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Dabill 02:47 PM 12-15-2017
Hello, I am new here and have some questions! I am interested in starting a family daycare, but only if I can use a separate space. I was considering building an open, non-home like building, but it would be considered a commercial building requiring it to pass the same inspections as a center. That would be costly, so now I'm looking into building an actual home that is only used for daycare. I was told that as long as it's built as a home, it would be considered residential even if I don't live there. I have many questions,but first I am interested in how tax deductions would work in this scenario. Since everything there would be used only for the business, could I deduct 100% of space, utilities, etc? I am located in Minnesota. Any info helps! Thanks!
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Blackcat31 02:59 PM 12-15-2017
Originally Posted by Dabill:
Hello, I am new here and have some questions! I am interested in starting a family daycare, but only if I can use a separate space. I was considering building an open, non-home like building, but it would be considered a commercial building requiring it to pass the same inspections as a center. That would be costly, so now I'm looking into building an actual home that is only used for daycare. I was told that as long as it's built as a home, it would be considered residential even if I don't live there. I have many questions,but first I am interested in how tax deductions would work in this scenario. Since everything there would be used only for the business, could I deduct 100% of space, utilities, etc? I am located in Minnesota. Any info helps! Thanks!
Welcome to the forum!

I am also in Minnesota.
I also provide care in a house in which I do not live.
I have operated this way since I opened (mid-90ies)
I am licensed as family care.

There are several women that operate this way in my community. One operates FAMILY child care in a commercial building and is licensed as family care (rule #2)

If you have any questions and I can be of help, don't be shy!
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Dabill 03:17 PM 12-15-2017
Thank you in advance for your help! I am mostly interested in how tax deductions work. Are you able to deduct 100% of your daycare homes expenses?
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Blackcat31 04:22 PM 12-15-2017
Originally Posted by Dabill:
Thank you in advance for your help! I am mostly interested in how tax deductions work. Are you able to deduct 100% of your daycare homes expenses?
Yes, everything is for the business.
I donít do my own taxes so I donít know the complexities of it all but yes every expense is counted.
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Dabill 04:33 PM 12-15-2017
Originally Posted by Blackcat31:
Yes, everything is for the business.
I donít do my own taxes so I donít know the complexities of it all but yes every expense is counted.
Ok.. I'm trying to figure out if I'd be able to make enough income after paying the mortgage, utilities, etc.. after I get started I would like to have my mom work with me, which would be another expense.. I just think it'd be nice to have a separate space and be able to leave your job!
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Blackcat31 05:24 PM 12-15-2017
Originally Posted by Dabill:
Ok.. I'm trying to figure out if I'd be able to make enough income after paying the mortgage, utilities, etc.. after I get started I would like to have my mom work with me, which would be another expense.. I just think it'd be nice to have a separate space and be able to leave your job!
I make a pretty nice income.
You are planning well!

I am licensed for 12-14 and usually have 12
I donít take kids once they start school.
My DH is also self-employed and assists as a second (licensed) caregiver when necessary so I donít currently have an employee that I have to pay but have in the past.

If you your area has the need for care options and you can buy/built efficiently you can absolutely turn a good profit.

Know your areaís needs and create a good business plan.
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Blackcat31 05:28 PM 12-15-2017
You can apply for start up grants to help you get all the required equipment and such too...

http://childcareawaremn.org/professi...s-scholarships
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TheMisplacedMidwestMom 10:01 AM 12-16-2017
Just throwing out ideas.... I operate out of the home I live in, but have a completely separate level for daycare. Other than the laundry being located downstairs I don't often go in the daycare area at all when not working. The daycare has its own playroom, kitchen, bathroom, and bedrooms. So I still get a lot of that feeling of leaving work, only my commute is a flight of stairs.
I know that wasn't your question, but possiby another option to consider if you're looking to buy/build anyway.
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Dabill 06:57 PM 12-21-2017
Originally Posted by TheMisplacedMidwestMom:
Just throwing out ideas.... I operate out of the home I live in, but have a completely separate level for daycare. Other than the laundry being located downstairs I don't often go in the daycare area at all when not working. The daycare has its own playroom, kitchen, bathroom, and bedrooms. So I still get a lot of that feeling of leaving work, only my commute is a flight of stairs.
I know that wasn't your question, but possiby another option to consider if you're looking to buy/build anyway.
This is something I've strongly considered. I just have trouble thinking of a floor plan that I would like!
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Dabill 01:02 PM 01-03-2018
how does it work if I have my own kids.. say I buy toys that are only for daycare use, but my kids will be at daycare with me obviously.. so if they only play with them during daycare hours can I count these toys as 100% business? or because my own kids touch a toy does it make it not 100% business, even though my kids are counted in the ratio and everything?
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Blackcat31 01:18 PM 01-03-2018
Originally Posted by Dabill:
how does it work if I have my own kids.. say I buy toys that are only for daycare use, but my kids will be at daycare with me obviously.. so if they only play with them during daycare hours can I count these toys as 100% business? or because my own kids touch a toy does it make it not 100% business, even though my kids are counted in the ratio and everything?
Any toys you purchase specifically for child care are 100% deductible. If your child plays with the toys outside of care then you would use T/S% but if your child is only allowed to play with them during daycare they are daycare toys and 100% deductible. Your child(ren) are daycare children during daycare hours.
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Dabill 01:28 PM 01-03-2018
Originally Posted by Blackcat31:
Any toys you purchase specifically for child care are 100% deductible. If your child plays with the toys outside of care then you would use T/S% but if your child is only allowed to play with them during daycare they are daycare toys and 100% deductible. Your child(ren) are daycare children during daycare hours.
Thank you!! You are so helpful. I really appreciate it!
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Tags:deduction, separate building for daycare, tax advice
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