Budget

Your choice of legal structure (e.g., nonprofit, tax-exempt corporation; religious affiliation; for-profit business; or employer-sponsored center) will affect your total budget and the way the center is run, so it is important to consider this carefully before starting your center. Seek legal advice as you make these important business decisions.

No aspect of managing your child care program will be more important than tracking your budget. You'll need one type of budget for your start-up operations, and another once your center is up and running.

Start-up Budget

A start-up budget will help you to plan and project the expenses and income for your center's initial months of operation, and should include:

• One-time capital expenses, such as installed playground equipment, furniture, indoor equipment and materials, computers, kitchen supplies, etc.
• Renovations to make the space suitable for child care and to meet all licensing regulations
• Legal fees, licenses, and permits
• Rent deposit and insurance
• Marketing and advertising costs
• Staff time before the center opens for business
• Cash to cover start-up expenses, food, and supplies for the first three months

Operating Budget

After you establish a start-up budget, you will want to create an operating budget for running the center. Personnel costs (salaries and benefits) for a high quality center are usually 75 to 85% of the total budget. Keeping control of your budget requires accurate record-keeping. Some centers (especially nonprofit educational corporations) have an annual audit completed by an accountant. If your center has a governing Board, you may have a treasurer. You may also hire a part-time bookkeeper or accountant to balance the center's books, pay outstanding invoices, bill parents, cut payroll checks, submit state reimbursement paperwork, and file payroll withholding and other taxes.

Important elements to track:

• Attendance and enrollment records, including part-time and full time enrollment, and fees to be charged for each family
• Income records: parent fees, outside donations, grants, government reimbursements, subsidy payments, etc.
• Petty cash fund
• Receipts for all expenses
• All payables, including insurance, rent or mortgage, utilities, capital expenses, furniture, office equipment, classroom equipment, supplies
• Payroll, including tax withholding, Social Security, worker's compensation, and other payroll expenses
• Tax statements and records
• Bank statements, loan statements
• Financial reports made to parents (for nonprofits) and to the Board, and/or to owners/shareholders (if applicable)