I have seen many home daycare providers do not know how to report their income and expenses. Gross income has to be reported in line 162 and net income in line 135 of T1 General Return (I have chosen Ontario Link). Make sure the software you buy has T2125 form. You can deduct business related expenses to arrive at net income.
Image by neuroskeptic.blogspot.com
Here is a list of some expenses that can be deducted:
Business use of home office
Field trip expenses