you’ll have nothing to worry about.
One potentially confusing element of your tax situation is how to account for your building if you run the business out of your home. Are expenses that cover your home deductible? If you invest a significant amount of money into your building in one year, can you spread out that deduction over multiple tax years? You might have a lot of questions on this point, and you certainly don’t want to get it wrong.
Again here, having accurate financial data and a professional bookkeeper on your side is going to make a huge difference. As long as you provide the basics like bank statements and credit card reconciliations, the bookkeeping tasks will be completed off-site and you’ll have everything you need to hand over to your CPA. Alternatively, you might pick a bookkeeping company that can also do your tax return – this will make tax time even easier and you can feel good about getting every deduction that you are owed. Outsourced bookkeeping companies for CPA firms often specialize in seamless tax preparation and financial management, offering a comprehensive solution for businesses like daycares.
Cut Down on Business Expenses
As we mentioned earlier, there isn’t a lot of margin in a daycare business. So, all expenses that can be saved should be saved, and you’d be wise to put costs associated with things like managing accounts payable and payroll processing at the top of the list. If you can trim how much you spend on this kind of work, you’ll see an immediate improvement in your bottom line and you won’t notice any drop off in performance. In fact, you’ll probably have better financial records as a result of working with an experienced and professional team, yet you’ll be spending less money.
There is also the matter of avoiding costly mistakes that you might want to consider in this process. Daycare centers don’t have the budget available to bring in a CPA firm or something similar to do a big audit when the books get way off track. Instead, you need to stay ahead of the game and avoid letting them get that way in the first place. It’s hard to pay personal attention to every bookkeeping entry while you are busy running such a demanding business, so let someone else do it for you.
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