Childcare has a bookkeeping problem most small businesses don't: the person who receives the service, the person who pays for it, and the agency that reimburses part of it are often three different parties, on three different schedules. Get that wrong in the books and you cannot answer the only question that matters — which families are actually current.
Tuition, deposits, and what isn't revenue yet
Registration fees and deposits collected in August for a September start are not August revenue. They are money you hold against a future obligation, and they belong in a deferred revenue (unearned income) account on the balance sheet until the care is provided. The same goes for prepaid tuition when a family pays a semester ahead. Booking all of it as income on receipt makes late summer look like your best month of the year and January look like a collapse.
Run tuition as invoices against a family account rather than recording deposits as they hit the bank. That single change is what produces an accurate receivable list. Sibling discounts should reduce the invoice, not appear as an expense — a discount is revenue you never earned, not a cost you incurred. Late pick-up fees and field trip charges are separate income lines, small enough to ignore individually and large enough to matter annually.
Subsidy payments and food program reimbursements
State childcare assistance is the piece that breaks most centers' books. The agency pays on its own timeline, often weeks behind, frequently for a different amount than you billed, and usually in one lump covering several children at once. If you record that deposit as a single line of income, you have no way to tell which family's balance it cleared or which portion is still owed.
Treat it like any other receivable: bill the full tuition to the family account, record the expected subsidy portion as due from the agency, and apply each remittance against the specific children it covers, using the remittance advice. The leftover — parent co-pay — stays on the family's balance where staff can see it. Shortfalls then show up as an unapplied balance you can question, instead of quietly vanishing into a revenue total.
Food program reimbursements (CACFP) should sit on their own income line, not mixed into tuition, with food and kitchen supply costs coded separately so you can see whether the program covers what you spend. Grants and quality-improvement funds are usually restricted to specific uses — track each one separately from day one, because a grant report written from a lump expense account is a week of reconstruction.
Payroll, capacity, and the numbers to watch
Staffing is your largest cost and it is not discretionary — ratios are set by license, so the schedule is driven by enrollment, not by what you can afford this month. That makes labor as a percentage of tuition the number to watch, and it is only meaningful if substitute staff, overtime, and paid training hours are recorded as payroll rather than scattered into miscellaneous expenses. Background checks, licensing fees, and required training hours are ordinary operating costs; code them consistently so renewal season isn't a surprise.
Watch revenue per enrolled child against your licensed capacity. A center running at 80% with full staffing is losing money on empty spots that cost the same as full ones, and that shows up in the books long before it shows up in the bank balance. Curriculum materials and consumables are expenses; playground structures, vehicles, and major classroom build-outs are assets that get depreciated, which also changes what your balance sheet is worth when you renew a lease or apply for financing.
Year-end, and keeping it current
Every January, parents need a statement of what they paid you during the prior year for the child and dependent care credit, along with your name, address, and EIN — many will hand you a Form W-10 and ask you to complete it. That statement has to come from per-family payment history, which only exists if payments were applied to family accounts all year rather than dumped into a revenue total. Centers that bill through a family ledger produce those statements in an afternoon; centers that don't spend a week rebuilding twelve months of deposits.
Evolv Bookkeeping is $199 per month flat: tuition and deposits separated properly, subsidy remittances applied against the right family balances, food program and grant income tracked on their own lines, payroll recorded so labor cost is actually readable, every account reconciled to its statement, and your P&L and Balance Sheet delivered by day 2 of the following month. 1099 prep is included at year end.
If enrollment season got away from you and the books are months behind, catching up is $199 for each month behind, done within 2 days and guaranteed in writing. No contracts, cancel anytime, and you can get an instant quote on our homepage.