Accountants for Childcare Centres and Early Learning

A childcare centre looks like a simple business from the outside: licensed places, daily fees, a roster. Underneath, it is a service where the Commonwealth pays most of the revenue, regulation sets most of the cost, and the owner controls a narrow band in between. Fixed costs barely move between sixty and ninety per cent occupancy. The margin between those two numbers is nearly all profit, or nearly all loss.

We work with long day care centres, kindergartens, family day care schemes, outside school hours care services and small groups across Brisbane, Logan and the growth corridors around Jimboomba, where new centres are opening in nearly every new estate. The accounting is built around how the sector actually works: enrolment software, weekly subsidy payments, fortnightly payroll and a compliance calendar that does not forgive late lodgements.

Most operators come to us with a bookkeeper who reconciles the bank and an accountant who lodges the return, and no one looking at the numbers that actually run the centre. Our job is to put those numbers in front of the owner every month: occupancy by room, wage cost as a share of revenue, the gap fee position, and the cash the next quarter will need.

The Child Care Subsidy is paid directly to the approved provider and reduces the fee the family pays. From the centre's side, revenue is a mix of subsidy from Services Australia and gap fees from parents, and reconciling the two to the enrolment system every week is the single most important bookkeeping task. Unreconciled subsidy is where debts, overpayments and audit findings start.

Provider approval and service approval sit with the state regulator under the National Quality Framework, with ACECQA overseeing the system. The assessment and rating process, the educational program and the physical environment are the director's domain. The financial viability and fit and proper requirements, the record keeping and the reporting obligations are where we come in. Regulators can ask for evidence that the service can continue to operate, and a clean set of management accounts answers that quickly.

Subsidy rates, activity test settings and the hourly rate cap change with government policy. We do not quote them on this page because they would be out of date within the year. We keep across the current settings and model what each change does to your gap fees and occupancy.

• Weekly Child Care Subsidy reconciliation to the enrolment system
• Fortnightly payroll with Single Touch Payroll and super guarantee
• Quarterly or monthly BAS and PAYG instalments
• Annual financial statements and income tax returns for each entity
• Payroll tax and workers compensation declarations where wages exceed the threshold
• Regulator reporting and financial viability evidence when requested

Wages are the largest cost in a centre by a wide margin, and they are not discretionary. Educator-to-child ratios and qualification requirements are set by regulation, so the roster is driven by the number of children in each room on each day. Every unfilled place still has to be staffed if the ratio tips over.

The number we watch most closely is the wage cost percentage: total employment costs, including super, leave accruals, on-costs and agency staff, divided by revenue. It moves with occupancy, with the mix of ages in the rooms, and with how well the roster is managed around attendance patterns. A centre that tracks this weekly can act. One that sees it once a year in the tax return cannot.

The Children's Services Award and the Educational Services (Teachers) Award are complicated, with classification levels, qualification allowances, broken shifts and educational leader payments. Government wage support for the sector has come and gone and may be conditional on fee commitments. We check what currently applies, make sure the payroll system is set up for the award correctly, and keep Single Touch Payroll and super lodged on time.

Occupancy is the number that decides everything else. Rent, the director, the cook and the minimum roster cost the same whether the rooms are full or half empty, so each additional enrolment above breakeven is worth far more than the fee it brings in.

We build an occupancy model for each centre that shows utilisation by room and by day, the revenue each enrolment adds after the subsidy, the point at which another educator must be rostered, and the effect of the fee increase that is being considered. New centres use it to plan the ramp-up and the cash required until breakeven. Established centres use it to decide whether to convert a room, extend hours or open a kindergarten program.

The same model feeds the cash flow forecast, which matters because subsidy payment timing, fortnightly wages, quarterly BAS and annual rent reviews do not line up on their own.

A purpose-built centre is an expensive building with a single use, and the decision to lease or own it shapes the business for a decade. Leasing keeps capital free to open another centre, but centre leases are long, rent reviews are often fixed and the make-good and fit-out obligations are significant. Owning, usually through a separate entity or a self-managed super fund that leases the premises back to the operating company, builds an asset but ties up money and concentrates risk.

We model both paths with the actual numbers: rent as a percentage of revenue, the cost of capital, depreciation on the building and fit-out, the land tax position and what happens at sale if the property and the business are sold together or separately. A centre that owns its building through the right structure can be worth more to a buyer, or can be sold as two assets to two different buyers.

Where the premises are already owned by the operator personally or in the trading entity, we also look at whether moving them into a cleaner structure is possible without triggering duty and capital gains tax, and whether the rent charged between related entities is at market rates, which both the ATO and the regulator can ask about.

The second centre is where the accounting has to change. Each service usually sits in its own entity for licensing, liability and eventual sale, with a holding company or trust above it, shared staff charged between entities and a management fee for the head office function. Done well, this gives a clear view of each centre's profit and protects the group from a problem at one site.

Done badly, it produces intercompany loans nobody reconciles, Division 7A exposure where a company has funded a related trust, payroll tax grouping that catches the whole group once combined wages pass the Queensland threshold, and consolidated accounts that take months to produce. Our multi-entity group accounting service exists for exactly this. We set up the group so each centre reports monthly, the head office allocation is defensible and the group reports as one business when the bank or a buyer asks.

• One entity per service with a holding entity above
• Intercompany charges and loans reconciled monthly
• Payroll tax grouping assessed across the whole group
• Consolidated management reporting for the bank and the board

Childcare centres trade regularly, and buyers range from first-time operators to listed groups and property funds. What drives the price is well understood: licensed places and occupancy, the quality rating, the lease terms and remaining term, the wage cost percentage, the age and condition of the building, local demand and competition, and how much of the operation depends on the current owner. We do not quote multiples because they move with interest rates and buyer appetite, but we can tell you where your centre sits and what would move it.

For a seller, preparation starts a year or two out: clean books, a reconciled subsidy history, a lease with enough term to satisfy a lender, and a management team that can run the service without you. For a buyer, due diligence covers the regulator history, the enrolment records behind the occupancy figures, award compliance in the payroll, and whether the lease and the approvals can be transferred. Greg Blackaby's background in business acquisitions means we have sat on both sides of these transactions and know where the problems hide.

Our due diligence, business valuation and selling a business pages cover the process in more detail. For centre owners not yet ready to sell, a valuation every year or two is a useful discipline, because it tells you whether the decisions you are making are adding to the value of the service or quietly taking it away.