Running a daycare is a fulfilling job, and important to parents who need someone watch their children. There are plenty of things to keep you busy at all times so making things easier is crucial to your peace of mind. And so that you can focus on other things – like the children trusted in your care. One way to make things easier on yourself is to have an accounting plan.
Here is a starter guide to daycare accounting and what you need to know.
Why Accounting is Important
No matter what kind of business you run, accounting is integral to ensuring your business is on the right track. Not to mention having the information you need for taxes and other related entities. With daycare accounting, you have data, records, reports, analysis, accurate information about assets, debts, liabilities, profit, and more.
According to Chron:
In addition to providing you with the tools to compile the information you need to complete your tax returns and apply for business loans, small business accounting helps you understand what’s going on with your business financially. When you understand your company’s financial workings, you are better able to keep your operations profitable and stay afloat. If you keep accurate books, you can see whether you’re spending too much money in a particular area such as materials or payroll.
Accounting also tells you when your operations tend to be busiest and when you spend the most money on expenses such as taxes and licenses. If your books are current and accurate, you are able to use the information they contain to make better choices and earn a better living.
And while you may be able to start out doing your own books, why not allow a professional to do it so that there are no mistakes and you have more time to do other things?
Does Daycare Accounting Differ From Other Businesses?
While your business may be different from another, the accounting is going to be somewhat similar. You will still need to keep up with things like:
Payroll. This includes things like paying employees, filing W-2 forms, tracking hours, and employment taxes.
Expenses and Accounts Payable. These expenses range from toys for the children to play with to cleaning products used and even utility bills.
Service Fee Income. This includes invoices for the parents, tracking deposits, preparing receipts for parents, accepting payments via credit card or ACH, recording income, and more.
Sales Tax. This is pretty self-explanatory but it crucial for correct IRS reporting.
Income Tax. Much like sales tax, this is imperative to keep up with.
Financial Reporting. This includes generating balance sheets, income statements, and cash flow statements.
Running a daycare means that you have a lot of accounting issues that need addressing, much like other businesses. The difference is simply in the details. For instance, a restaurant won’t need to keep up with customer ACH payments but you do not have to keep up with inventory on food. The basics are still similar. The bottom line is that it is extremely important that you have a professional accounting service that keeps everything right on track.
What Daycare Accounting Covers
Some people may feel that they are adept enough to use accounting software. While accounting software does help cover a few things like syncing data or automating your routine, it still depends on user ability and the user keeping up with it. If you don’t enter your numbers or do not have the information you need, it won’t work as well.
With daycare accounting from an accountant, you get much more – such as:
Someone who matches your business needs with appropriate software if necessary
The ability to pinpoint account problems and issues that you might not be aware of on your own or with software alone
Someone who can suggest improvements and provide or suggest proactive planning services
Gives a level of assurance that you’ve done things properly and won’t have the state or the IRS coming after you
That’s not all. With an accounting firm, you have the ability to call and talk to someone about your needs or issues. While you won’t have 24/7 support, you don’t with accounting software either. And with an accountant, you’re talking to someone who specializes in accounting – not just someone who can tell you about the software but not about individual issues with what you’re doing.
Let’s say that there are numbers in your accounting software that don’t seem to add up right or something seems amiss. Your tech support is going to be someone who only helps with how the software is working, not the fact that your figures are amiss. But with an accountant, you can reach them about what is going on with your finances and talk to a real person who cares about your business needs.
This doesn’t mean you shouldn’t use daycare accounting software. Instead, use it for your day-to-day operations but have an accountant who you can turn to for your needs.
You Owe It To Your Daycare Business
You owe it to yourself and your daycare business to make things as seamless as possible. Instead of learning difficult software as your main accounting form or relying on yourself not to make errors (or someone on your staff), you can trust an accounting firm to keep everything easily accessible and help you if there is something you need.
Honest Buck is a full-service accounting firm in Seattle. We offer a range of options from bookkeeping help using popular accounting software to tax planning and consulting services. To learn more about how we can help with your daycare’s accounting needs, schedule a consultation now.