Starting a Babysitting Business
This article is part of our Ultimate Babysitters' Guide eBook series. Please feel free to download the entire guide for free below.
In order to meet the monthly financial costs of raising a family, most two-parent families must both work to be able to afford the cost of living and put food on the table. In addition, there are many single parent families as well as all types of blended families. No matter what type of family you are, if you have children, you will most likely be in need of good quality child care! The good news is that this means that there is a high demand for babysitters.
Whether you are already a babysitter who has regular clients, or you are looking to start your own business, babysitting is an excellent way to earn money. Teenagers, college students, and retirees looking for additional income are all perfect candidates for becoming a babysitter and small business owner. One major attraction of starting your own babysitting business is that your start-up costs can be very inexpensive. Some additional perks of a babysitting business include being generally recession-proof, it is needed year round, and can be planned around your schedule. This allows for flexibility for your own life! As a business owner, you would also be learning valuable skills that may be of benefit to you in a future job or new career. A home-based business can provide you with money-saving tax breaks at tax time, or can be run as a small cash-based business.
This guide is intended to provide information and resources for babysitters of all ages and all skill levels. From the novice or beginner to the experienced babysitter, our guide will get you started or help you maintain and grow your babysitting business so it is a safe and rewarding experience for everyone involved. When finished, you should have all the tools and resources you need in order to launch and grow your business.
According to the Internal Revenue Service you do not have to file taxes for income under $5,000. Since the average pay rate of a starting babysitter is around $10 an hour, you would have to work for 500 hours or almost 12 weeks before you have to worry about the government. That is plenty of time for you to get up and running and learn what else you will need to do. Do not let worrying about taxes or forms stop you from getting started!
When it Comes Time For Filing Taxes
Not only do you not need to worry about any taxes until you earn your first $5,000 – when it does come time to file taxes, there are methods of doing so that will not cost you a dime. In fact, most tax filing programs do not charge for basic Federal tax submissions. Below are a few you can select from.
- H&R Block – http://www.hrblock.com/online-tax-filing/free-online-tax-filing/
- Turbo TaxÃÂ – https://turbotax.intuit.com/
- Free Tax USA – http://www.freetaxusa.com/
The IRS also has plenty of information you will want to read through. This is great reading when you have your charges tucked into bed and you are waiting for parents to come home. DO NOT ignore your responsibility to learn about your business and your obligations. It takes work to build a business, and it is up to you and you alone to do it right the first time.
You can read more about filing taxes for your business below. All IRS links and information is taken from and linked directly to the IRS.gov website. https://www.irs.gov/tax-professionals/e-file-providers-partners/electronic-filing-options-for-business-and-self-employed-taxpayers.
- Employer Identification Number
An Employer Identification Number (EIN), also known as a federal tax identification number, is used to identify tax reports to the IRS.
- Business Taxes
The form of business you operate determines what taxes you must pay and how you pay them.
- Estimated Taxes
Federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. There are two ways to pay as you go: withholding and estimated taxes.
- Employment Taxes for Small Businesses
If you have employees, you are responsible for several federal, state, and local taxes. As an employer, you must withhold Federal income tax withholding, social security, and Medicare taxes, and Federal Unemployment Tax Act (FUTA) taxes.
- Self-Employment Taxes
The self-employment tax is a social security and Medicare tax for individuals who work for themselves. Your business may be required to file information returns to report certain types of payments made during the year.
- e-File Form 940, 941 or 944 for Small Businesses
Learn your options for e-filing form 940, 941 or 944 for Small Businesses.
- Filing Past Due Tax Returns
Before you decide not to file your tax return on time or not pay all of your taxes when they are due, consider this.
- Reporting Payments to Independent Contractors
If you pay independent contractors, you may have to file Form 1099-MISC, Miscellaneous Income, to report payments for services performed for your trade or business.
- Deceased Taxpayers – Probate, Filing Estate and Individual Returns, Paying Taxes Due
Information to help you resolve the final tax issues of a deceased taxpayer and their estate.
Reporting Information Returns
Taxes are one of those things that we all have to contribute to in order to maintain a safe society. But, in order to grow your business and be able to pay taxes in a way that is affordable, you will need a robust business plan.
Chapter 2. Developing a Business Plan
No matter how large or small you would like your business to be, simple organization can be a key to your success whether you are just starting or you are looking to expand your current business. Developing a business plan can be as simple as a one-page document that outlines goals you set for yourself, or it might be extremely detailed and include vision and mission statements, expenses, and budgets and cost projections. Think of it as a roadmap or a checklist for your ideas and the steps you need to take in order to start your business off on the right foot. There is no right or wrong way to develop a business plan! This is YOUR business, and you should use what methods and tools with which you are comfortable.