Childcare Accounting – What to Do When You Fall Behind

January 2, 2024
childcare worker drowning in bookkeeping task for their childcare accounting

Childcare Accounting – What to Do When You Fall Behind

If you’ve made a New Year’s resolution to get caught up on your childcare accounting, then you’ll want to check out this article. We have put together a five-step guide to getting caught up—and staying current—on your books in time to file your tax return. Read on the find out more and get started today. 

Whether you are a little behind on your bookkeeping or way off track, you will want to take the necessary steps to get caught up as quickly as possible. 

Here’s what to do: 

Step 1. Gather All Receipts

First, collect all receipts, bank statements, and credit card statements related to childcare business expenses for all the months you have fallen behind. Review your records to make sure all customer invoices are up-to-date for the tax year and follow up with customers who are slow to pay. Determine whether you have any bad debt expenses to write off at this point. Review your vendor accounts to make sure you have paid all vendors in full, and be sure you have a bill from every vendor activity. 

Note: We recommend using a digital backup system for all receipts and bills. You can use Google Drive or one of these free receipt scanners: Evernote, Expensify, Smart Receipts, and Wave. 

Step 2: Reconcile Bank Accounts

Next, reconcile your bank accounts by comparing each transaction from your bank and credit card statements with the corresponding transaction in your childcare accounting records. If the numbers don’t reconcile, then identify and fix the errors. Ultimately, the balance on your bank statement should match the balance in your accounting records. 

Step 3: Separate Business and Personal Expenses

Third, make sure all your childcare business and personal expenses remain entirely separate. If you currently manage business and personal expenses with the same account, then you should be aware that doing so may have unpleasant consequences, such as being held personally liable for your business’s debt and actions and adding unnecessary stress to bookkeeping and tax filing. The sooner you separate business and personal expenses, the better. 

Step 4: Collect W-2s, W-9s, and 1099s

Did you work with freelancers or independent contractors over the past year? For any contractors you paid $600 or more this year, you will need to submit Form W-9 and Form 1099-MISC. You will also need to file Form W-2 for all employees, which they will use for their personal tax filings. Give yourself plenty of time to complete all the required paperwork before the filing deadline. 

Step 5: Call the Professionals 

There’s no doubt that getting caught up on bookkeeping on your own can be cost-effective, but only if it’s done right. If you’re overwhelmed by how much you have fallen behind or want to be sure your books are error-free, then it’s time to call the professionals. We highly recommend getting in touch with a certified public accountant (CPA) who can review your books, help you get caught up, and make sure you are taking advantage of any tax credits and deductions available to you. 

The childcare accounting experts at Honest Buck can help. Get in touch with us to discuss your childcare accounting and bookkeeping needs. Contact us today. 

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