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I'm considering opening up a licensed home daycare. I've looked into many of the rules and regulations so far, but my concerns are mostly with the cost of operation and legal matters. I live in SW FL and things are expensive here. I've looked up liability insurance and it runs on avg 800/yr for 8-10 kids. Does that seem right to you? Also, I'm wondering how taxes are done. I've been told by family that I have to choose a business name and file separately as a small business and submit paperwork 4x a year for a home daycare. Is this true? Any info you can give me about the legal rundown of a home daycare would be GREAT. Thanks!
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I can't answer for your state taxes, but for federal you don't have to file separately from your regular taxes. There are more forms to fill out as you have to pay self employment taxes. You will be paying your own social security and medicare and your regular taxes on your income. I would figure at least 30% of what you make will go to taxes. As far as paying the four times a year, it depends. I have my husband withhold from his check for taxes as single, it is enough to keep me from having to pay quarterly. Tom Copeland will likely chime in here, he is the expert! I have a business name, but I still file it with my regular taxes there is a place on the paperwork for "Doing Business As". -
I am in SWFL also. That sounds high for insurance. I pay $511, and I am licensed center with a capacity of 15 children. Its a $600k policy. I'm not sure about home daycare rules, but centers must have a name. You file DBA status with the state, you can do that online. I would suggest you separate your business and personal finances. Definitely have a separate bank account.
Taxes.....not my area of expertise. :
: If you post in the "taxes" section of this forum, Tom Copeland can answer almost any question. I do mine annually. I think that's cool. :confused:
Whereabouts are you? I'm in SRQ. I'd be glad to help, if I can. Regs are quite different for licensed facilities and I'm not sure about all home daycare rules.Comment
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Also....I use Insurance Time of Bradenton for both hazard and liability insurance. I love them!Comment
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Thanks for the quick answers. I'm in Charlotte County.Comment
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First of all, if you're in Florida you don't pay a state income tax. That's why your property tax is so high. Secondly, no you will not necessarily have to file quarterly. Do you plan on having employees? If not, the only thing you'll need to do is keep a detailed record of every dollar made and every dollar spent. No dire need for a separate bank account. If you are a sole proprietor, the government doesn't consider your business to be separate from your personal accounts.
Now, if you plan on expanding, hiring employees, etc, you may want to create a business entity such as an LLC, and will have to pay withholding taxes, ss and medicare. I highly recommend that you hire an experienced CPA to help you set up everything you'll need for that.Comment
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I'd also say that the liability insurance is too high. Mine was $500 annually for 8 children. I got mine through a broker using Mt. Vernon Insurance.Comment
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Our property taxes are actually half the price here in FL compared to what they were up north in IL - surprisingly! Yes I'm glad that we don't pay state income tax, so it will probably save a lot of $$$ in the long run. Might have to check in with H&R Block to see about specific tax info. And I won't be having any employees, so hopefully it will make things smoother.Comment
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I would look into buying books by Tom Copeland, look him up on Amazon.com, he also has a blog, just google his name. I pay about $680 a year for a million dollar liability policy (http://www.assurechildcare.com/) . It's up to you if you want to file a fictitious business name. You should get an EIN so you don't have to use your personal social security number, you can get one online: http://www.irs.gov/Businesses/Small-...8EIN%29-Online . As a sole proprietor you will be responsible for paying quarterly taxes, or as someone else mentioned, making sure your spouse is withholding enough from their paycheck to cover those taxes, otherwise you can get a penalty. I use a separate checking account to deposit all my daycare income into, and I have a separate savings account that I always transfer about 25% of the income into to save for tax payments. I use a tax preparer that specializes in home daycares and he charges $500. I'm going to try doing it on my own this year since I've got some experience with it all now. But it was helpful to have the tax preparer calculate how much my quarterly tax payments should be.
You say you live in an area where things are expensive - that's a good thing in my opinion, because you will be able to charge more for daycare. As an example, my daycare brought in about $48k, my daycare expenses were about $6k (actual supplies, liability insurance, food, and toys, etc) and my household business use expenses (the percentage of utilities, rent/mortgage, etc used by the daycare, which for me was 36%) were about $10k. So my net profit was $32k. I live in an area where a 3 bed/2 bath house rents for about $2,200/mo and would sell for about $450k+, to give you an idea.Comment
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Check out my blog to see my insurance directory to see if you rate is reasonable: http://www.tomcopelandblog.com/famil...directory.html
You do not have to file quarterly estimated taxes if your husband has enough withheld from his taxes to cover you. You do not have to have a business name. You should continue to file married filing jointly (if you are married). You don't file separately as a business.Comment
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