Running a successful childcare business involves more than providing excellent care: It’s also about making sure families know about your services. Whether you’re launching a new program or looking to fill open spots, effective marketing is key to driving enrollment. However, marketing comes with costs, from digital ads to community events, all of which can add up quickly.
This guide will walk you through everything you need to know about managing your marketing budget. We'll explore what qualifies as a marketing expense, how to track these costs effectively, and how to deduct them to improve your program's financial health. With a clear understanding of these expenses, you can make informed decisions that help you grow your business and reach more families.
What counts as a marketing expense?
For childcare providers, marketing includes any activity or material that promotes your program to potential families. The IRS categorizes these as "advertising" expenses, meaning they must be ordinary and necessary for your business.
Examples of marketing expenses include:
- Website costs: Design, hosting, and domain fees.
- Online ads: Social media or Google Ads.
- Print materials: Flyers, brochures, and business cards.
- Signage: Banners or yard signs.
- Community events: Open houses or branded sponsorships.
- Branding: Logo design or other visual assets.
- Email marketing: Subscriptions for email tools or newsletters.
- Promotional items: Branded giveaways like pens or tote bags.
These examples cover a variety of ways to market your childcare program, whether you prefer traditional or digital strategies.
Why it’s important to track marketing expenses
Keeping track of marketing costs benefits your business in several ways:
- Measure ROI: Understand which campaigns—like social media ads or flyers—result in more enrollments.
- Set realistic budgets: Tracking spending trends helps you manage fluctuating costs.
- Maximize tax deductions: Organized records ensure you take full advantage of deductible expenses.
- Present professional records: Clear documentation is useful for loans, grants, or financial planning.
How to track marketing expenses effectively
Marketing expenses are often small and scattered, making them easy to overlook. Here’s how to stay organized:
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- Centralize receipts: Store paper and digital receipts in one place.
- Categorize clearly: Use labels like "Marketing - Online" or "Marketing - Print."
- Separate accounts: Use a business credit card to keep personal and business expenses separate.
- Add notes: Briefly describe expenses (e.g., "Fall Enrollment Ad") to track their purpose.
Income and Expense Worksheet
Use this worksheet to track your finances, make smarter spending decisions, and create a monthly budget.
Are marketing expenses tax deductible?
Yes! Marketing expenses directly related to your business are fully deductible under IRS guidelines, typically listed as "advertising" on Schedule C (Form 1040).
Key Tips:
- Sponsorships: If your business name is displayed, it counts as advertising. Without visible branding, it may qualify as a charitable contribution.
- Promotional items vs. gifts: Branded items given broadly count as advertising, while individual gifts have stricter deduction limits.
- Start-up costs: Pre-opening marketing expenses may fall under start-up costs, with specific deduction rules.
To ensure compliance, consult a tax professional familiar with IRS regulations.
Simplify marketing expense management with brightwheel
Brightwheel makes tracking marketing and operational expenses easier, helping you save time and prepare for tax season. With brightwheel, you can:
- Track all expenses—marketing, payroll, supplies, and more—in one platform.
- Automate payroll and taxes for accuracy and efficiency.
- Analyze financial reports to optimize budgeting and spending.
- Stay organized with detailed records and receipts.
- Support your team with childcare-specific tools.
By reducing administrative tasks, brightwheel lets you focus on what matters most: Growing your program and supporting the families you serve.
Frequently asked questions: Marketing expenses
Can I deduct the cost of hiring a marketing contractor or agency?
Yes, hiring a marketing contractor, consultant, or agency to promote your childcare program is a legitimate business expense. Fees paid for design, ad management, social media, website development, or marketing strategy are all deductible as advertising expenses.
What qualifies as pre-opening marketing expenses, and how are they deducted?
Pre-opening marketing costs, such as promoting your new program before welcoming children, are considered start-up costs. The IRS allows businesses to deduct up to $5,000 of start-up costs (including marketing and advertising) in the first year, with the remaining amount amortized over 15 years. Keep detailed records of these expenses and consult a tax professional for accurate handling.
How should I account for and track marketing expenses?
- Use clear categories (e.g., Marketing—Print, Marketing—Online) in your bookkeeping.
- Keep all receipts related to marketing costs. For convenience, take a photo of your receipts with your smartphone and upload the digital photos to brightwheel. This practice saves time and helps prevent receipts from getting lost.
- Use a business credit card or bank account to keep marketing expenses separate from personal transactions.
- Record brief notes about each expense to clarify its purpose.
Are marketing expenses for items like branded t-shirts or giveaways deductible?
Yes, promotional items that display your business name or logo and are given away to promote your program are fully deductible as advertising expenses.
How can brightwheel help with marketing expense tracking?
Brightwheel allows you to upload and organize receipts, categorize marketing expenses, and generate financial reports. This saves time, keeps your records organized for tax season, and helps you stay compliant with IRS guidelines.
If you have additional questions, consider consulting a tax advisor who understands small business and childcare regulations.
