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The Childcare Management Blog

Tips for Finding the Best Accounting Software for Your Daycare

Posted by EZChildTrack Team on Jun 30, 2021 11:00:00 AM


When it comes to accounting software for your daycare, you have many options available. You can purchase or subscribe to general accounting software like QuickBooks, or you can select a daycare management software with built-in accounting tools.

While general accounting software offers a lot of bells and whistles, it’s doubtful you will need them in the course of operations. In the meantime, it’s just another software solution you need to pay for and maintain. 

Also, you may not be able to transfer data from another application electronically, leaving you to transfer information manually. That takes time and can introduce errors.

Daycare management software with built-in accounting tools brings the best of both worlds. The accounting tools provide what you need without a lot of fluff and automatically and securely share data with the rest of the software—no extra work for you. As a result, errors are mitigated, and time is saved.

Here are some tips for finding the best daycare management software with accounting features.

Look for These Basics

To make the first cut in your long list of potential solutions, consider the following to be “must-haves”:

  • Simplicity 
  • Paperless billing
  • Online payment
  • Expense tracking
  • Compatibility with tablets and smartphones

With management software, the simpler it is to use, the more likely you will use it. To find easy-to-use software, look at reviews, check daycare forums, and review the company website for videos and documentation. But the best way to learn how easy it is to use is to take advantage of a free trial.

Paperless billing not only saves paper but also simplifies the billing process. Parents receive the bill via email or through a parent portal. There’s no chance for them to lose it. 

Online payment is the second half of the equation. Provide parents the ability to pay online. You will be paid faster and without the repetitive task of manually entering and processing the payment.

Paperless billing and online payment make up automated billing. The software tracks those who pay and automatically adds late payment fees to those who don’t. You can even set the software to notify the customer regularly

Tracking expenses is crucial for determining your profits. It also helps you with planning future activities and making forecasts.

The compatibility with smartphones and tablets is a given. You don’t want to be married to a terminal on a desk. Select cloud-based software, and you can access and work with your data anytime, anywhere, with any device.

Now, let’s look at some specific features that make daycare management software better than plain, old accounting software.

Learn why web-based, fully supported childcare software is the better option. Schedule a free demo today »


When you have employees, you have added administration requirements. You need to track their hours, vacation time, and sick time. You need to be able to deposit and report employee taxes and file a W-2 for each worker at the end of the year.

Payroll taxes are more complicated than estimated quarterly taxes or once-a-year income taxes. Payroll tax reporting is required throughout the year and has multiple deadlines. 

Even if you have no employer, you still have payroll tax obligations to yourself if you receive your wages through an LLC or corporation.

A well-rounded payroll application simplifies employee pay tracking and keeps things from falling through the cracks.

Expenses and Accounts Payable

Expense tracking is essential for your business tax recordkeeping. If you buy food, toys, arts and crafts supplies, and other goods, you can usually get a tax deduction for them. Also tax-deductible are payments for services such as field trip tickets and utility bills. 

Your daycare software should keep track of all expenses, help you save receipts, and track bills you need to pay so everything is all in one place come tax time. 

Service Fee Income and Sales Tax Tracking

Whether you bill hourly, daily, weekly, or monthly, you must keep track of all service fee income. If you want your operation to look professional, you shouldn’t rely on bank deposits alone to show proof of income.

A quality daycare can provide several options for customer and business recordkeeping.

  • Itemized invoices for parents
  • Electronic ACH and credit card payments
  • Automated payments
  • Receipt preparation for parental tax credit records
  • Deposit or prepayment tracking
  • Automated income recording

As your business grows, the amount of necessary paperwork grows with it. Also, parents expect most service providers to prepare documentation they can use on their taxes and expense tracking. 

When it comes to sales tax, the amount depends on the state. However, even if your business is exempt from sales tax on daycare services, you may be required to collect sales tax on physical goods you sell, like toys or shirts.

Income Tax Recordkeeping

Your daycare management software should provide all the information you need to prepare a complete income tax return.

The software should convert the books between cash and accounting if you use different methods for taxes and regular bookkeeping. You should be able to easily match expenses to the correct line on your tax return. Also, the software should help identify expenses that qualify for special deductions or credits. 

Financial Reporting

Good daycare software accounting generates everything you need for financial reporting — income statements, balance sheets, and cash flow statements among them. In addition, the software should allow you to access by period so that you can pull reports for monthly, quarterly, and annual statements.

Financial reporting software is critical for determining business performance throughout the year and in comparison to previous periods. Comparing this quarter to the same quarter last year can show you how much (or little) your business has grown. You can easily find trends where expenses have gone up that you can use to inform your own rates.

Some software has advanced options allowing you to see how your income breaks down by family, location, membership tier, or other metrics. It helps you make sound business decisions based on data.

Ready to choose childcare software, but don't know where to start? Download  our free guide

What Daycare Management Software Can Do for You

Daycare management software with integrated accounting features is excellent for automating routine and repetitive tasks, particularly manual tasks that can introduce errors into the system. You can synchronize data between your bank accounts and different software programs to eliminate manual data entry.

Software mitigates data entry and math errors and will alert you when something is wrong. Plus, you receive an array of pre-formatted and customizable reports to help you make better business decisions.

EZChildTrack offers all of these features and more. Our childcare management software solution combines all the necessary applications to streamline operations and help you expand your business, whether you operate a single daycare or multiple facilities. 

Visit EZChildTrack to learn more about the best accounting software as part of a comprehensive solution.

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Topics: Childcare Software

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