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When tax time comes, small business owners often do not maintain their books, so they hand over a handwritten note, excel spreadsheet, or shoebox of receipts and expenses to their accountant.

Just like any business, a childcare center is also a business. When you own a childcare center and continue to make the same mistake mentioned above, you set yourself up for failure.

The key to understanding anything is understanding its four primary aspects: what, why, how, and when. So let’s analyze each of these four aspects for the term “bookkeeping.”

  • Meaning of bookkeeping
  • Importance of bookkeeping
  • How you can maintain the books
  • The frequency in which you have to review your book
  • When to hire a professional bookkeeper?

Here we will also discuss the frequency of reviewing your book for childcare business owners.

  • Meaning of bookkeeping:-

First of all, let’s understand the meaning of bookkeeping in elementary words. The activity of keeping records of the financial affairs of your Business is known as bookkeeping. 

  • Importance of bookkeeping:-

Now let’s discuss why bookkeeping is essential for childcare or small business owners. There are so many advantages your business will get through the bookkeeping:-

  • Tax Deductions – 

Bookkeeping will help your business not to miss out on any claims or expenses.

  • Business Loan

   Bookkeeping will help your business with all the accurate and up-to-date financial details when you apply for Financial assistance/Relief/Grants for your business.

  • Financial Mistakes – 

Bookkeeping will also help you find financial mistakes like errors, omissions, duplicate payments, fraudulent transactions, staff stealing money so that your business can run stress-free from these time-consuming financial errors.

  • Financial Picture

 Bookkeeping will also help you to create a financial picture of your childcare business. With proper bookkeeping, you can understand the financial position of your business, like whether it is profitable or not. Also, it will help you identify whether your business’s services are correct with the price rate. Also, bookkeeping is the only thing that can help you create a budget and cash flow forecasts.

  • Business and personal

It is quite common for new businesses to make the mistake of having a credit card on hand before setting up a business bank account. Being able to consult a professional bookkeeper will assist you in avoiding this error and can help you give advice before you do so as well.

  •  How you can maintain the books:

The majority of childcare business owners keep their financial records in Excel, which is very unreliable. A highly recommended way to ensure accurate records can be achieved with software. There are many software programs available to assist your childcare business in keeping financial records, as well as saving you time. You can also seek professional help in setting up the account to keep your books easily.

  • The frequency in which you have to review your book:-

To have accurate financial records, it is crucial to review them throughout the year. One can decide the frequency based on the business’s revenue. You can part them like the following:

-> 1 Million in Annual Revenue – Monthly

-> $500K – $1M – Quarterly

-> $250K to $500K – mid-year, Oct, then year-end

-> Under $250K in Revenue – October, December

  • When to hire a professional bookkeeper?

Business owners sometimes lose their heads when it comes to determining when to hire professional help for bookkeeping. Therefore, we strongly recommend that any business owner dodoes over $500K yearly revenue not handle their accounts.

Hopefully, you will have a better understanding of why childcare businesses need a professional bookkeeper and how to determine if your business needs one.

We have more tips like these on our YouTube channel, so you can watch the videos over there if you’re interested.

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