Does anyone know how to set up Time/Space percentage for Home business daycare & is it even possible? I operate child care business from my home in CA and must keep receipts and totals for cost of goods (food, supplies, etc.) and determine Time/Space percentages. Is anyone familiar with this?
time/space you will need to explain, but off the top of my head you will have to use a spreadsheet if it is what I think it is.
It has to do with how I claim dedcutions on my tax returns. I've copied the following paragraphs from FamilyChildCaretaxes.com. I guess what I'm asking help on is how to categorize the items or how to tag them so that I can apply the Time Space Percentage. Hope this makes better sense:
"The business percentage on Line 7 of your Form 8829, Expenses for Business Use of Your Home, determines how much of your home (and other shared) expenses can be treated as a business tax deduction. It is often called the time/space percentage, because of the unique way the business percentage is calculated for family child care businesses, with a time component and a space component. Day care is very special this way! No other type of business qualifies to deduct home expenses when space is used for both business and personal purposes.
Your time/space percentage will be used to determine the business percentage of many expenses for income tax purposes. This can include such things as rent, mortgage interest, home repairs, property tax, utilities (gas, heating oil, electricity, phone service, water, sewer, cable tv, etc.), home insurance, home depreciation and improvements, furnishings, appliances, play equipment, toys, and household/cleaning supplies. I could go on! Boosting your time/space percentage can mean money in your pocket, because it affects so many shared (business/personal) products and services."
I finally found the example of how time/spaceis calculated in the link you provided
http://familychildcaretaxes.com/tax_tips_article.php?blRecordNumber=151
bookmark it
In his example the rate was 33.19%. When you get the utility bill multiply it by that percentage ($100.00 bill * 0.3319 = $33.19) and .....
Assuming you pay the utiltiy bill with personal funds, create a journal entry
debit utilit expense 33.19
credit owner equity investment 33.19
If you pay the full bill from the company bank, use write checks, on the expense tab select utilities expense, 33.19, on the next line select owner equity drawing and enter the amount 66.81 (100 - 33.19)
If you are going to write a check from the business and deposit it in your personal account and pay the full bill from there, use write checks, on the expense tab select utilities expense and enter the amount 33.19
You can handle all bills that qualify that way. Just be consistent
That is about all you can do in QB.
Thank you so much for your response and the time you invested to
research my question. I am so green with QB but I think I understand
your solution. Thank you again. =)
You're welcome.
Click solved (thumbs up) if you think it is
