Tom Copeland has written over 1500 articles on this website and it’s probably overwhelming to try to sort through all of them.

Here’s 125 of the best of these articles.

The articles cover the topics of:

• Record Keeping and Taxes
• Contracts and Policies
• Marketing
• Legal & Insurance Issues
• Money Management and Retirement

You are free to download, copy and share these articles with anyone. Organizations can post them on their website. Trainers can use them as handouts in their workshops. Share away!

The organization of these articles was made possible by the National Center on Early Childhood Quality Assurance. There you can find two online classes Tom developed on Record Keeping and Taxes and Contracts and Policies. In addition, you can find three webinars Tom recorded on Money Management and Retirement, Legal & Insurance Issues, and Marketing.

Tom Copeland

Image credit: https://serialtrainer7.com/best-of-the-best-image/

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Providers often ask why they should pay themselves – and how they should do it. Shontae Hightower, one of our Early Child Care Business Coaches, talks about that in this video. 

More information:

What Does It Mean to Pay Yourself With a Stabilization Grant?

Paying Yourself: A Guide for Sole Proprietors

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Since taking over this blog, our team from Civitas Strategies Early Start has had a chance to get to know some of you, Tom Copeland’s loyal readers. Now it’s your turn to get to know some of us. Our President and CEO Gary Romano made this video so you can get to know a little bit about him. And stay tuned: we’ll be sharing videos from other members of our team soon!

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By: Gary Romano

Breaking news from the IRS that can increase your 2022 deductions: In light of the increasing cost of gas, the IRS standard mileage rate has increased to 62.5 cents per mile for travel from July 1, 2022 to December 31, 2022. 

Mileage from January 1, 2022 to June 30, 2022 will still be at the previously set rate of 58.5 cents per mile. 

As a reminder, you can count a trip as a business trip if the “primary” purpose of the trip is business. Primary purpose means that more than 50% of the reason for the trip is business. To learn more, read Tom Copeland’s post about claiming vehicle expenses for your child care business.

Thank you to Fred Kenyon of Kenyon & Associates who first brought this to our attention. 

Gary Romano is the President & CEO of Civitas Strategies Early Start. He is an award-winning strategist and experienced adviser for nonprofit leaders and entrepreneurs, driven by the vision that no child will grow up in poverty. In 2009, Gary founded Civitas Strategies to provide mission-driven organizations with the high-quality, cost-effective consulting services needed to improve outcomes for families and children.

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I’ve created two online, self-directed classes to help family child care providers be more successful in their business. The classes are free.

Family Child Care Record Keeping and Taxes

After completing this class, you will be able to:
• Keep accurate business records.
• Track your business income.
• Deduct your business expenses.
• Calculate your time-space percentage.
• Depreciate your home and home improvements.
• Follow special rules for claiming vehicle and food expenses.

Family Child Care Contracts & Policies

After completing this class, you will be able to:

*Establish a business relationship with parents.

*Create a contract and policies.

*Make changes in your contract and policies.

*Enforce your contract and policies.

*End your contract with parents.

You can navigate through the classes at your own pace and self-check what you’ve learned with quizzes throughout.  Contact your state’s professional development registry for questions about using this course for training credit or to inquire about a certificate of completion.

These classes are sponsored by the Child Care Communications Management Center, which is funded by the Office of Child Care (OCC), Administration for Children and Families (ACF), U.S. Department of Health and Human Services (HHS), and was developed in partnership with the National Center on Early Childhood Quality Assurance, which is funded by OCC, the Office of Head Start, ACF, HHS.

Tom Copeland

Image credit: https://www.imf.org/en/Capacity-Development/online-learning

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Your second quarter payment includes the months of April and May. Your third quarter payment will include the months of June, July, and August, while the fourth quarter will include the months of September, October, November and December. (Yes, the tax quarters for estimated taxes are not equal!)

To determine your business profit, add up your income for April and May (parent payments, CACFP reimbursements, grants) and subtract your business expenses for these months. You will owe federal income tax plus Social Security tax (15.3%) on your profit.

Most child care providers do not need to file estimated taxes (IRS Form 1040 ES Estimated Tax for Individuals) because their spouse usually has enough withheld in taxes to cover them. If you are single or have a spouse who is unemployed or self-employed, you likely will need to file.

