OK I'm in trouble - Stup!d DH!!

[Mamma_Mia]

1st....PLEASE DON'T KILL ME! :o:o:o:o:o:o

When I frist started doing daycare (Jan 2012) somehow DH and I got on the topic of receipts etc. DH said I didn't need to give any out to parents....or to just tell them that I do not provide them. As the "money" guy in our family I believed him and went with that. Since NOT ONE SINGLE parent has ever asked about them it never crossed my mind.

So I haven't saved any thing for me to 'claim' and I'm soooooo confused!

NOW I have a 12mos old to start with me in two weeks and the parents today are asking to confirm that I do provide them. I don't want to loose them before they officially start!

I was on the CRA site and I'm worse off than what I started.....

WHAT DO I DO?

I know I have to save grocery, gas, supplies receipts but we haven't put ANY money away because we've needed every penny to live off of! I'm scared of having to pay a $3000 penalty or something..

** I'm NOT good at math or 'fancy terms' can anyone help me move in the right direction...but can I ask that it be put in "normal plain english" **

THANK YOU and please don't judge me for the ONE time I listened to DH :no:

[Inspired by Reggio]

Ok so you started your business in January 2012 ~ while your husband was wrong in your not needing to provide them at all you are not in trouble yet by not having given out receipts ;)

Yes you have to provide a reciept but it does not say how OFTEN you have to just that you have to ~ technically you only have to provide an ANNUAL receipt and like all business you have until February 28, 2013 to issue the childcare tax receipt for 2012 to any family you served during that year ... so you will not be getting a fine or anything ;)

Besides IMO it is much easier for everyone to just do ANNUAL one than to have to do them weekly cause than clients do not have to keep track of 52 receipts and well saves you time and paper in printing out so many and not having to give duplicates if they 'loose them' and so forth ;)

So first you need figure out a way to track your income ~ I use an Excel worksheet for mine but you can use a manual manner such as a accounting book or even a calendar. You can start from the beginning by recording each family you've had in care so far, when they started care and how much they paid you daily or weekly or biweekly or however you charge and than moving forward you keep a running tally of this ~ this is what you use to create your 'receipt' at the end of the year by adding up each persons 'amounts received' for that year ... great thing about Excel is you can make it add for you so no math required ;)

As for your expenses ~ start saving ALL your receipts for the household expenses .... this is so you can show how much you spend on groceries in total and how much of that was 'daycare' related you also want to save all your 'vehicle expenses' cause you can write off a portion of your vehicle for 'business' , save all your BILLS such as hydro, gas, water, mortgage interest, property tax and so forth you can write off a % of that as well.

Here is a list of what I 'save' receipts for as reasonable expenses for the daycare
Food & Kitchen Supplies ... I save ALL my receipts as proof I fed my family in addition to the daycare
Toys & Equipment
Craft Supplies
Field Trips & Outings
Gifts & Seasonal Celebrations
Office Expenses
Advertising & Website
Business Name Registration
Daycare Maintenance & Repairs
Professional Development
Interest on Line of Credit for Business
Interest on Credit card for business
Vehicle Expenses = gas receipts, oil changes and other maintenance, registration, insurance, etc
Business Liability Insurance
% Home Owners Insurance
% of annual Mortgage Interest
% of annual Property Tax
% of annual Gas bill total
% of annual Reliance Bill
% of annual Hydro bill total
Phone ~ you can write off any 'additions' to your landline such as call answer, display, forward but NOT the landline itself unless you have a 'business number' different than your home phone
Cellphone ~ if you purchased a phone specific for BUSINESS you can write that off 100% but be careful not to use it for personal use in an audit they can and will check your phone records! Otherwise you can write off the 'business use of it' ... aka a small %
Internet ~ this is a grey area of argument ... IMO if you need access to Internet for your business website page and advertizing it is reasonable to write off a % of your Internet specially since you may incur additional costs uploading images and so forth using up bandwidth and so forth
Cable ~ again like your phone line you cannot write off your basic cable because that is a personal expense for the family and sharing it for business does not cost 'extra' but if you purchased 'additional childcare related channels' for use with the daycare you could write that off ~ like the Disney channel or something.

If you did not 'save' your PAST receipts from January to now hopefully you paid by debit so you can print out your bank statements and 'circle' all the grocery expenses to get that 'proof' of groceries for that time frame than just do a guesstimate based on a reasonable equation of how much was 'daycare related' verses personal use based on menus served and so forth.

hope that helps ease your mind a bit :)

[Toregone]

Ok wowsers. That is a bit of a pickle. I would start saving reciepts ASAP and search through purses, desks, your office... anywhere a reciept of 2 might have gotten stashed. Every reciept counts.

As for putting money away... you might not be as screwed as you're thinking. It's August there is still time. It may crimp your budget some but start saving! Can you afford 150 a month in a saving account? You have August - March/April of next year to get some put away. Yes this carries into next year when technically you should be saving for 2013 taxes but you need to deal with immediate first. That gets about 1300 put away which will be a big help. Save ALL reciepts from now on.

To calculate what you've already spent you may need to do a guesstimate. Supplies, start up expenses, vehicle expenses. I'm not sure how to help you with those but for food there is a system to help. I have heard a lot of people make mention of a "set food amount" per child per day. Say 10 bucks. So every day you spend 10 bucks per child, then you work out how many days you've had kiddos and how many kiddos on each day. That should give you a food amount to claim. Then if you keep all reciepts for food between now and end of year you may have enough reciepts to cover the amount you wish to claim. This is certiantly not an ideal system but for this year it may work. And please take note that $10 was an arbitrary number that popped into my head, not a suggestion for how much to charge. I don't do it that way so I would get advice from someone who uses this system on settling on a number.

