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Daycare Center and Family Home Forum>Do you have a business checking account for your daycare?
permanentvacation 08:39 PM 08-05-2011
None of the daycare providers I know have a business checking account for their daycare. I have often considered opening one for my daycare though, but can't quite figure out how to organize it. If you have one, do you give yourself a paycheck each week? Do you really buy your household groceries from your personal checking account and your daycare groceries from your business account? Isn't that more work for you to go through? What about things that you buy to fix or upgrade your house that is not a 100% write off for your business? Let's say for example, you have a porch built. If you do daycare 12 hours/day, 7 days/week ( exactly 1/2 of a day every day per week), then you can write off 1/2 of the price of the porch. So do you pay 1/2 of it from your personal checking account and 1/2 of it from your business account? Do you pay all of it from your business account and keep it listed seperatly from your items that are 100% write offs? I'm a bit confused on exactly how to handle paying for things if I have a business account and it seems like so much more work involved to keep track of.
So, do you guys have a seperate business account for your business? If so, how do you pay for and record your income and expenses?
So, do you guys have a seperate business account for your business? If so, how do you pay for and record your income and expenses?
sharlan 08:42 PM 08-05-2011
I never have. I do have one cc that I try to use only for daycare expenses.
mom2many 08:55 PM 08-05-2011
I have never had a separate account for my business. I pay for everything out of my household account and itemize it out for tax purposes. We have had the same tax accountant, since I started my business and this has always worked very well.
jojosmommy 09:23 PM 08-05-2011
I have a seperate account just for business. All my checks or e payments go into this account. I have a check card and actual checks which I use to pay for things that are 100% business expenses. I split things up when I shop- I use my personal card for food and non deductable expenses and my business card for business/deductable things like paper products etc. I still enter them into mmk and claim the necessary % based on my time space but I find it helpful to keep things seperate.
I fund transfer myself from my business account to my personal account as I need. No need to write yourself a "paycheck" as you described. Tom Copeland says you can pay yourself in whatever manner you choose. I just prefer to have proof that the money parents are paying me is going into a seperate account first.
I did get audited recently and I think having a business only account is a must. Someone on here also recently mentioned getting a bunch of bank fees from not having enough funds when a clients check bounced. Keeping things seperate affects less of my personal spending when something like this happens.
My husband's paychecks are never deposited into my business account and say I do something for cash like a garage sale (or he does) it doesnt look like we are trying to hide some of our income when we have unaccounted for deposits.
When I record my mileage to the bank and stores into my mmk I just log onto my bank account and look in my business account. Much less to remember and account for.
As for large things like home remodel. We just did our roof and I paid out of my business account but you still have to find a way to track it. I use mmk and just depreciate it as required or time space it out. No reason to pay 1/2 and 1/2 when in reality you don't get to claim 1/2 of large projects anyhow- you have to depreciate them.
I fund transfer myself from my business account to my personal account as I need. No need to write yourself a "paycheck" as you described. Tom Copeland says you can pay yourself in whatever manner you choose. I just prefer to have proof that the money parents are paying me is going into a seperate account first.
I did get audited recently and I think having a business only account is a must. Someone on here also recently mentioned getting a bunch of bank fees from not having enough funds when a clients check bounced. Keeping things seperate affects less of my personal spending when something like this happens.
My husband's paychecks are never deposited into my business account and say I do something for cash like a garage sale (or he does) it doesnt look like we are trying to hide some of our income when we have unaccounted for deposits.
When I record my mileage to the bank and stores into my mmk I just log onto my bank account and look in my business account. Much less to remember and account for.
As for large things like home remodel. We just did our roof and I paid out of my business account but you still have to find a way to track it. I use mmk and just depreciate it as required or time space it out. No reason to pay 1/2 and 1/2 when in reality you don't get to claim 1/2 of large projects anyhow- you have to depreciate them.
ShortyMom 06:24 AM 08-06-2011
My daycare is licensed and I do business as an LLC, so it's pretty much a requirement. I don't have checks for it, but it's easier to keep money separate that way. My SO is a sole proprietor for his business, and running all the personal and business expenses under one account has been a headache in terms of taxes, financing, and income verification. I wouldn't recommend it even for sole proprietors.... Quicken is great for tracking various accounts, btw.
TBird 07:36 AM 08-06-2011
Originally Posted by jojosmommy:
I did get audited recently and I think having a business only account is a must. Someone on here also recently mentioned getting a bunch of bank fees from not having enough funds when a clients check bounced. Keeping things seperate affects less of my personal spending when something like this happens.
I hope it's not too personal but was your audit random or are there some "red flags" that the IRS was looking for related to your daycare that you can share???I did get audited recently and I think having a business only account is a must. Someone on here also recently mentioned getting a bunch of bank fees from not having enough funds when a clients check bounced. Keeping things seperate affects less of my personal spending when something like this happens.
Squirrel 10:00 AM 08-06-2011
I have a separate account basically so that checks can be written to my business name rather than my clients misspelling my real name all the time. I don't keep much in it because I pay bills and such from personal accounts. I don't use it much even if what I'm getting is 100% business because I'll get charged a maintenance fee by the bank for doing any more than deposits and transfers.
Crazy8 10:04 AM 08-06-2011
I do not. One reason.... the fees my bank charges for business accounts are too high (balance kept to avoid fees is 5k, etc.). Also, the money I make goes to pay my household bills, not business expenses since I don't provide food, etc. The only reason I'd want the business account is to have people write checks out to the business name but that isn't worth the hassle of everything else so they make the checks out to me.
Danielle 10:15 AM 08-06-2011
I don't but only b/c I have a very small daycare and get paid mostly in cash.
SandeeAR 01:48 PM 08-06-2011
We have a joint account for household bills.
I have a personal account for groceries, gift, eating out etc.
I have a DBA (Doing business as) Personal account in my Business name.
Personal accounts are free at our bank.
I put all daycare funds in the DBA account. Pay for business stuff there, transfer "my money" to my personal account for use.
This way our "bills" money is never in jeopardy. If a check was to ever bounce, it would mean less groceries bought or less eating out, until it was repaid. But our rent, insurance, electric, etc could never bounce.
I have a personal account for groceries, gift, eating out etc.
I have a DBA (Doing business as) Personal account in my Business name.
Personal accounts are free at our bank.
I put all daycare funds in the DBA account. Pay for business stuff there, transfer "my money" to my personal account for use.
This way our "bills" money is never in jeopardy. If a check was to ever bounce, it would mean less groceries bought or less eating out, until it was repaid. But our rent, insurance, electric, etc could never bounce.
jojosmommy 11:51 AM 08-08-2011
Originally Posted by TBird:
I hope it's not too personal but was your audit random or are there some "red flags" that the IRS was looking for related to your daycare that you can share???
Actually we got "reviewed" not a full audit b/c one student loan company did not report our interest paid in correctly. Each year you (taxpayer) gets to claim student loan interest paid as a deduction and we entered our total and since it didn't match we needed to provide proof of what we had paid in. BUT b/c one deduction changes your entire adjusted gross income (and thus your taxes owed as well as medical deductions, retirement credits etc) it was a bigger deal than it needed to be. I hope it's not too personal but was your audit random or are there some "red flags" that the IRS was looking for related to your daycare that you can share???
The review had nothing to do with daycare per say but since it all rolls together at the end of the year it was nice to have our ducks in a row and accounts seperate.