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Stephanie Hatfield

I incorporated almost a year ago because it was suggested to me by several people. One benefit according to my CPA is that my chances of being audited are much lower with an s-corp than a sole proprietor. However, there is significantly more paperwork and record keeping to maintain the corporate veil. And after paying taxes this year I'm not sure I saved any money!

Tom Copeland

It used to be that corporations were audited less than sole proprietors but the tide is turning so I'm not sure if this is true anymore.

Laurie Cudo

I'm considering opening a daycare center outside my home. Would the LLC be the best choice for protection?

Tom Copeland

Yes, an LLC makes sense if you are operating outside your home. It is the least complex types of incorporating. I would still recommend talking to an attorney and tax professional so you can understand all the pros and cons of choosing a business structure.

Susan Flynn

I just opened a group family daycare in my home. I have two other women that work with me. We split the income and we all put in 250.00 a month for rent, utilities, etc. I am not sure if this is going to hurt me when I do my taxes? Is there a better way to get help from them financially?

Tom Copeland

You can't do what you are doing because you have to choose a business structure to operate under. My recommendation is for you to be a sole proprietor and hire the other two women as your employees. Any other option (partnership, corporation, LLC) would be more complicated, more record keeping, and possibly higher taxes. See my book Family Child Care Legal & Insurance Guide for details or call me at 651-280-5991.


After many people suggested it to me, mid 2011 I incorporated. Now as I realize it was a bad idea! Can I give up the corporation and file as a sole propreiter?

Tom Copeland

Yes, you can dissolve your corporation. Go to the secretary of state's office to get the form to do this.

Grace Camp

I plan to start a family child care as sole proprietorship but would like to be able to have a name for my business other than (or in addition) to my own. Is this possible?


Yes, you can have a business name and operate as a sole proprietor. Contact your state secretary of state's office to register your business name.


Is it a good idea to form a S-corp for the purposes of being able to produce pay check stubs and verify income (which is difficult sometimes as a small business owner and sole prop)...


No, it's not a good idea to form an S-corp for record keeping purposes. There are too many negative consequences to incorporating.

Anna Abbott

I rent a separate building to do Childcare. I have been a sole proprietor but am looking to just go partners with someone. We would make roughly 60,000 plus.. I've done the pay someone & take out taxes, work comp. Etc. What are your thoughts? I cover insurance on my childcare & kids, do food program..


If you are asking whether it's better to form a partnership with someone or hire them as your employee, my advice would be to hire them as your employee. When you form a partnership you give up your right to make all the decisions, you don't save any money on your taxes, and you take on additional risks because you would be responsible for anything the partner did.

jen franzen

Where can I get A List for taxes on what I all need to be writing down? I have been wtiting all down but when going in for taxes not using any of the hours for cleaning...book work...I need to see what all I am supposed to keeping track of? Any Help Please.


Here's an article where I summarize what hours you can count: http://www.tomcopelandblog.com/2011/02/what-hours-can-you-count.html


I am working on my FCC license application and am confused about forming a corporation. The only reason why I want to form corporation is saving on taxes. I don't know much about corporation and if I should file it before getting the license or after. Kindly advice.


It's unlikely you will save money on taxes by filing as a corporation unless you are making a profit of more than about $30,000. I've written an article about this: http://www.tomcopelandblog.com/2011/06/should-you-form-an-s-or-c-corporation.html


I'm a director of a daycare. Do I have any personal liability? How do I protect myself?


You do have potential personal liability if a child is injured or a parent sues you. Get professional business liability insurance to protect you. Look at the insurance directory on my blog for agents that can get you this insurance.


I am in the process of opening a child care center. I have consulted with my attorney and he suggested I file as a corporation. I have also consulted with my cpa and he suggested I file LLC. I am kind of confused about which direction I should go.


If you are going to be operating out of your home, I suggest you don't incorporate and operate as a sole proprietor. If you are going to operate outside your home I would suggest operating as a single person LLC. This is one type of corporation and the easiest to operate. Have your cpa explain the different tax consequences of your choices. Have your attorney explain the different legal consequences of your choices.

Patricia Zito

Good day! My end goal is to have an After-school Program/Teen Center. I would like to start it in my house a and then rent a place outside my home. I am seeking advice on what legal structure I should go for.

Thanks so much!


I'd stay with a sole proprietor (self employed) until you get bigger. It only makes sense to incorporate if you have a lot of personal assets you are trying to protect, don't mind doing extra paperwork, and plan to be in business for awhile. Purchase a lot of business liability insurance to protect yourself against personal liability.


I would like to open a daycare. But in the meantime I have to get my credit up to a standard that will afford me the opportunity to do so. I have a name that I would like to use for my daycare. Can I or should I register the name so that no one else makes claim to it?

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