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Childcare and Education Accountants
Childcare accountants in Birmingham for childminders, nurseries and tutors across the West Midlands: fees, funded hours, expenses, payroll and tax returns.
September brings a new intake, a new fee schedule and usually a new rota, all inside a fortnight. The money to pay for it arrives on three separate timetables: parents pay when they pay, the local authority pays to its own calendar, and the hours actually delivered follow the register. Most of what our childcare accountants do at Midlands Accountancy, a Birmingham practice acting for settings across the West Midlands, is making those three timetables agree with each other before the mismatch turns into a cash flow problem or a funding clawback. Calls fit around sessions, nap times and the end of the day rather than office hours.
Pages for your kind of setting
The sector covers several quite different businesses, and each gets a dedicated page as it is written:
- Accountants for childminders: home-based, Ofsted-registered childminders, including the household-cost questions most sole traders never face.
Nurseries, pre-schools, out-of-school clubs and self-employed tutors do not have their own pages yet, and the rest of this page is written mainly for them. If you run one, ask for a quote and we will answer against your setting rather than a template.
Term-time income, and the August problem
Income in this sector follows the school calendar. Term times are busy, holidays are quiet or silent, and September resets both the roll and the price list. Nurseries and many childminders also receive local authority funding for eligible children’s hours, paid on the authority’s timetable rather than the setting’s, which makes cash flow lumpy even when occupancy is steady.
The pinch point is predictable. A setting that bills term-time only still pays rent, insurance and salaried staff through August, and deposits or retainers taken to hold a place over the summer are money received for a service not yet delivered. Both need to be visible in the books rather than discovered in the bank balance. Budgeting across the whole year, with the quiet months funded out of the busy ones, is the core financial skill in childcare, and it is the thing a set of monthly figures makes possible.
Funded hours: the reconciliation that protects the money
Funded places bring their own paperwork: headcount and census submissions, provider agreements, and audits of the hours claimed. Three numbers have to agree, every month. The hours claimed from the authority, the hours actually delivered according to the register, and the hours invoiced to parents. When they drift apart, the discrepancy surfaces in a funding audit and money already spent can be clawed back.
Two details cause most of the trouble. The first is children who join, leave or change their pattern part way through a term, because the claim was made on a headcount taken on one date. The second is anything charged on top of a funded place, for meals or consumables, which has to be recorded separately from the funded entitlement, since the funding rules limit what can be made a condition of the place. Keeping those charges on their own line in the ledger is what makes the position explainable later.
Payroll in an Ofsted-registered setting
For a nursery, payroll is not an administrative afterthought; it is the largest cost in the business and it is set by regulation. Staffing ratios mean the rota is a compliance document as well as a budget, so a single unfilled qualified post can close a room and cost fee income. Staff turnover in the sector is high, which makes starters and leavers constant work: new starter checklists, P45s, and a Real Time Information submission to HMRC on or before every payday.
Two things routinely go wrong. Holiday pay for term-time-only staff needs its own calculation rather than a copy of the full-year method. And auto enrolment is not a one-off: every employee is assessed each pay period, apprentices and young staff move in and out of the qualifying bands as their pay changes, and re-enrolment comes round on its own cycle with a declaration to file. Our payroll and auto enrolment service covers all of it, including the training and DBS costs that sit alongside the wage bill.
How tutoring income behaves differently
Tutors sit in the same hub for a reason and behave nothing like a nursery. Income is hourly, paid directly by parents or through an agency or platform that deducts commission before payment, so the amount banked and the amount earned are different figures. Demand is compressed rather than seasonal: exam season is frantic, summer is empty. Many tutors also hold a teaching post, so a single tax year contains employment income taxed through PAYE and self-employed profits alongside it, and the return has to bring both together correctly rather than treating the tutoring as separate.
Online tuition adds two wrinkles worth naming: platform fees are a deductible cost that never appears on a bank statement as a payment out, and overseas students can mean money arriving in another currency. A simple session log, recording who was taught and what was paid, is worth more here than any accounting software, because it is the record that makes commission and cancellations explainable.
Growing from a home setting into premises
Nurseries span the full range of structures: sole traders, partnerships, limited companies and, in some cases, charitable or community organisations with their own reporting rules. The step that changes everything is premises. A lease brings rent, business rates, utilities and insurance as fixed monthly commitments that do not pause in August, and staff bring payroll, pensions and employment liabilities. That combination is usually what makes a company structure worth costing properly, and it is also the point at which a set of accounts becomes something a landlord or a lender asks to see. Tutors who build an agency engaging other tutors face the same shift, with the added question of whether those tutors are genuinely self-employed.
What childcare accountants do for a setting
Regular bookkeeping keeps fees, funding and expenses straight through the year and makes the term-time cash cycle visible in advance rather than in arrears. Payroll runs monthly for settings with staff. Where the setting is a company, we prepare the year-end accounts and the company tax return; where it is a sole trader or partnership, the Self Assessment tax return is prepared from the same records. Childminders working from home have their own page and their own guides, including the childminder bookkeeping records checklist and our guide to preparing childminder Self Assessment records.
Records worth keeping in childcare and tuition
Useful records include attendance registers reconciled to fees billed, parent invoices and payment records, local authority funding statements and provider agreements, receipts for food, toys, equipment and training, session logs for tutors, and full staff records where there are employees. Parent arrears deserve their own routine: small unpaid balances accumulate quietly, and a setting without a firm invoicing and follow-up habit ends up lending working capital to families indefinitely. A monthly check of registers against funding statements against invoices catches both problems while they are still small.
Frequently asked questions
Can a childminder claim household costs against tax?
Yes, where the home is genuinely used for the business. HMRC publishes an approach specific to childminders rather than leaving it to a general estimate, and which version applies depends on how you report. Keeping notes of your working hours alongside receipts is what makes the claim stand up, and we confirm the right basis for your circumstances rather than you copying a figure from elsewhere.
Do nurseries charge VAT on fees?
The provision of childcare is largely exempt from VAT, so most settings neither charge it on fees nor reclaim VAT on their costs. Where a setting has significant income from something else, such as room hire, a holiday club run as a separate activity or retail sales, the test is whether that income is itself exempt, so it needs checking against what the setting actually sells.
How much does an accountant cost for a childcare business?
It turns on the number of staff, whether funding is involved, and whether you want bookkeeping through the year or only the year-end work. Our guide to childminder accountant costs explains what drives the price at the smaller end, and a quote is free at any size.
What happens if funded hours claims do not match attendance?
Local authorities audit funded places, and gaps between hours claimed, delivered and invoiced can lead to funding being clawed back after it has been spent. Monthly reconciliation of registers, funding statements and invoices is the practical safeguard.
Does a tutor with a teaching job need to file a tax return?
Almost always, yes. Employment income taxed through PAYE does not remove the obligation to report self-employed tuition profits, and the two are brought together on one return so the tax due on the tuition is calculated on top of the employed income rather than in isolation.
Get a quote for your setting
We act for childminders, nurseries and tutors across Birmingham and the surrounding West Midlands, with records exchanged digitally and calls arranged around a childcare setting’s working day. Request a quote and tell us how many children you have on roll, how many staff you pay and whether local authority funding is in the mix.