4 Child Care Accounting Tips for the New Year
As you’ve probably noticed, the calendar has moved to a new year—which is a great time to consider how to start the year right with your Child Care Management Software. You know… those common bookkeeping tasks needed to wrap up the last year and move forward into the new.
In this post we’ll reveal our top 4 tips for getting off to a great start. For those of you using Procare Software we’re also offering a free webinar on How to Start the Year Right (sign up here!) or watch a recorded version (below).
#1 Parent Tax Statements
The most common task at this time of year is getting tuition statements to each of your families that show the charges, payments and credits recorded during the previous year. With Family Accounting Software it’s easy to Email End-of-Year Statements to all families at once. Be sure to include your business tax ID number (in Procare you’ll find this within Region & School Options).
# 2 Financial Reports and Bad Debt
You’ll need accurate financial reports for your center. To make sure they are up to date you’ll want to Write Off any Bad Debt from last year. In other words, you don’t want to keep a family on the books that you know you’ll never collect from—doing so overstates your accounts receivable and is not a good accounting practice. Typically, you’ll write it off using a date of December 31 of the year that just ended. This will bring their balance to zero and let you get on with printing end-of-year reports for your center, such as the Total Charge & Credit Summary, and the Receivable Journal Summary, which you can save as PDFs or print out as hard copies.
# 3 Payroll Tax Tables, W2s, and Benefit Rollovers
If you’re doing Payroll for Child Care, make sure you begin using the latest federal and state tax tables as soon as they become available. Not to worry though, if you use the old tables for a pay period or two—it’s no big deal since income tax withholdings are simply an estimate of what each staff person will owe the following April and the differences over a couple of pay periods are insignificant.
The easiest way to produce W2s is to use W2 Software designed for your payroll system, especially software that supports Federal E-filing Requirements. Or, if you are having someone else do the W2s, you’ll need to provide them with reports showing the taxable earnings and withholdings for each person, such as an Employee Earning & Withholding Summary.
One more employee related item—if your policy on unused benefit hours, like vacation and sick time, states that they do not carry forward, you’ll want to be sure and Zero Out Benefits going into the new year.
# 4 Beginning Balances, Budgets, and Balance Sheets
You’ll also want to make quick work of the items below, either manually with spreadsheets or by taking advantage of Expense Tracking and General Ledger software specifically designed for child care providers:
- Calculate Beginning Balances for the start of the year for all assets, liabilities and equity, while resetting your revenue and expenses back to zero. This assumes your fiscal year begins January 1.
- Create a Budget for the new year to gauge progress on your revenue and expenses.
- Print a balance sheet, profit and loss report, and income statement for your overall financial records.
For Procare users, be sure to Sign up for our Free “How to Start the Year Right” Webinar and until next time, cheers!
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