Bookkeeping & Payroll for Early Learning Centres

Child Care Subsidy is a government payment to parents to help cover childcare costs. It's based on parental income, hours of eligible work or study, and the child's age. You receive CCS directly from Centrelink based on enrolled families' eligibility. As a service, your income is your fee charges (sometimes paid by parents directly, sometimes subsidized by CCS), plus any gap fees. CCS varies month-to-month as families' employment and eligibility changes. At year-end, Centrelink reconciles CCS paid against actual eligible usage, which may result in adjustments or clawbacks. Track enrolment and CCS claims carefully to forecast cash flow accurately.

The NQS sets minimum staff-to-child ratios and qualification requirements. For long daycare, you must have: 1 educator per 3 children under 2 years, 1 per 4 children aged 2–3 years, 1 per 11 children aged 3+ years. At least one certified educator (VET Level 3 in Early Childhood Education or equivalent) must be on site at all times; larger centres need more senior educators. All staff in contact with children must have current First Aid and working with children checks. Failure to maintain ratios or required qualifications can trigger regulatory action from the state authority.

Most childcare educators are covered by the Children's Services Award 2010, with some roles under the Social, Community, Home Care and Disability Services Industry Award. Classification typically depends on qualification level: Level 1 (assistants, no required qualification), Level 2 (childcare workers), Level 3 (educators with a Certificate III/IV), and Level 4 (senior educators, coordinators). Minimum wages for each level are reviewed annually and rise from the first full pay period on or after 1 July (the 2026 review lifted modern award minimum wages by 4.75%), so check the current classification rates on the Fair Work Pay Calculator and make sure your payroll applies the correct level.

Annual leave accrual is typically 4 weeks per year for full-time staff under the relevant award. Long service leave is 1 week per year of service (some awards provide 8.67 days/year). Sick leave is typically 10 days per year. Casuals receive a loading (around 20%) instead of leave accrual. For part-time staff, accrue leave pro-rata based on hours worked as a % of full-time. Record leave taken and accrued monthly. At separation, calculate final pay: accrued annual leave (at ordinary rate × 1.175 loading) + accrued long service leave + any accrued but untaken sick leave.

If your centre closes during school holidays, educators generally take paid annual leave (if available) or unpaid leave (by mutual agreement). If they take paid annual leave, you must pay at their ordinary rate. Some centres offer paid leave loading or bonus payments to encourage staff retention. For centres that remain open with reduced hours, roster fewer staff and adjust enrolments accordingly. Plan ahead for holiday closures in your annual budget and discuss leave arrangements with staff early in the year to minimize surprises.

Invoice parents weekly or fortnightly for fees (less CCS subsidy received). Set a fee payment policy clearly stating due dates and late payment consequences. Track all unpaid fees in your accounting system. If fees become arrears, send reminders and attempt to collect. In extreme cases, you may suspend the child's enrolment until arrears are cleared (follow your policy). CCS payments are separate from parent fee collections—track each separately. Regular reporting on outstanding fees helps you monitor cash flow and identify problem accounts early.

Enrolments drive both revenue (fee income and CCS) and costs (staffing levels). Forecast enrolments based on historical data and current enquiries. When enrolments drop, you may not be able to immediately reduce staffing due to ratio requirements, which squeezes margins. Build a cash reserve to cover enrolment troughs. Track enrolment trends monthly and adjust staffing planning accordingly. Some centres use a sliding scale for parent fees based on enrolment levels to maintain margin stability.

Full-time educators typically work a set number of hours per week (e.g., 40 hours) and are entitled to paid leave entitlements (annual, long service, sick leave). Part-time educators work regular but fewer hours (e.g., 20 hours/week) and accrue leave pro-rata. Casual educators have no guaranteed hours and are typically engaged on an as-needed basis; they receive a loading (around 20%) instead of leave entitlements. For ratio compliance, all three can count toward required educator-to-child ratios, provided they have required qualifications. Clearly document each educator's employment arrangement in their contract.

All educators and support staff must have a current Working with Children Check (WWCC) issued by your state authority (e.g., NSW, VIC, QLD). WWCC is typically valid for 5 years and must be renewed before expiry. At least one staff member present with children at any time must have current First Aid certification (usually CPR + general first aid). Certifications are typically valid for 12 months. Maintain a compliance register with staff names, WWCC expiry dates, and First Aid expiry dates. Set reminders to renew before expiry and maintain documentation for regulatory audits.

Profitability = Revenue (CCS + parent fees) less Direct Costs (educator wages, super, on-costs). Calculate gross margin as (Revenue – Labour Costs) / Revenue. For example, if a room generates $500,000 in annual revenue with $350,000 in labour costs, margin is 30%. Track profitability by room and/or age group. If a room or program has margin below 25%, investigate: are ratios lower than required (overstaffed)? Are enrolments lower than capacity? Is wage cost above average? Use profitability data to guide staffing and enrolment decisions.