We all hate talking money and taxes, especially now, but it is a critical piece to the success of a successful childcare center. We are 5 months away from the Corporate filing deadline and we had our taxes estimated by our CPA recently and I mentioned it to someone and they asked, “Why are you talking to your Accountant about taxes now?”
Before I answer, I want to share a variety of financial business partners you can work with so you know your options, there are other types of financial advisors for a small business, but typically this is who you could work with. The highest educated and licensed to the least, but no less important, is Certified Public Accountant, Accountant, Bookkeeper and Tax Preparer.
A Tax Preparer is someone you go to typically one time per year and have them take your numbers and prepare your taxes for the year. The individual or company providing this service should be trained in tax preparation and utilize a current software system. This type of business partner is great as they can efficiently get it done and can answer any questions you have about your numbers. This would be a onetime fee per year unless you have them prepare estimated taxes for you.
A Bookkeeper is someone who takes all your financial statements and cash receipts and puts them into financial reports. These reports are then used to manage the business and have your taxes done.
An Accountant and Certified Public Accountants hold the most education. They both go to school for Accounting, but the CPA goes on to take a CPA Exam, additional courses, and licensing. These individuals and companies also typically offer Bookkeeping services and prepare taxes for you and your business.
We work with a CPA, and we love them, even though we do not always like what they tell us. They offer bookkeeping services, but we perform those tasks at the Center. We talk to them all year long, sometimes I reach out to them for assistance and other times he reaches out to me to say let’s take a look at your numbers or to provide me with some information he knows would be helpful to my business.
The key to the success of this relationship is the relationship. You need to find a CPA who wants to get to know your business and your financial goals. Someone you are comfortable with because the discussions can be hard sometimes. Have a conversation with them before you request services, see if you even like speaking to them. Ask them how they can help you all year. I talk to my CPA about the following topics:
- Tax review every 6 months business revenue and expenses fluctuate, it is important to know what your tax amount will be each year for the business. Some childcare centers will be filing quarterly tax estimates or must pay taxes on the profit annually. By looking at the numbers in advance it provides you with time to plan versus a big surprise and a struggle to meet the number. A tax review is different than your normal tax preparation, it is less work, so the fee is much less.
- Business Set Up, this is if your Center is an LLC, S Corp, C-Corp, DBA, and so on. We have a quick chat each year if we are still in the right bucket given where the business is.
- Annual Business Filings. My CPA makes sure I am completing all the necessary annual documentation needed for the State and the Federal government. We have to file an Annual Report and certify the busines each year, it is part of our annual tax review, so you don’t forget.
- Business Growth is a conversation we have frequently. ScribbleTime, our childcare center, is our main company, we also have 3 other businesses we have under the Corporation. As we have launched these other businesses, we met with our CPA first and discussed all the financial aspects. He always provides me with information I never thought to ask or look into, and I LOVE this! I come in with a hefty list and I leave with all the answers and a lot more.
- Performance Evaluation is when we discus how the numbers are looking. What is going well, what needs some work, and what is coming up in the future. This is so helpful, especially when you want to discuss tuition increases. Working throw this process with a CPA can be so beneficial to determining the number.
- Pandemic Financials. This right here proved my feelings on why you should have a CPA. They are the most expensive to work with, but I could not even imagine not having them as we hit the first pandemic of my business life. I knew my numbers because it is a habit I’ve had for 16 years. I had every document needed at my fingertips for the applications. He called me immediately when the PPP was announced and worked through it with me as they were changing the rules. We all know how tough it is leading a Center in a pandemic, now make financial decisions that could make or break your Center. Having them to call and say am I making a big mistake? And knowing that the answer is going to be without emotion, sound, based on the numbers we know are up to date was relieving. The financials were the easiest part of the pandemic for me because of this relationship.
For me, I need to have someone work with me that understands my business long term so we can forecast possibilities in the future. You can have a goal, maybe a new playground, but not having a plan is not helping. This is something great to speak to your CPA about on how to reach your financial goals.
Your numbers are important. You cannot keep things in your head and know something costs this or that and think you have control. You need to look at your financial performance each month, compare it to last month and last period, and look for trends. You would be so surprised how cash increases when you do this. I teach this in The Director’s Club Membership, so be on the lookout for that!
You can find these professionals by asking local business owners who they use or reach out to the local Chamber of Commerce.
If you want to talk about this more, tag me in my Facebook Group for Child Care Center Owners and Directors HERE. Go to my website, thedirectorsclub.net, and grab your free training and get on my list so we can stay in touch.
Cheering you on!
Noelle