If you are not sure if you have paid in enough taxes for the months of April and May, it’s worth making a payment. You goal is to have paid in at least 90% of the taxes you owe for this quarter to avoid paying a penalty, and, as always, if you pay in too much you will get a refund.

How do you know how much you will owe in taxes? If you were in business last year, use that as a guide. If this is your first year, use 20% of your gross income (parents fees plus Food Program income) for April and May as a conservative guess of how much you will owe. For more help, see Tom Copeland’s article on “How to Estimate Your Taxes in Your First Year of Business.”

You also should check your records to see if you will owe any state income taxes. If so, make a state estimated tax payment by June 15th as well. And set a reminder in your calendar for future tax deadlines: third quarter estimated tax payments will be due September 15 and fourth quarter payments on January 17, 2023.

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A recording of the webinar “Money Management & Retirement with Tom Copeland” is now available.

In this webinar I covered how family child care providers can save more money for retirement and will learn how to invest using the various IRA plans available. In addition, I spoke on how to:

• Identify ways to reduce expenses.
• Recognize where to put money to meet short- and long-term goals.
• Prioritize long-term financial goals.
• Understand the five basic rules of retirement planning.
• Gain knowledge about IRA retirement plans for providers (e.g., traditional IRA, Roth IRA, SIMPLE, SEP).

Here’s a link to the webinar recording.

Here’s a link to the power point slides.

Here are some of the questions and answers from the webinar:

Individual Retirement Account

Q: How much should I be putting into my IRA each month?

A: This is not a simple question. It totally depends on your age, how much you have previously saved for your retirement, how much you will need in retirement, and other income you may be receiving in retirement. In general, you will need about 70-80% of your current income to maintain your current standard of living in retirement.

Q: What type of retirement accounts should a sole proprietor own?

A: There are several IRA accounts that the vast majority of providers can contribute to. They are: Regular IRA (also known as the Traditional IRA), Roth IRA, SIMPLE IRA and SEP IRA.

Q: For an individual home daycare provider, should I set up a SIMPLE IRA or a Roth IRA? Or both? Should I start putting a portion of my income towards quarterly tax bills or have my husband start withholding more from his paychecks?

A: I like a Roth IRA above all other IRAs. That’s because although you don’t get a tax deduction when you make your contributions, you will not pay any taxes on your contributions or the interest earned when you withdraw them in your retirement. You can contribute to both a SIMPLE IRA and Roth IRA in the same year. Your first priority is to get the maximum contribution your husband’s employer can make on top of your husband’s contributions. After her has gotten the maximum employer contribution, you can start investing in your own IRA.

Q: What would be best way to invest in a 401K?

A: A 401K is a type of an IRA. You can set up a solo 401K plan, but I wouldn’t recommend doing so unless you have at least $10,000 or more than you can contribute to it each year. Instead, start with a Traditional IRA, Roth IRA or SIMPLE IRA, where the annual expenses are lower.

Q: What is the max I can put away a year for retirement?

A: The amount you can put away in an IRA each year depends on the type of IRA you invest in. You can contribute up to $6,000 a year in a Traditional IRA or Roth IRA. If you are age 50 or older you can contribute an extra $1,000 a year. You can contribute up to $13,500 into a SIMPLE IRA, and another $3,500 if you are age 50 or older. You can contribute up to about 18% of your profit into a SEP IRA each year. You can also save money for your retirement outside of an IRA and there is no maximum on how much this can be.

Q: Have you heard of “hiring” your children and establishing a Roth IRA for your children?

A: Yes, this can be a good idea. To do this you must have your child do work for your business and pay them a reasonable amount ($10-$15 per hour, perhaps). You can set up a custodial Roth IRA for your child and contribute your own money on behalf of your child.

Q: Can I contribute to all these vehicles and max them out? I’d like to shelter most of my CCRF grant funds and avoid the higher tax bracket.

A: You can contribute to both a Traditional IRA and Roth IRA in the same year, but the maximum you can contribute to both is $6,000 per year ($7,000 if you are age 50 or older). In addition, you can contribute the maximum to a SIMPLE IRA. You can’t contribute to both a SIMPLE IRA and a SEP IRA in the same year

Q: Can a provider contribute to her own IRA and then contribute to a spousal IRA for her husband that is her assistant?

