.svg)
The annual report can be a very important document for your childcare business. Depending on your company’s type and which state you operate in, you may be required to file an annual report, so it is important to be familiar with the relevant regulations that may apply to you.
An annual report is also an opportunity for your business to showcase your performance over the last year, and to present your plans for the future to your partners, the families you work with, and your employees. It’s an opportunity for you to tell the story of your business, and to back it up with data that help build trust and accountability.
What is an annual report?
The annual report is a document that summarizes your childcare business’s financial performance and business operations over the preceding year, but also outlines your plans for the year ahead.
As the name suggests, this document is produced annually, and summarizes key information about your business. Typically an annual report will include:
- A letter from Chair of the board, Owner, or Director
- Management’s discussion and analysis (MD&A)
- Operating and financing highlights
- Financial statements, including a balance sheet, cash flow statement, and income statement
The first two points cover the company’s narrative. Through the letter and management’s discussion and analysis, you can tell the story of your childcare’s operations and activities over the past year, highlight particular aspects of its performance, and outline your goals for the next year. For ideas on how to set goals for the future of your business, read How to Ensure the Long-Term Financial Sustainability of Your Childcare Business. When writing your daycare’s annual report, you may want to select highlights that cover both your operational and financial successes: the launch of new services; the opening of new facilities; any new major partnerships and contracts; and whether the business turned a profit or loss for the year.
In the second half, the annual report presents more specific data that support the story told in the first part of the annual report. All narrative elements of an annual report should be consistent with and backed by the financial data presented in this section of the report. Your annual report should show if your business has made a profit or loss, but also other financial information such as the proportion of revenues to operational expenses, the breakdown of revenue by different services offered, etc. This will allow the reader to analyze the information and reach data-driven conclusions about your business.
Why is the annual report important?
Your annual report is a unique opportunity to highlight your childcare business’s key achievements and your goals for the coming year. An annual statement serves primarily three goals:
- Delivering required year-end documents, depending on your reporting obligations on financials;
- Sharing key financial information and your strategy for the next year with key stakeholders, such as your employees, your customers, your partners and any potential investors;
- As a marketing tool, telling a clear, data-based story of your business’s success and plans, which also serve to make your business more transparent and trustworthy.
To achieve those benefits, there are a few things to consider on how to write an annual report.
Provide accurate information
The aim is to be transparent and clear in your communication through the annual report. Be open about both your successes and your losses over the last year, and outline a clear path of action for the future. Ensure you back up your claims with data, to have the credibility that will draw potential new partners to your business.
Make it accessible and engaging
While there are some technical aspects to an annual report, try to make the language and layout as easy to read and comprehend as possible. This way, you can ensure that your annual report truly reaches a wide audience, and appeals to different stakeholders. The use of photographs and some graphic design elements can make the annual report more visually appealing, while also communicating your message through images.
Don’t leave it to the last minute
An annual report includes a lot of information, both financial and operational. Collecting, processing and editing all that information in one go can be a daunting task, especially if you are not working with a large team of accountants, copywriters and designers. Using a clear and easy to manage template, such as brightwheel’s Annual Report Template for Childcare Programs can help with this process. Make sure to collect information for your annual report throughout the year, by keeping up to date financial statements, and identifying the key news you will want to share with your partners at the end of the year.
Who is required to file an annual report?
Annual reports are often associated with larger, publicly traded companies who are required by law to file an annual report. But publicly traded companies are not the only ones who are required to file an annual report. According to the US Chamber of Commerce, limited liability companies (LLCs) and corporations also have certain filing requirements which can include an annual report. Make sure to check if your childcare business falls into these categories; therefore, you do not miss out on your filing obligations.
In addition to the type of business, your filing requirements may also be affected by the state you operate in, as different licensing regulations and filing obligations may apply. You can find information on how to check with your state's business department to learn what the filing requirements are through the US Small Business Administration.
As a daycare owner, it is important to be up to date with the licensing regulations that apply to the state or states you offer childcare services in. You can find information on the regulations and filing obligations of childcare businesses by state.
Publishing an annual report is a great idea for any business. It gives a great overview of how the business is doing, and the steps you intend to take in the future. But, if filing an annual report is a requirement for your daycare, neglecting to file it can lead to serious consequences for your business. The severity depends on the state regulations, but failure to file is likely to incur a late penalty fee, and in the long term can impact your ability to do business. So make sure you’re up to date with your filing requirements to avoid unpleasant surprises later on!
Annual report examples
Below are two annual report examples, to give you an idea of what they entail and how you might apply them to your childcare business.
You can also download brightweel’s customizable Annual Report Template for Childcare Programs, which has been designed especially for the needs of childcare businesses.
Get started on your annual report
An annual report can be a very important document for any business. Whether your business is required to file an annual report, or whether you want to create a document for your partners, employees, and the families that trust your daycare, your annual report can communicate both your financial and operational updates. Learning how to write an annual report for your childcare business may seem like a daunting task. With good organization throughout the year to stay on top of your financial reports, and the help of a template so you have a good starting point, you can make the process a lot simpler.
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 mybrightwheel.com.
