Business Profit Vs. Income Made

[My4SunshineGirlsNY]

Sorry for the multiple questions, this is my first full year in business and what better place to ask than here!

Usually I wouldn't share numbers but I want to make sure my taxes are "normal" for a daycare provider....so far I have income of $18,555 and after the expenses I have entered currently (which lacks my cable bills and depreciation of home) I am showing a profit of only $3700....does this sound "normal"? With this being my first full year in business I had many purchases. Hope this sounds right.

[dEHmom]

I can't honestly be too much help, but to me it does sound about right.
I know if my mother in laws last year of childcare, she made 20 or 25 000 dollars, and knocked it down to about 8 000 after all deductions.

[lvt77]

Sorry for the multiple questions, this is my first full year in business and what better place to ask than here!

Usually I wouldn't share numbers but I want to make sure my taxes are "normal" for a daycare provider....so far I have income of $18,555 and after the expenses I have entered currently (which lacks my cable bills and depreciation of home) I am showing a profit of only $3700....does this sound "normal"? With this being my first full year in business I had many purchases. Hope this sounds right.

I was told by my cpa last year that it is expected to take a loss the first 3 years that you are in business....
My numbers were 23,000 and expenses were 31,000. I bought new computer for DC, tables, chairs, education programs and etc, so this year i won't be spending as much...

[Abigail]

I was told by my cpa last year that it is expected to take a loss the first 3 years that you are in business....
My numbers were 23,000 and expenses were 31,000. I bought new computer for DC, tables, chairs, education programs and etc, so this year i won't be spending as much...

WOW, $31,000 in daycare expenses?! That's a lot....that's more than I make right now. LOL

[Abigail]

Sorry for the multiple questions, this is my first full year in business and what better place to ask than here!

Usually I wouldn't share numbers but I want to make sure my taxes are "normal" for a daycare provider....so far I have income of $18,555 and after the expenses I have entered currently (which lacks my cable bills and depreciation of home) I am showing a profit of only $3700....does this sound "normal"? With this being my first full year in business I had many purchases. Hope this sounds right.

I know you have a "start up" way to calculate things if you already had things before opening daycare. Did you open in 2010 or did you mean you've been open since sometime in 2009 and this is a complete 12 month year? Make sure you follow the rules for purchases over a certain amount ($100 I think?) and depreciate them over time. Sounds like you're very organized.

[My4SunshineGirlsNY]

I opened in Sept. 2009 but found myself buying a lot still in 2010. I have a couple higher priced items I need to fix to the depreciation method. I use Minute Menu and entered it in using depreciation but Minute Menu was still showing it to be TSP on the full amount, not the depreciation amount...anyone know why this is?

It asks for the value when placed in service, so I enter in the value I paid for the item since it's brand new, selected TSP since it's a shared item, then selected the 7 year depreciation as the option it gave me and the half year option since I had it 1/2 the year and when submitted it was still showing the TSP on the full value of the item. Help, anyone??

[AnythingsPossible]

I must be doing something wrong as my income has never gone down so much after deductions. I average 9 to 12,000 a year with household utilities deductions and everything. I don't know how everyone else accumulates so much in deductions. I usually earn around 36,000 a year, give or take, and still pay taxes on well over 20,000. Different people I talk to tell me I need to find more deductions, but I don't see how without completely scamming the system.

[TomCopeland]

Profit?

It's not unusual to show a loss your first year in business (start-up expenses, low enrollment, recession, etc.).

Minute Menu doesn't calculate your depreciation. The depreciation rules are too complicated. So, use MM to record your larger expenses and let your tax preparer do the calculations or use my 2010 Family Child Care Tax Workbook to do your taxes yourself.

[My4SunshineGirlsNY]

It's not unusual to show a loss your first year in business (start-up expenses, low enrollment, recession, etc.).

Minute Menu doesn't calculate your depreciation. The depreciation rules are too complicated. So, use MM to record your larger expenses and let your tax preparer do the calculations or use my 2010 Family Child Care Tax Workbook to do your taxes yourself.

What I did last year was printed out my Minute Menu reports and gave them to my accountant...all my numbers were already calculated for him. So if I want to add in my depreciated items, can I calculate the depreciation myself and still enter them in MMK so it shows under my Schedule C report?

I read the tax rule for 2010 depreciation, I can take 1/2 the depreciated value the first year my item is purchased and the rest I can depreciate over the allowed depreciation time...So I guess I just enter in the cost of 1/2 the depreciated value then, correct? Wow I have spent a lot of time yesterday and today reading...I'm getting there! Still so much to read.

[cillybean83]

2010 was my first year, I didn't have enrollment until MAY! I lost $800 for the year, not bad considering what it could have looked like! Hopefully I'll turn a profit in 2011!

[TomCopeland]

MM records and depreciation

You can't calculate your actual depreciation deduction on MM. Depreciation expenses show up on Form 4562 and then are transferred to Schedule C.

I wrote a blog post about the new 50% additional depreciation rule - http://www.tomcopelandblog.com/2010/...-business.html

To use this rule the item must be purchased new in 2010. You would multiply the cost by your t/s% (assuming it's a shared expense). Then take half the result and deduct it in 2010, and depreciate the other half over the normal depreciation period for that item.

[My4SunshineGirlsNY]

You can't calculate your actual depreciation deduction on MM. Depreciation expenses show up on Form 4562 and then are transferred to Schedule C.

I wrote a blog post about the new 50% additional depreciation rule - http://www.tomcopelandblog.com/2010/...-business.html

To use this rule the item must be purchased new in 2010. You would multiply the cost by your t/s% (assuming it's a shared expense). Then take half the result and deduct it in 2010, and depreciate the other half over the normal depreciation period for that item.

So you're saying that I can't make this calculation myself and enter it in under Schedule C on Minute Menu? I would have to just take my calculations on a separate paper and give it to my accountant? Just want to clarify, thank you.

[TomCopeland]

Depreciation and MM

Depreciation expenses are put on Form 4562 and then added together and entered on Schedule C.

I wouldn't try to put them on Schedule C on Minute Menu (even if you did the depreciation calculation on your own) because it might confuse the tax preparer.

Just print out the depreciation report on Minute Menu and give this to your tax preparer.

[My4SunshineGirlsNY]

Depreciation expenses are put on Form 4562 and then added together and entered on Schedule C.

I wouldn't try to put them on Schedule C on Minute Menu (even if you did the depreciation calculation on your own) because it might confuse the tax preparer.

Just print out the depreciation report on Minute Menu and give this to your tax preparer.

Ok, thank you so much for clarifying that, the depreciation was really confusing me but it is looking so much clearer now. Thanks again!