Many childcare providers wrestle with the all dreaded payroll tax syndrome. Not staying on top of these taxes have caused many providers to close their doors and put up an 'out of business' sign. Don’t let this happen to your center. The truth about unpaid federal and state taxes is the penalties and interest alone can become a gruesome burden to any child care provider. The weightiness of these payments can put providers in an unfathomable position.
Before payroll taxes become your own personal burden, make the tough decision and pull back on staff work hours so that you can reduce this burden. In some cases, you may have to reduce staff members until you can re-balance your profit and loss. Only when profit and loss sheets show a positive cash flow should you begin increasing staff hours again. Importantly, look for other ways to grow your center and produce positive cash flow. Adding additional classes that are paid for by families, and outside of standard enrollment fees, is a great way to create positive cash flow.
Don’t let the fear of trimming back stronghold you into carrying more cost than you can reasonably handle. This will ensure your center stays profitable and remains solvent.