As a childcare provider, it can feel like you're constantly inundated with expenses. Between materials, equipment, rent, and utilities, numerous financial obligations need to be taken care of to provide a safe and nurturing environment for the children in your care.

Expense tracking is a great way to record, categorize, compare, and project your incoming and outgoing expenses.

Ways expense tracking can benefit your childcare business

Financial Awareness: Expense tracking lets you have a clear understanding of your financial situation. By keeping track of your expenses, you can identify areas where you can cut costs and make informed financial decisions.

Budgeting and Planning: With expense tracking, you can set budgets and goals for your childcare business. This can help you effectively allocate funds and plan for any future expenses.

Tax Deductions: With tax season approaching, proper expense tracking ensures that you can accurately claim tax deductions for any eligible expenses, which can help lower your taxable income and save you money during tax season.

Reimbursement: Expense tracking also helps you keep track of receipts that can be reimbursed by parents or government programs. By accurately documenting these receipts, you can ensure that you are fully reimbursed and receive the financial support you are entitled to. This can include expenses for materials, equipment, rent, utilities, and other necessary items for your childcare business.

Have you ever wondered how you can effectively track expenses for your childcare center?

Wonder no more. Below, we explain a few strategies to keep your expenses organized, making your financials clean and easy for year-end taxes and reporting.

Sneak peek: Playground’s child care business spend credit card allows you to easily spend and track expenses directly through your child care management software.

1. Pen and paper
   
   

   

   
   This is how expenses have been tracked for hundreds of years. While we don’t necessarily recommend it - it’s a low-cost method.

   The downside? Your expenses will be hard to sort and in the unfortunate event of a fire, flood, or other disaster, you may lose all of your receipts. Or what if you want to pull a specific receipt from 6 months ago? This is far more laborious and unorganized than the other methods we delve into below.

   
   
   

2. Spreadsheets/Excel
   
   

   

   
   Excel has been a go-to program for expense tracking since its inception. It has gained popularity due to its versatility and low cost. With its wide range of features and customizable options, Excel can be tailored to meet the specific needs of your business.

   However, it’s important to note that Excel relies heavily on manual data input, which can be time-consuming and increases the risk of errors.

   
   

3. Playground’s Expense Tracking Tools

   Playground's expense tracking tools offer various features for streamlined expense tracking - specifically for childcare businesses. This includes automatic spend tracking, expense report creation, and mobile receipt upload.
   
   

   

   
   For childcare programs with multiple staff members, you can also issue individual Playground Spend Cards for each staff member to make purchases. You can set custom limits and budgets for each card to make sure you are setting your business and staff up for success, eliminating the need for reimbursement procedures since staff will no longer be spending on their personal cards.

   Playground spend cards can be directly funded with tuition received from families through Playground, eliminating another step in the process.

   See how this would work for your child care program
   
   

   

   
   
   

4. Accounting software (e.x. Quickbooks, Expensify)

   Accounting software offers various tools to expedite expense-tracking processes. It provides features such as reconciling entries, automatic management of expense receipts, and expense report generation. However, these benefits come at a cost. Accounting software can be expensive to purchase and maintain and may be challenging to navigate for inexperienced users.

How can expense tracking simplify year-end taxes?

As a childcare provider, doing your taxes is probably one of the least exciting parts of your job - but it is essential to remain a licensed business.

Diligently keeping track of all your expenses throughout the year enables you to save valuable time and helps ensure that you take full advantage of every deduction available to you, ultimately minimizing your tax liability.

Tax deductions are available for specific categories of expenses like food, insurance, supplies, field trip expenses, and rent. By properly documenting these expenses, it becomes much easier to claim these deductions and can significantly lower your tax payout.

And, if you’re using childcare software like Playground, you can track both revenue and expenses with minimal effort, further simplifying your end-of-year tax process.

Want to learn more about how Playground’s childcare software simplifies end-of-year taxes for childcare businesses? Read here.

Conclusion

Expense tracking not only simplifies your filing processes when it comes to storing receipts, but it can also be helpful for tax purposes as it allows you to easily retrieve and organize necessary documents when filing taxes. Leveraging childcare software such as Playground further simplifies this process by centralizing all of your childcare business financials into one place.