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Childcare Center Budget: How to Successfully Create and Balance Your Budget

Learn the many factors that go into a childcare center budget, plus download a free budget template. 

Childcare Center Budget: How to Successfully Create and Balance Your Budget

Childcare Center Budget: How to Successfully Create and Balance Your Budget

As a childcare provider, maintaining a balanced budget is vital to running a childcare center. No matter how good your service is, your business will fail if you’re not bringing in as much money as you're spending. In this article, we'll go over budgeting basics to help you understand the many factors that go into a daycare budget.

Download our free annual budget planner here!

What is a budget and what should you include in your daycare center budget spreadsheet?

At its most basic level, a budget is a financial tool that helps track your center's income (money you’re making) and expenses (money you’re spending) while running your business.

A thorough daycare financial plan and childcare center budget will help you understand where your money is going and how to improve efficiency. Consider your daycare's budget to be similar to your household budget. You have mortgage or rent payments, utilities, phone, internet, cable, gas, water, and car payments. Similarly, when starting a daycare, you must budget for utilities, classroom furniture, classroom supplies, advertising expenses, salaries, and other expenses.

Crafting and maintaining the proper budget can help your childcare business reach your financial goals. It’s the ultimate tool for helping you maximize profits so you have what you need to keep the business running and invest back into your center. You can consult your budget to help you prioritize the right purchases, see where you can cut expenses, and know where your profits are going. It helps you maintain checks and balances for your spending and is an ongoing resource you can consult for:

  • Potential expansions
  • Extracurricular activities
  • Annual planning
  • Employee pay/raises
  • Upgrades to your center

Your childcare business’ budget should be a living document. As a resource, it needs to be continuously adjusted to fit your goals. Regularly review the budget to track your finances and stay flexible to adjust as your needs change or unexpected things occur.

As you update your budget over time, continue to keep your team in the loop. Your staff needs to be on the same page with financial planning so they can bring you feedback or suggestions regarding the decisions. Remember, your team is a financial resource for you to utilize in financial planning and can make a big difference in reaching business goals.

Utilizing a budget spreadsheet resource can streamline your center’s efficiency. Track every business expense, record your revenue, and use it to see a snapshot of your finances throughout the year. 

Download our free annual budget planner here!

Daycare revenue: How to properly account for the money you're earning

Accuracy is important for everything you do regarding the finances of your childcare business. Tracking and recording your revenue is part of budgeting and financial planning, so you’ll need a reliable system in place. You may be accounting for revenue from multiple places and payers, and it can be time consuming to track down families when payments are late. A billing and payments software like brightwheel can make your billing process organized, accurate, and up-to-date with customizable billing reports that help you track every dollar with ease. Save hours each week with automated invoicing, payment notifications, and autopay, so you get paid on time, every time. 

A majority of your revenue as a childcare provider comes from the tuition fees paid for the children registered in your program. Therefore, the most important calculation you'll need to make as a business owner is determining how many children to enroll and how much to charge.

Tuition fees

Setting the right tuition fees is one of the most difficult and important decisions you’ll make when starting your childcare center. Before setting your prices, consider all of your financial costs such as salaries, utilities, rent payments, supplies, advertising costs, and other operational expenses, and how many children you’ll be caring for to ensure your prices allow you to stay profitable.

It’s also a good idea to gauge what competitors in the area are charging, as families will likely compare prices to ensure what you’re charging is fair. If your tuition fees are higher, explain why and show parents the added benefits your center will provide over others.

Service fees

In addition to child care, providers can charge additional fees for extra services, such as providing meals, supplies, (i.e., diapers, wipes, etc.), laundry, transportation and drop-off service for children, and night care. 

Enrollment fees

Childcare providers often charge enrollment fees for the time, paperwork, and individualized attention each applicant requires. Childcare centers can also make money through registration fees and waitlist fees.

Additional fees

Unscheduled care, late payment fees, early drop-off, or late pick-up (outside your regular business hours) are all additional childcare costs. Your childcare charge schedule needs to include any extra costs families might pay to your facility.


Daycare grants can greatly help childcare centers, allowing you to get access to additional funding and financial assistance to run your program. You can apply for funding for things like building and remodeling projects, food, equipment purchases, labor costs, and administrative expenses. 

There are several government grants you can apply for to get the funding necessary for your childcare business. Some grants you can apply for include:

Check with your local, state, provincial, or federal governments and advocacy organizations to learn about available options and how to apply.


There are plenty of simple, yet effective preschool fundraising ideas you can implement at your center to help supplement your program's revenue. Communities recognize the importance of high-quality child care and can often be very supportive and willing to contribute to funding your childcare center.