A: Yes.

Q: Is the Roth IRA still the best choice for those of us that are within 10 years of retiring?

A: Yes, in my opinion. See my article for more on the Roth IRA:

Q: Is there a minimum age or minimum income to contribute to a Roth?

A: No, there is no minimum age requirement to be able to contribute to a Roth IRA. You, or your child, must have earned income and the amount you contribute to a Roth IRA for your child cannot be more than your child’s earned income.

Q: My tax accountant aid I can only put $7,500 a year total in an IRA but it sounds like you are saying I can do more if I put in more than one source.

A: I don’t know where the $7,500 number comes from. You can contribute up to $6,000 a year into a Traditional or Roth IRA each year ($7,000 if you are age 50 or older). In addition, you can contribute up to $13,500 into a SIMPLE IRA (plus an extra $3,500 if you are age 50 or older).

Q: You said that fist contribute to 401k, then a Roth and then what next?

A: If your spouse works for a company that offers a retirement plan, and the employer contributes to this plan, then your first priority is to ensure that your spouse invests enough in this retirement plan to get the maximum contribution from the employer. This is free money! After that, in my opinion, make the maximum contribution to a Roth IRA. If you still have more money to contribute to an IRA, either have your spouse contribute more to his employer plan or you can set up your own SIMPLE IRA.

Q: If you have a Roth IRA, can you file your annual contributions on your taxes as Family Childcare Provider?

A: No. You do not get a tax deduction when you make a contribution to a Roth IRA. Instead, you won’t have to pay taxes on either your contributions or the interest it earn when you withdraw the money at retirement.

Q: Being that Subsidy payments are paid through the state, are we considered as state employees? Can we tap into their 401k plans?

A: No, you are not a state employee when you participate in your state’s child care subsidy program. Therefore, you can’t be a part of their 401K plan.

Q: What’s the difference between and IRA and an ING Direct? Which one is best?

A: ING Direct is an online bank where you can generally receive a higher interest rate on your savings than from your local bank. It is not an IRA investment. You can put some of your retirement savings in an ING Direct bank as part of your fixed asset allocation.

Q: If you invest in long-term stocks for retirements along with saving for the Roth IRA, how can I label the long-term stocks for retirement without being taxed a lot.

A: Any investment in an IRA, other than a Roth IRA will be taxed when you withdraw the contributions and interest when you start taking distributions when you retire. I strongly recommend saving as much as you can within a Roth IRA to reduce the taxes you will owe when you retire.

Q: If I have a license with The Navy, can they open a 401k for me?

A: I don’t know the answer. Ask someone from the Navy if they have a retirement plan you can contribute to.

Money Management

Q: Should you save if you have debt?

A: Not a simple question. You want to reduce and eventually eliminate all debt, especially credit card debt. You don’t want to wait before you start saving for retirement until all your debt is eliminated. Do some of both.

Q: Besides an IRA, what sort of accounts should one open? Money Market checking? Regular savings?

A: You need to review your entire financial situation before trying to answer this question. You want to reduce and eliminate debt, you want to create an emergency fund, you want to eventually pay cash for a car, you want to have adequate insurance, and so on. When saving for retirement, you want the vast majority of your investments in an IRA. It also makes sense to have some retirement savings outside of an IRA, invested in money market funds, CDs and other fixed assets. It doesn’t make sense to invest money in a regular bank savings account because the interest rate is so low.

Q: Should you work on improving credit score or build savings?

A: It depends on what you will be purchasing in the next few years. If you are looking to buy a home, take out a home equity loan, borrow money to buy a car, or borrow money for any other purpose, it makes sense to improve your credit score. That’s because a lower credit score will result in paying higher interest rates on loans. If you don’t plan on borrowing money in the near future, increase your retirement savings.

Q: I have 0 credit card debt; I owe $1500 on car 3% interest and $2000 5% interest on hot tub. If I pay off and put monthly payments into savings, it’s going to hurt my credit rating that I worked so hard to achieve. Would it benefit me to pay off?

A: I’m not an expert on what affects your credit score. In my understanding, borrowing money and then paying off the loan will increase, not hurt, your credit score.

Q: Can you talk about I-bonds?

