The idea is to keep all related business information in one place. Most of the income you receive from your child care business will show up on other people's tax returns. Parents use these figures to determine their allowable child care credits. This may make your income very visible to the Internal Revenue Service - more so than other types of income. Therefore, you should be very careful to report all receipts from your business.
Accurate records are vitally important.
You must keep records on all aspects of your business in case you ever have an IRS audit. To justify food expenses, the IRS may look at grocery receipts, copies of menus, and children's attendance records. Written evidence of business related travel should include the date, destination, reason for the trip, odometer readings at start and stop of each trip, and miles driven. Check on the current rate for IRS mileage deduction then multiply by the number of child care business miles driven for the year. Provide receipts and copies of bills of all related costs.