For example, you can organize an online fundraising campaign for specific projects for your daycare center, such as a garden expansion or purchase of equipment. If your daycare is registered with the IRS, you’re eligible to receive donations on Facebook. You can do this by signing up on Facebook with your registry, tax ID number, and bank account for your childcare center. It’s one simple way to raise awareness and receive extra funds.

You can also hold a yard sale or set up a penny drive where families can donate any spare change. Selling tickets for raffles, art exhibits, or talent shows is another method of raising money. You can also organize a bake sale or sell handcrafted jewelry and lanyards to the community to raise funds.

Daycare expenses: The best way to budget for what you spend

As you budget for your childcare business, you’ll need to understand your expenses thoroughly. Maintaining solid record keeping and making updates promptly will give you the information you need to keep using your budget as a resource and reference. Explore software for childcare providers, like brightwheel, to stay informed of your finances with a real-time snapshot of account balances, payments, and cash flow. 

Below we discuss the different expense categories you’ll encounter as a business owner.

Operating expenses

Operating expenses are ongoing costs associated with the day-to-day operation of your childcare center. Operating expenses include rent, supplies, utilities, marketing expenses, staff salaries, and business insurance.

If your childcare center is a for-profit entity, the Internal Revenue Service (IRS) permits you to deduct operating expenses from your business taxes. But in order for you to do this, those expenses must be required and appropriate for your childcare center.

Fixed costs vs. variable costs

Fixed and variable costs can be included in your operating expenses. Fixed costs are expenses that remain constant month after month, whereas variable costs fluctuate in proportion to your business activities.

A fixed cost could be your monthly internet bill, which is the same regardless of how many children are enrolled in your program. Meals, on the other hand, are considered a variable cost. If your center has more children enrolled, you’ll need to spend more money to provide more meals, i.e., the cost varies.

Understanding the various types of expenses will allow you to estimate costs more accurately as you create your childcare center budget.

Capital expenses

A capital expense is any money spent purchasing a long-term asset for your childcare center. If you buy chairs and desks, that is considered a capital cost. Capital expenses are investments a childcare center makes in the form of purchases. This includes any money spent on tangible or intangible assets such as:

  • Real estate
  • Computer equipment
  • Office furniture,
  • Intellectual property
  • Copyrights
  • Licenses

Sample operating budget for daycare

A sample operating budget helps you anticipate your business expenses before they occur. You can also plan for extra income or find ways to cut costs so you don't spend more than you bring in monthly.

Your budget calculations will be based on estimated monthly costs for each expense item. For this example, let's say you have about 60 children enrolled in your program, you have a full capacity of 80 children, and are open 254 days a year.

You’ll be open Monday through Friday, closed on weekends, and closed on major public and national holidays such as Veteran's Day, Thanksgiving, Christmas, Martin Luther King Jr. Day, and President's Day. Your sample operating budget may look as follows:

Expense item

Total center expenses

Advertising costs:


Business cards and flyers


Social media account management and content creation


Website maintenance


Social media ads


Building maintenance:


Landscaping (lawn mowing, snow removal, leaf removal)

$1,000 per month ($12,000 per year)

Building repairs (as needed, such as electrical repairs, plumbing leaks)

$1,000 per month

($12,000 per year)




$3,500 per month

($42,000 per year)

6 full-time teachers ($16 per hour; 40 hours per week; $640 per week; $2,560 per month per teacher)

$15,360 per month

($184,320 per year)

6 full-time aides ($14 per hour; 40 hours per week; $560 per week; $2,240 per month per aide)

$13,440 per month

($161,280 per year)

6 part-time substitute teachers/aides (about 10 hours per week per substitute at $12 per hour; 60 hours amongst all 6 PT employees; $720 per week; $2,880 per month for all 6 PT employees)

$2,880 per month

($34,560 per year)

Operating expenses:



$600 per month

($7,200 per year)

Business phone

$55 per month

($660 per year)

Legal/accounting fees

$400 per month

($4,800 per year)

Professional development training (CPR, childcare training)

$50 per month

($150 per quarter; $600 per year)

Subscriptions (educational magazines such as National Geographic)

$12.50 per month

($150 per year)



Food ($4 [$2 cost for breakfast and $2 cost for lunch] x 60 children = $240 per day; $240 x 254 operating days per year = $60,960 x 85% utilization)

$5,280 per month

($60,960 for the year)

Classroom supplies (paper, paint, crayons, pencils, other arts and crafts supplies)

$500 per month

($6,000 per year)

Building supplies (cleaning supplies, first aid kit, office supplies such as paper, printing ink, pens, folders)

$170 per month

($2,040 per year)

Total Monthly Costs:


20% Contingency (money set aside in a budget for unexpected costs):


Monthly Costs After Contingency:



Download our free annual budget planner here!