A: I-Bonds are savings bonds issued by the US government. They earn a fixed rate of interest that is higher than most other fixed assets. Investors should hold onto these bonds for at least a year and preferable for five years. They cannot be held within an IRA or Roth IRA, so the interest is taxable each year. I-bonds are a good option as part of fixed assets that you are investing for retirement.

Q: What’s the max that you would recommend we should feel comfortable putting into an account that is uninsured?

A: This depends on many factors: how comfortable would you be if you lost all of this investment, how much you have saved in insured accounts and when do you need the money. Stocks and bonds are not insured, but the vast majority of the money you are saving for retirement should be invested in stocks and bonds.

Q: Most people recommend we have a 3-6 month emergency fund. I’m self-employed so I decided to save for 9 months. Should I lower it to 6 months and add the remaining to my IRA. I’m trying to increase my retirement contributions.

A: Congratulations on having a substantial emergency fund. I wouldn’t lower it to six months. I would not increase your emergency fund and start saving more for retirement.

Q: How long are short term bond funds?

A: Such funds invest in bonds that have a maturity date of less than five years. Bond funds are generally less of an investment risk than stocks and should be included as part of your fixed asset allocation.

Q: It is true that for solely proprietaries (LLC) is much better to obtain an SEP-IRA?

A: There is confusion in this question. A sole proprietor is different than a Limited Liability Company (LLC). I don’t recommend establishing an LLC unless you have consulted a tax professional and lawyer who can advise you about the consequences of doing so. Both a sole proprietor and an LLC can contribute to a SEP IRA.

Q: What if you are in your sixties with no retirement?

A: Unfortunately, this probably means you will have to work longer and live on less in retirement than if you have saved for retirement earlier in your life. However, it is still not too late to start saving for your retirement. Try to make it a high priority to save as much as you can towards your retirement going forward.

Q: Help! I am 58 years old and have no savings for retirement! I have been working hard to pay down my debt, so I won’t have to worry about that when I retire. What else can I do to prepare for retirement at this late date???

A: Try to reduce your monthly expenses as much as you can, so living on less in retirement will be easier. Hold off claiming Social Security benefits until you are age 70 if you can. Start contributing to an IRA, even before eliminating all of your debt. The tax advantages of contributing to an IRA will be more beneficial over time than the interest you are paying on your debt.

Q: How can we trust or find a good financial planner?

A: Here’s a good article on this topic: https://www.bankrate.com/investing/how-to-choose-a-financial-advisor/  I’ve also written about this in my book Family Child Care Money Management & Retirement Guide.

Q: Once you pay off your credit cards should you close them?

A: In general, it’s best to keep your credit card open even after you have paid off your debt. See: https://www.experian.com/blogs/ask-experian/if-my-credit-card-balance-is-0-should-i-close-the-account/

Q: What’s a good amount to put in an emergency fund?

A: My advice is to have at least three months of minimum living expenses in an emergency fund. If you can save more, do so.

Q: What are your thoughts on annuities?

A: This is a complicated question and the answer depends largely on your personal circumstances. There are a variety of annuities and they can be difficult to understand. In general, in my opinion, a fixed annuity that pays out a set amount for the rest of your life makes the most sense versus a variable annuity. If you choose an option that allows your spouse to receive annuity benefits after you die, the amount of the annuity will be smaller. Here’s some additional information: https://www.investopedia.com/articles/retirement/09/choosing-annuity.asp

https://www.nerdwallet.com/article/investing/buy-retirement-annuity

Social Security

Q: How am I paying into my Social Security? I file my child care taxes, but I don’t owe/pay taxes after I file?

A: If you are a sole proprietor you pay Social Security taxes on your profit when you file IRS Form 1040SE with your other tax forms. These taxes are owed whether or not you owe any federal income taxes or get a refund.

Q: If I have a licensed child care business incorporated, I am automatically contributing to my social security when I pay taxes or that is separated?

A: All child care businesses, regardless of their structure, pay Social Security/Medicare taxes. If you are incorporated and are an employee of your corporation, the corporation will withhold and pay Social Security/Medicare taxes on your behalf. If you are a sole proprietor, you pay these taxes when you file IRS Form 1040SE along with your other tax forms after the end of the year.

Q: I am 70 and still working. I am getting Social Security. I am still paying into Social Security. Do my Social Security benefits increase?

