What to Keep?

[Jenjo]

I am getting ready to quite daycare but I wonder what papers do I need to keep and for how long.

[TomCopeland]

You should keep a copy of your business receipts and tax records for 4 years after your quit (3 years is the rule, but 4 years is safer). Save your tax returns forever. Keep a copy of your business liability insurance contracts that you've had while you were in business until the day the youngest child in your program (on the date you quit) turns age 21 (this will help you if you get sued by a child later on). Cancel your business liability insurance.

[Abigail]

What do we need to do if we sell daycare toys and furniture that we wrote off or took deductions on?

[TomCopeland]

Believe it or not, selling items you used for your business is a complicated topic. If you completed deducted an item (toy) for your business and then sold it, you must report as income the amount you sold it for. If you were depreciating an item and then sold it, you must take this depreciation into account when determining if you sold it at a profit or loss. Any depreciation you claim reduces the profit. For details, see my Family Child Care Tax Workbook and Organizer.