What do you use to organize your taxes?
My tax binder. Because I keep a tax binder for my nanny business, instead of taking me days to do taxes, it only takes me minutes. My nanny binder is where I keep all of my business recipes, bills, and any tax forms I may receive. Putting all this information in one place and neatly organized means I can quickly grab the information that I need to properly file taxes.
The binder I use is a simple 3 ringed binder with tabs dividing the months of the year. Then, I have some hand-made spreadsheets inside that I use to keep track of my expenses and income that I fill out as the year goes on.
What do you need to know about receipts?
When making a nanny related purchase, right after you check out and get a receipt, step aside to not block other customers and write on the top of the receipt “work.” If you made the purchase for a specific family you work with, write the name of the family beneath that or, if you’re worried about privacy, write a number that you associate with the family.
This helps you later to know that this purchase was a work expense. Otherwise, going through your receipts to find work expenses will take ages longer than it would if you’re just looking for clearly labeled receipts.
At the end of the day, go through your receipts, and record your work expenses, mileage, hours worked, and income in your tax spreadsheet. Then, file away your receipts into the month they belong to. If you do this every day, you will save yourself SO MUCH WORK later on.
Do nannies need to set aside (withhold) income for taxes?
If you are self-employed or an independent contractor, yes, you need to set aside income for taxes. I recommend setting aside 20% of your income.
If you are an employed “w2” nanny, no, you do not usually need to worry about setting aside money for taxes. A portion of your income is most often automatically withheld from your paycheck.
Is keeping track of taxes hard for nannies?
Keeping track of your nanny business’s taxes doesn’t need to be complicated. To be ready for tax season, you only need to follow a few simple steps:
- spend one minute a day filling out your tax tracker after work
- set aside a few minutes at the end of each month to tabulate your income and hours worked
- file away your receipts and invoices as you get them
By that time, all you will have to do is add up the numbers you’ve already recorded, AND YOU’RE DONE!
Taxes are simple. You don’t need to feel overwhelmed.
If you’d like to do your nanny taxes with me, let me know down in the comments below, and we’ll look into doing a live Tax With Me video.