A: Yes, it’s possible that your Social Security benefits will increase if you continue to work after age 70. Your Social Security benefits are based on the higher 35 years of earnings over your lifetime. If the amount you earn in a year after age 70 is greater than what you earned earlier in your life (adjusted for inflation), then your benefits will be slightly higher.

Q: How about my husbands who passed away 4 years and I’m 60 years old? Can I get both his and mine at a later age?

A: This is a complicated question. Contact Social Security or a financial planner for help. See: https://www.aarp.org/retirement/social-security/questions-answers/survivor-and-retirement-benefits.html

Q: Will estimated taxes go toward Social Security?

A: Yes. When you pay quarterly estimated taxes some of the money can be credited to your Social Security/Medicare taxes.

Other

Q: What is the depreciation penalty if you sell your house and have not had 2 years since you stopped doing child care in the home?

A: The rule you are referring to expired many years ago. The current rules say that if you have lived in your home and owned it for at least two of the last five years before you sell it, you won’t have to pay any capital gains tax on the sale as long as the profit on the sale is less than $250,000 if you are single or $500,000 if you are married. You will owe taxes on any depreciation you claimed (or were entitled to claim) after May 1997. For more information, see my article, “

Q: How do you determine on how much to pay yourself each week?

A: If you are a sole proprietor (self-employed), you don’t pay yourself each week. That’s because all the money is yours. See my video for a further explanation:

Q: Tom I am a DBA. Do I need to change that to LLC?

A: These are two different things. A DBA (doing business as) is a business name that you can create for your business. It’s also known as an “assumed name” or a “fictitious business name.” It’s not a requirement to have a DBA. Whether you have a DBA or not, you can set up an LLC if you choose.

Q: What do you think about life insurance? is it investment for future?

A: Life insurance makes sense if you have someone in your life that would suffer financially if you died. This can include your young children, spouse or another person who you currently care for. I don’t recommend purchasing a financial vehicle that combines both life insurance and retirement savings. That’s because the fees associated with such a vehicle are high. If you need life insurance, purchase it separately from a retirement plan.

Q: What’s the best way to keep your receipts?

A: There is no best way. You can put the paper receipts in folders throughout the year, according to the type of expense. You can then save them in a file cabinet or plastic storage boxes for at least three years. Or, you can scan your receipts into a computer and then download them onto a flash drive and save the flash drive for at least three years in a safe deposit box.

Q: What is an IUL?

A: IUL stands for Indexed Universal Life. It’s a type of life insurance that you can borrow against.

Q: I would like to pay my house faster why is that not a good idea?

A: it depends. In general, reducing the amount of interest you pay on your mortgage is a good idea. However, before taking this step you should consider your other financial circumstances. It’s better not to pay off your mortgage faster if you have other debt such as student loans, credit card debt or car loans. It also should be a higher priority to have at least a three-month emergency fund and have established a retirement savings plan. Once you have addressed these other issues, then it does make sense to start paying off your mortgage at a faster rate.

Q: I am 68 and bought a house only 3 years ago.  I have been adding significant principal each month because of my age.  Should I instead be saving more for retirement? I do have an okay amount so far but can always use more.

A: You should be saving enough for retirement to meet your financial goals in retirement. Once you are on that path, then paying off your mortgage makes sense.

Q: What if your child is under 18, do we pay taxes if our child is working for us?

A: You will not owe Social Security/Medicare taxes when hiring your own child who is under age 18. If your child earns less than $12,950 (2022), he or she will not owe any income taxes. Check with your state workers compensation office to see if you must purchase any workers compensation insurance.

Q: What’s the name of your book that contains over 1,000 business deductions?

A: My Family Child Care Record Keeping Guide:

The webinar is sponsored by the Child Care Communications Management Center, which is funded by the Office of Child Care (OCC), Administration for Children and Families (ACF), U.S. Department of Health and Human Services (HHS), and was developed in partnership with the National Center on Early Childhood Quality Assurance, which is funded by OCC, the Office of Head Start, ACF, HHS.

Tom Copeland – www.tomcopelandblog.com

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Tom Copeland

It’s time for me to say so long and introduce the new organization that will be taking over the management and expansion of this blog.

I started this blog in September 2010 with the intention to create a resource library to help family child care providers be more successful as a business. Since then, I’ve posted over 1,600 articles that have reached hundreds of thousands of providers and organizations that serve them.