All your income needs to be claimed. My DH also ask wondered why I don't just work "under the table" and my response is just not worth the risk. If you have a parent who without a reciept claims the money they paid you CRA can come back and you could be in BIG trouble. I would never as a parent not claim daycare expenses, those are a HUGE deduction. You're actually lucky this situation arose now rather than next year when you still have time to try and fix the situation.

Hope this helps!! And just for future purposes here is what I do with reciepts. I have a box (pretty one from the Dollarama) on top of my fridge and every time I come up with groceries etc I put the reciepts in there. I know I could be SOOO much more organized but for me simple works. I know myself and spending 2 hours next March organizing the box is much more likely to happen than keeping everything neatly organized in folders by type of receipt/month etc. If you're at all like me a simple system like this might work to make things easy.

[Inspired by Reggio]

Also if you end up owing taxes for 2012 tax year and you have not 'saved up' to pay it all at once ~ you can pay them in installments once you know how much you owe but moving forward from NOW I would be looking at your family budget and figuring out a way to be putting aside 10-15% of your revenue from daycare just in case because chances are you are going to owe SOMETHING in taxes and if you save more than needed that's cool you can save it for when times are 'low' in daycare or if a big expense comes up for the daycare and so forth.

[stitcherka]

Don't forget to keep track of any mileage used specifically for your business too.

[mimi]

I would visit an accountant after figuring out your gross income to date. There is an reasonable percentage you can claim on grocery and look at your utility bills using an equation provided by accountant to figure out what you can claim there. (based on your homes sq footage/ amount of time daycare in operation etc. You are not in trouble, just behind in your book keeping. It is worth the investment in the accountants fee to set you in the right direction and start doing things correctly. You don't need to be losing sleep wondering if you are doing things right.

[Momof4]

I agree with Mimi, it's not too late and we're only halfway through the year. Go back week by week and figure out your income and write it all down and catch up. I bet those parents will be expecting receipts at the end of the year, but I'm surprised they didn't bring it up. Now that I think about it, I'm always the one who tells them that I make up weekly receipts as I'm paid and at the end of the year I give them all out at once. That way I'm not writing out duplicates because I have friends who told me they end up doing that.

[Cocoon]

I know you said not to judge but I will :) you should know that if you don't provide receipt it is obviously means that you are working under the table! What I read from your posts I dont think you are that naive.

Regarding your situation, you shouldn't be panicking as the new family hasn't started yet. When they start then you can collect your receipts for the tax purposes. Since you did not provide receipts to your current clients so far I don't think you should be claiming anything from those expenses.

I'm very anal when it comes to taxes and I belive if a person can manage a business they should also be able to know about basic taxes. Even if we use an accountant it is our responsibility to check everything is by the book.

[Mamma_Mia]

I Just wanted to say THANK YOU for you help, I'm meeting with our accountant for better claification this week.

You girls ROCK :thumbsup:




Oh and Cocoon, Aren't you a BIG ol'ball of sunshine!

[Toregone]

Oh and Cocoon, Aren't you a BIG ol'ball of sunshine!

Ha! I thought the same thing.

I'm glad you're getting things sorted out. It's not too late. I'm sure it won't be easy but it can be done. And as for claiming expenses for the children you currently have in care but have not yet provided reciepts for I would claim expenses and at the end of the year give them a reciept for everything paid that year. You don't have to provide reciepts on an ongoing basis, just once per year.

[Inspired by Reggio]

.... Since you did not provide receipts to your current clients so far I don't think you should be claiming anything from those expenses.....

I am anal myself when it comes to 'rules' but I have to disagree with this quote!

Yes she made a mistake of following the advice of a third party rather than researching it herself ~ lots of providers make that same mistake unfortunately getting outdated or misinterpreted advice as a result of looking things up and reading first hand .... but fortunately she has realized it it early on in the game she did not open until the start of 2012 so she does not have to provide receipts until Feb 2013 for this tax year so has lots of time to provide current and future clients receipts for this tax year and every legal right to claim ALL expenses incurred for business during the 2012 tax year ... she would just have to find a way to PROVE those business expenses which would be time consuming but not impossible.

My brother owned a business a few years back and had a 'bad break up' with his ex and in a fit of anger she BURNED all his belongings on him including his business files ~ his Accountant and CRA worked with him to recreate 'reasonable income and expenses' based on other businesses that year and what records he could recreate so he could file his taxes for that year.

[Crayola kiddies]

I too only give out one receipt in February for the prior years taxes. I do save all my receipts and I do have an accountant. Now I was not full last year I had one full time for the entire year, one part time for the year,one just after school from Jan to June and one full time for aug and b and a from sept to dec and my accountant was able to do it so All that I owed was the value of my cpp. I never even claimed all the supplies that I had purchased cause he said to wait till this year when I might need it more. So I keep a running list of the items like the high chairs, play pens, toys, outdoor toys, ect with the amount that I paid as I bought these things second hand . So hopefully you won't have to pay too much.

[Mamma_Mia]

I too only give out one receipt in February for the prior years taxes. I do save all my receipts and I do have an accountant. Now I was not full last year I had one full time for the entire year, one part time for the year,one just after school from Jan to June and one full time for aug and b and a from sept to dec and my accountant was able to do it so All that I owed was the value of my cpp. I never even claimed all the supplies that I had purchased cause he said to wait till this year when I might need it more. So I keep a running list of the items like the high chairs, play pens, toys, outdoor toys, ect with the amount that I paid as I bought these things second hand . So hopefully you won't have to pay too much.

ok good to know, thanks!