Daycare profits: How to make a sample operating budget for daycare

Here are the steps to take when creating an operating budget for your childcare center:

Step 1: Calculate your daycare’s monthly income

Step 2: Create a list of monthly expenses

Step 3: Calculate net income using a daycare budget template


Step 1: Calculate your daycare's monthly income

It’s important to calculate your average monthly income to know your profit.

As a childcare business, you’ll make most of your income from the weekly or monthly childcare costs that families (or state programs) pay you for childcare services.

Average cost of toddler care

Although the actual costs of child care can vary greatly based on location, setting, and age, this 2021 report estimates that the average monthly cost for center-based toddler child care in the U.S. is $1,096/month. For an example of how to estimate your monthly and annual income, let’s say you have 30 toddlers: 

  • Each family pays $1,096 per month per toddler
  • The childcare center would make $32,880 per month with a class of 30 ($1,096 x 30)
  • The childcare center would make $394,560 per year with a class of 30 ($32,880 x 12)

Average cost of infant care

While the costs of infant care will vary by location, setting, and age, this 2021 report estimates that the average monthly cost for center-based infant child care in the U.S. is $1,324/month (about 21% more than costs for toddlers). For an example of how to estimate your monthly and annual income, let’s say you have 30 infants: 

  • Each family pays $1,324 per month per infant
  • The childcare center would make $39,720 per month with a class of 30 ($1,324 x 30)
  • The childcare center would make $476,640 per year with a class of 30 ($39,720 x 12)

Assume you’ve already collected the registration fees for 60 children in your program. If you charge a $100 registration fee per child, you’ve made $6,000 in revenue before your grand opening day.

You can include this $6,000 in your yearly income calculated using the income template. You can charge an additional registration fee for each child who renews their term at your daycare yearly to generate additional revenue.

This income template assumes that you’ll maintain 60 children enrolled in your facility for a few months without enrolling any new children. Of course, there will be extra income if another family is interested in enrolling their child. Because your center has a total capacity of 80 children, you can enroll up to 20 more before starting a waiting list.

Income item

Quantity per income item

Monthly income for each item

Toddler child care

($1,096 per month)

30 toddlers


Infant child care

($1,324 per month)

30 infants


Late tuition payment fees

($50 per instance)

About 2 per week ($100 per week)


Late pick-up fees

($10 per minute)

About 30 minutes per week

($300 per week)



1 fundraiser every month


Total Monthly Income:




Step 2: Create a list of monthly expenses

As you’re detailing your daycare’s list of expenses, separate the list into operating expenses and capital expenses. Operating expenses include things that your center needs to run properly. Examples include utilities, staff salaries, supplies, insurance, and additional costs related to program activities, licensing fees, and maintenance.

Capital assets are the major pieces of property you purchase for your daycare, such as cars, equipment, and buildings that are subject to depreciation. Calculating them into your capital expenses means calculating depreciation. Follow these steps to do so:

  • Determine the initial cost of the capital asset
  • Decide on a suitable depreciation method (e.g., straight-line, declining balance)
  • Calculate the monthly depreciation by dividing the total depreciation by the asset's useful life in months
  • Subtract the monthly depreciation from the initial cost to get the monthly capital expense

Step 3: Calculate net income using a daycare budget template

To calculate your net income for your budget, start by recording your childcare center’s expenses, tax bills, and interest payments. Subtract those amounts from your total revenue to determine your net income. Keeping this amount updated helps you understand your daycare’s profitability or its ability to turn a profit relative to its amount of expenses.

The average profit margin for a chain daycare center is 15-20% annually. To calculate your profit margin, take your net income, divide it by your total revenue, and multiply it by 100. So, for a childcare business like the example with a monthly expense cost of $45,548 and $77,200 in profit per month, the net profit margin would be about 41%.

To stay informed regarding your daycare’s financial state, it’s important to do all of the proper monthly calculations. It can become a lot of work to properly record these numbers and accurately do these calculations every few weeks. Your time as a childcare provider is valuable, and having to re-do financial planning if there are any mistakes or miscalculations can impact the time you spend focused on your business. Using a tool like a budget planner can help you avoid errors and wasted time so you can get back to running your childcare center.  

Download our free annual budget planner here!


Why do you need a childcare budget plan?