I’ve greatly enjoyed writing these articles and responding to tens of thousands of questions from providers over the phone, Facebook and email over the years. But it’s time for me to step down and retire. Thanks to all the family child care providers I’ve met along the way. I hope my work has helped make your business a little more successful.

This blog and all the articles and resources will continue to remain available to providers. Nothing will be lost. I’m pleased to announce that the future of the blog will be taken over by Gary Romano, President & CEO of Civitas Strategies, LLC and his team. I’ve known Gary for several years and worked with him on several projects. He helped me better understand the Small Business Administration Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan Program (EIDL) so I could encourage providers to apply for these programs. In addition, Gary was helpful to me in getting the word out about the Child Care Stabilization Grants.

Gary will ensure that my blog articles will continue to be made freely available to everyone. His team will be adding new content to the blog and expand its reach. In addition, they will answer your questions via phone, email and on Facebook. I’m very excited that Gary and his team has agreed to take on this work that I began. I look forward to the new resources they will be making available to the early childhood field.

Gary Romano and Civitas Strategies, LLC

Our team at Civitas Strategies has a deep understanding of child care businesses and a passion for helping owners be confident and successful. We’ve worked with thousands of providers across the country to help reduce costs, increase revenue, and mitigate risks to their businesses. Our goal is to make every engagement personal, easy-to-understand, actionable, and relevant—a goal that we’ll be bringing to this blog, as well, as we look forward to continuing to answer any questions you may have on this blog, on Facebook, or by phone or email, just as Tom did in the past.

Throughout all our work with providers, one thing has been abundantly clear—the value of Tom Copeland’s Taking Care of Business Blog. It has been a source of knowledge, wisdom, comfort, and empowerment to providers, and we are honored to have a chance to extend Tom’s legacy and impact for the field.

Moving forward, you’ll see content from several members of our team, including myself, as well as our Principal Alison LaRocca, Senior Manager Kelly Turner, and Senior Consultant LaToshia DeVose.  Together, we have almost 50 years of experience working in various capacities with mission-driven organizations including child care businesses. Since the start of the pandemic in 2020, we have focused on helping child care businesses survive and thrive through our Early Start initiative. We’re excited to share what we’ve learned with all of you.

Both the blog and the Facebook page will look a little bit different going forward, as you will see Civitas Strategies branding across both sites. But what will remain the same is the high-quality content as our team will continue to provide expert child care business advice.  Stay tuned over the next weeks and months to learn more!

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Here’s how to easily access the most important resources created by Tom Copeland.

Over the years I’ve written over 1,500 articles and handouts, delivered numerous webinars and online classes and created videos and other resources for family child care providers and those organizations that support them. Below is a directory highlighting the most important of these resources. You are free to download them, copy them and distribute them to anyone you wish, as long as you do not charge a fee for their use.

Articles

Here are the most important articles on each of the following topic areas.

Contracts

Legal and Insurance Issues -See subheadings of different topics

Marketing

Money Management and Retirement – See subheadings of different topics

Record Keeping – See subheadings of different topics

Starting Your Business

Handouts

General handouts by topic area

Handouts for Food Program sponsors

Spanish handouts

Online Classes

Family Child Care Contracts and Policies

Family Child Care Record Keeping and Taxes

Videos

A series of eight short videos on the business of family child care

Other videos

Webinars

The Business of Family Child Care: Legal & Insurance Issues with Tom Copeland

The Business of Family Child Care: Marketing with Tom Copeland

The Business of Family Child Care: Money Management and Retirement with Tom Copeland

Other

Insurance Directory

IRS Document Center – a library of all IRS documents, court cases, Revenue Rulings and other materials dealing with family child care tax issues

Getting Started in the Business of Family Child Care

How to Respond to a Serious Deficiency Allegation

Tom Copeland Books/DVDs

The Business of Family Child Care Record Keeping Featuring Tom Copeland – DVD and streaming

• Following these directions to stream the video

The Business of Family Child Care Contracts & Policies Featuring Tom Copeland – DVD and streaming – Forthcoming

Family Child care Business Planning Guide

Family Child Care Contracts & Policies

Family Child Care Inventory-Keeper

Family Child Care Legal and Insurance Guide

Family Child Care Marketing Guide

Family Child Care Money Management & Retirement Guide

Managing Legal Risks in Early Childhood Programs – For child care centers

Annual Family Child Care Tax Workbook & Organizer

Annual Family Child Care Tax Companion

Family Child Care Business Curriculum – For trainers

Tom Copeland – www.tomcopelandblog.com

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I’ve created a new publication for new family child care providers. It describes the most important aspects of becoming a successful family child care business. You are free to distribute this to anyone.

