Accounting for Daycares and Childcare Centres in BC
A childcare centre runs on two streams of money: what families pay and what government programs contribute. Both have to land in the books cleanly, because funding claims, payroll and year-end statements all lean on the same numbers.
EverStone CPA keeps the books, payroll and tax filings for licensed childcare owners throughout BC, online, for a fee fixed in writing.
Quick answer: A BC daycare’s accounting centres on separating parent fees from government funding, running accurate payroll for educators, and keeping records that support every funding claim. Childcare is generally exempt from GST, so most centres do not charge it and cannot recover the GST they pay. Many owners incorporate once the centre is steadily profitable.
Childcare businesses we work with
Childcare in BC comes in a few shapes, and each one has a different set of books. A licensed family daycare run from the owner’s home looks nothing like a multi-room group centre with a lease, a cook and a dozen educators.
We work mostly with owner-operated, for-profit centres. If your centre is a society or a non-profit, tell us; the filings differ and we will say plainly whether we are the right fit.
- Licensed family and in-home daycares run by the owner
- Group centres with infant-toddler and three-to-five rooms
- Out-of-school care and before-and-after-school programs
- Preschools running on a school-year calendar
- Owners with two or more sites, sometimes in separate companies
- Centres catching up after a year or more of unreconciled funding
Running a daycare as a sole proprietor or a corporation
Plenty of in-home providers stay unincorporated for years, and that is often sensible. A group centre with staff, a commercial lease and a large building fit-out usually ends up in a company.
Staying unincorporated
The centre’s revenue and costs are reported on a T2125 with your T1. For a family daycare in your home, part of the household costs can be claimed as business-use-of-home, measured by space and hours. Simple, but all profit is taxed personally in the year it is earned.
Moving into a corporation
A corporation lets profit you do not need stay inside the business at the 11% combined small-business rate. That money can fund the next room, the playground or a reserve for a slow intake year. You pay personal tax later, when you draw it.
Licensing and funding agreements
Your licence and any funding agreement are tied to a named operator. Changing from you personally to a new company can mean updating the licence and the agreements, so plan the switch with your licensing officer before the date, not after.
The incorporation calculator gives a first estimate with your own figures, and our BC guide to incorporating sets out the trade-offs. Our incorporation advice covers the timing and the paperwork.
How a daycare owner takes money out
Many owners also work on the floor as an educator or supervisor. Once the centre is incorporated, your pay can come as a wage, as dividends, or both.
A wage through payroll
You sit on the same payroll as your team, with a T4, CPP and RRSP room. The company deducts the wage, and it shows funders and lenders a clear labour cost for the work you actually do.
Dividends from profit
No source deductions and no payroll entry, paid once profit is known. Dividends create no RRSP room, and paying them to a spouse who is not active in the centre can trigger the tax on split income.
Check the funding terms
Some funding programs look at how wages, including the owner’s, are recorded. Before you settle on a mix, we read the reporting terms so your pay choice does not cause a reporting problem.
Run scenarios with the salary vs dividends calculator or read salary vs dividends for 2026.
GST and PST for a BC childcare centre
Childcare services are generally exempt from GST. That cuts both ways: you do not add GST to parent fees, and you cannot claim input tax credits on the GST you pay on rent, renovations or supplies.
Extras can be different. Charges for meals sold separately, merchandise, or programs aimed at older children may not fall under the same exemption. We review your fee schedule line by line and tell you whether any part of it needs a GST registration.
PST is generally a cost to a daycare rather than something it collects. You pay 7% PST on taxable purchases such as furniture, toys, computers and cleaning supplies, and it is not recoverable. The guide to exempt and zero-rated supplies explains why exempt status blocks the credits, and the BC PST guide covers the provincial side.
Payroll for educators, cooks and casual staff
Wages are usually a centre’s largest cost by far. Ratios mean you cannot cut hours when a room is short, so payroll errors show up quickly in cash.
Every educator is an employee
Educators work your schedule, in your rooms, under your licence. Treating them as contractors is rarely defensible. We run them through payroll with T4 slips issued by the last day of February.
Vacation and statutory holidays
BC requires 4% vacation pay, rising to 6% after five years with you. Centres open on or near statutory holidays need the holiday pay rules applied correctly, especially for part-time and casual staff.
WorkSafeBC and EHT
Register with WorkSafeBC and report payroll for premiums. Once total BC remuneration across associated companies passes $1,000,000 a year, BC Employer Health Tax applies, which a two-site operator can reach sooner than expected.