Creating your childcare center budget is important for opening and running your facility. Making a budget for your childcare center helps you:

  • Understand the steps you must take from inception to opening day and beyond to launch your childcare center successfully
  • Anticipate and create a daycare financial plan for the various expenses you'll face as you prepare to open your center
  • Secure financing or investment for your center
  • Calculate the resources needed for a successful childcare center launch
  • Make sure you have enough operating capital to keep your center running in the short term while you work to increase enrollment
  • Find ways to budget to accommodate expenses if your monthly revenue is small
  • Limit your spending by allocating a specific dollar amount to each category
  • Determine how much profit you can make after deducting all expenses from your monthly income
  • Decide which items are essential to running your center and which are nice to have
  • Decide how many children you’ll need to enroll to sustain your center
  • Determine how much you’ll need to charge to cover your expenses

How do you claim daycare expenses on your taxes?

Consult with a business accountant or tax professional to claim daycare expenses on your taxes. Getting your registered tax agent or tax attorney to help with your filing will ensure that your forms are filed correctly and that you’re maximizing all of the benefits from your state-specific expenses.

The amount you pay in salaries, benefits, and operating expenses counts as deductible business costs for corporations, regardless of where your daycare is located. Then, you’ll need to pay a corporate tax based on your daycare's profit at the end of the year.

Daycare expenses for sole proprietors can be deducted under Schedule C. Furthermore, if your daycare business is located in specific areas of your home, a portion of your housing cost such as a mortgage or rent payment, can be deducted as an expense from your taxes. However, you can only deduct the portion of your home used for your childcare business.

The items you can claim as deductions will vary from state to state, so check your state's website for more information on the income tax deductions that apply to you. The IRS also has a comprehensive list of what can and can’t be deducted.

How can I get more grants and donations to benefit my daycare facility?

Setting up a crowdfunding account on sites like GoFundMe can help you get donations for your childcare center.

Hold a bake sale or lemonade stand to benefit your daycare, or partner with a local business like a restaurant or toy store for a fundraiser night to donate a percentage of the proceeds to your daycare.

More grants for your daycare can be obtained by:

  • Applying for them through the US Small Business Administration
  • Enter "daycare business grants" into your preferred search engine to see what comes up
  • Check whether local or national organizations provide small business owners with daycare business grants

How can I cut my monthly expenses?

You can reduce your monthly expenses by shopping at local wholesale companies for cleaning supplies, art supplies, and other items. Check your inventory before reordering more supplies to ensure that you don’t have an excess of a particular item.

You can also sign up for a grant such as the Child and Adult Care Food Program funded by the USDA Food and Nutrition Service to help cover your food costs and, in turn, reduce your expenses. 

How can I increase my monthly income?

You can increase your monthly income by trying out new fundraising ideas. Ask parents what types of fundraisers they would support so they can become more involved in them. Incentivize families to sell items from your monthly fundraisers by offering a percentage discount off their weekly tuition based on how much money they raise.

How do I ensure tuition fees are paid on time? 

It’s important to set guidelines and policies that encourage families to pay tuition fees on time. Implement late fees and establish a payment reminder system to notify families when tuition is past due. Utilize email reminders before payment is due and after a missed deadline and consider following up with a phone call if your first attempts have no response. While unpaid invoices can be written off as bad debts on your taxes, they also serve as missed income and can affect your ability to pay your business expenses. 

If your center accepts subsidy payments from agencies, this can have a direct impact on your revenue and how you manage payments. Keeping track of payments from multiple payers can be complex and time consuming. A tool like brightwheel’s subsidies feature simplifies subsidy management, enabling you to easily track and manage the money your school is owed and has received from agencies. This feature can ensure you never miss a payment by allowing you to manage your finances in one place, giving you a complete picture of agency invoices, balances, and payments right from within brightwheel billing.

How can I make a daycare balance sheet template for my daycare business?

To make a daycare balance sheet template for your daycare business, create a spreadsheet on either Google Sheets or Microsoft Excel. With both options, you can put separate charts on one Excel sheet. If you don’t have or know how to use Microsoft Excel or Google Sheets, you can use other software like Microsoft Word or Google Docs by accessing Drive in your Google account.

A balance sheet template will help you see the total value of your assets, liabilities, and equity. The balance sheet is usually viewed as a "snapshot" of your company's current state. You or an observer can understand your company's financial position at the time of reporting by looking at it.

Set up your business for success

Managing money will always play an important role as your childcare center progresses and grows over time. Financial planning and proper budgeting are the keys to keeping your business financially stable. Take your time as you create and balance your budget, as it’s an important resource you’ll refer to frequently.

Brightwheel is the complete solution for early education providers, enabling you to streamline your center’s operations and build a stand-out reputation. Brightwheel connects the most critical aspects of running your center—including sign in and out, parent communications, tuition billing, and licensing and compliance—in one easy-to-use tool, along with providing best-in-class customer support and coaching. Brightwheel is trusted by thousands of early education centers and millions of parents. Learn more at

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