Here is a PDF copy of the entire publication.

I will be posting sections of the publication over the next five weeks.

Getting Started in the Business of Family Child Care

Congratulations on becoming a family child care provider! You are among a special group of individuals who have chosen the profession of caring for young children. You have chosen this work because you love children. You also have an opportunity to earn money to support your family. Each year thousands of providers have successfully set up their businesses, and we welcome you to this caring profession.

This publication introduces the most important topics that every family child care provider needs to know about to run a successful business.

Introduction: How to Begin

1. How to Promote Your Business
2. How to Create Contracts and Policies
3. How to Keep Records
4. How to Reduce the Risks of Running a Business
5. How to Manage Your Money and Plan for Retirement

How to Manage Your Money and Plan for Retirement

Learning to manage your money is a vital skill. You will need at least 70% of your current income when you retire to maintain your current standard of living. Social Security will generate less than half of this amount. You need to save money through your own retirement investments. You can expect to live approximately one-fourth of your life in retirement. Planning ahead will make a difference.

• Educate yourself about money. Two excellent books are Personal Finance for Dummies, by Eric Tyson, and Making the Most of Your Money, by Jane Bryant Quinn. Learn more by attending classes and workshops in your community.
• Know what you spend your money on. For at least two months, track every dollar your family spends. Put your spending in categories under two headings: fixed expenses and flexible expenses. Examples of fixed expenses include mortgage, utilities, insurance, and loans. Examples of flexible expenses include food, clothing, entertainment, vacations, and so on. To make savings a top priority, set aside a savings amount at the beginning of the month as a fixed expense. Cut something under flexible spending if you are short at the end of the month.
• Pay off all credit card debt. If you can’t afford to fully pay off credit card bills at the end of each month, this is a sign of overspending. The money saved from paying interest on credit cards can be used towards your retirement.
• Pay cash for all purchases. The only exceptions to this rule are the purchase of a house, home improvements, and a college education. Try to set aside money each month in a car replacement fund so that you can make a bigger down payment for your next car.
• Start saving in small amounts. Some providers set aside the amount of a payment for one child as their retirement savings.
• Time is money. The sooner you begin saving the better. This example illustrates this point. Susan and Rich are twins. Susan starts saving for her retirement at age 35. She saves $2,000 a year for ten years and earns 8% interest each year. At age 65 she will have $151,000. Rich waits to start saving until he is age 45. He saves $2,000 a year for 20 years and earns 8% interest each year. At age 65 he will have $99,000. Although he saved twice as much money as his sister Susan, he has a third less money because he waited 10 more years before he started to save.
• Purchase insurance to protect yourself against major disasters.
• Planning for retirement is a long-term goal. Before making long-term goals, make sure you have a plan to meet your short-term goals (one to five years). Short-terms goals can include buying a car, making a down payment on a house, and so on.
• Set up a plan to meet your regular monthly expenses if you become disabled or out of work for three to six months. You don’t want a short-term emergency to wipe out your retirement savings.
• Target at least 10% of your net income (income minus business expenses) for retirement savings. If you are over 40 years old, then 20% is better!
• Don’t wait until the end of the year to put money into a retirement account. Start investing a small amount each month.
• If you don’t know where to invest your money, put your retirement savings into a money market account. This is a safe starting point. Then start educating yourself and seek out advice about where to put your money. Don’t invest in stocks or bonds until you understand their risks and rewards.
• Depending on your household and business income, you may be eligible to participate in several retirement plans. These include a Traditional IRA, Roth IRA, SIMPLE IRA and SEP IRA.

Saving money and planning for retirement is not simple. But you can educate yourself about finances. And doing so will give you more control over your financial future. For more information see my Family Child Care Money Management and Retirement Guide from Redleaf Press.

Tom Copeland – www.tomcopelandblog.com

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