Our payroll services handle the pay runs, remittances and slips. See also the vacation pay guide, the statutory holiday pay guide and the BC Employer Health Tax guide.
Bookkeeping for parent fees and government funding
The core job in daycare books is keeping money from families and money from government in separate lines. Mixing them makes funding reports slow to prepare and hard to defend.
Parent fees and childcare software
Whatever you use to enrol families and bill fees is the record of what each family owed. We reconcile its billing and payment reports to the bank monthly, so arrears and refunds are visible.
Government funding, in its own accounts
Provincial programs may fund operations, reduce the fees families pay, or support wages. Each stream gets its own revenue account, matched to the payment notices, so a claim can be traced to the books.
Deposits, waitlists and subsidies
Registration deposits held for a future start are a liability until care begins. Fees paid on a family’s behalf by a subsidy are tracked per child so short payments do not hide.
Our monthly bookkeeping includes this reconciliation. If the funding and the books have drifted apart, catch-up bookkeeping rebuilds the trail first.
Building fit-outs, playgrounds and vans
Opening a centre usually means spending heavily before the first child arrives. How those costs are classed decides how quickly they reduce your tax.
Leasehold improvements to a rented space, outdoor play structures, furniture, kitchen equipment and computers each sit in different capital cost allowance classes. A van used to collect children from school is a vehicle, so the motor-vehicle rules and a vehicle log apply.
Capital grants toward creating new spaces are not ordinary revenue. Depending on the terms, a grant may reduce the cost of the asset it paid for, which changes the CCA you can claim. We read the agreement and record it correctly from the first payment. The CCA classes guide lists the classes.
Licensing, funding reports and family receipts
Funding reports and reviews
Funding usually comes with reporting: enrolment, fees charged, wages paid. A program can ask you to show the figures behind a claim. Books that match the claims make that review short.
Year-end receipts for parents
Families claim childcare expenses on their own returns and need a receipt showing what they actually paid. Receipts should exclude amounts covered by government, so your billing records must split the two.
Enrolment swings
September intake, summer gaps and staff turnover make cash uneven. A simple forecast shows when a quiet month will pinch, before payroll is due. See cash flow management.
Licence conditions
Your licensing officer, not your accountant, sets the rules on ratios, space and staffing. We keep the money side clean so you can show you meet them when asked.
Month-end checklist for a BC daycare
Run these steps in the first week of each month. A funding claim built on a closed month is far easier to prepare.
- Close the billing month. Export the fee and payment reports from your childcare software for every room.
- Match each funding deposit. Tie it to its payment notice and post it to the right program account.
- List family arrears. Follow up unpaid fees now, not at year-end.
- Check payroll against rosters. Hours paid should agree with the staffing schedule for each room.
- Remit source deductions. Confirm CPP, EI and tax went to the CRA on time.
- Reconcile bank and cards. Every account back to its statement.
- Keep supply receipts. Food, art supplies, cleaning products and toys, with PST shown.
- Record deposits held. New registration deposits go to the liability account until care starts.
- Note changes. A new room, a new program or a staff change: write it down for your accountant.
Feel free to share this checklist with other providers: everstonecpa.com/accountant-for-daycares-bc#month-end-checklist.
What we do for daycares, and what it costs
Childcare owners pay the same published rates as every client:
- Monthly bookkeeping with funding and fee reconciliation: from $300 a month
- Payroll for educators and support staff: quoted alongside the bookkeeping
- Self-employed T1 for an in-home provider: commonly $250–$450
- Corporate T2 and year-end statements: quoted after a free consultation
- Fractional controller for multi-site operators: from $1,500 a month
- A one-off Advice Call: $200 + GST
Fees are fixed in writing before we begin. The full list is on the pricing page.
Questions daycare owners ask
Does a daycare charge GST on parent fees?+
Is government childcare funding taxable income?+
Can I claim part of my home for a family daycare?+
What should a parent’s year-end receipt show?+
Do you work with centres outside the Lower Mainland?+
Written and reviewed by a Chartered Professional Accountant at EverStone CPA, an Abbotsford CPA firm working remotely with businesses across British Columbia. Updated . You can read client reviews before you get in touch.
Related reading
More for childcare owners and employers.
Tell us about your centre
How many sites and rooms, whether you are incorporated, and which funding programs you receive. A CPA replies within one business day with a fixed fee.