Who We Help · Childcare Centres · Bookkeeping
Daycare bookkeeping: reconcile the funding, cost every room
Since CWELCC, a childcare centre is closer to a funded program than a fee-for-service business: most of the revenue for an under-six space arrives from government, tied to enrolment and eligible costs, and reconcilable — which means recoverable — at year-end. Books that track money by source and by room, and run every wage grant through its own ledger, turn the annual reconciliation into a printout. Books that dump everything into one fee account turn it into a clawback.
By the AnalytIQ Accounting team · Last reviewed: August 12, 2026
One licensed space, three sources of money
A single under-six space in a CWELCC centre can be paid for from three directions at once: the capped parent fee, a municipal fee subsidy paid on the family's behalf, and CWELCC funding flowing through your service system manager — the Region of Peel for Brampton centres. Each stream has its own paperwork, its own timing, and its own reconciliation, so we build the revenue side by source and by room rather than as one blended fee account.
The operational truth lives in your childcare management platform — Lillio (formerly HiMama) and similar systems hold enrolment, attendance, and parent billing. We reconcile that record outward each month: enrolled children to billed fees, billed fees to deposits, and subsidy claims to what the municipality actually remitted. For subsidized families the split matters twice — once for the funding claim, and again in February, because the parent's tax receipt can only show what the parent paid, never the portion the municipality covered.
CWELCC funding is an advance until it reconciles
Ontario moved participating centres to a cost-based funding formula in January 2025: allocations are tied to eligible costs, centres report back to their service system manager, and unspent or ineligible amounts can be recovered. That makes CWELCC money an advance, not income, until the reporting says otherwise — so we keep each funding stream in its own account, defer what has not yet been earned, and map the chart of accounts to the funder's eligible-cost categories from day one. When the reconciliation template arrives, the numbers fall out of the ledger instead of being rebuilt from bank statements.
Enrolment data carries the same weight. Fee-reduction funding assumes the capped parent fee — $22 per day since January 2025 for participating centres, on the path toward the $10-a-day average — so every enrolment change ripples through both the parent bill and the funding claim. A centre that reconciles enrolment monthly catches the ripple; a centre that doesn't finds it at year-end, with interest in the form of a recovery.
Wage money is not wage-line money
Two kinds of compensation funding move through a centre's payroll, and both come with strings: the Provincial Wage Enhancement Grant — up to $2 per hour plus benefits for eligible program staff — and CWELCC's workforce compensation funding that supports the wage floor for registered early childhood educators. The money must reach the eligible staff, be reported as such, and be returned if unspent. We run each grant through its own cycle: received into its own account, paid out through a dedicated pay code, reconciled to the penny. Blend it into base wages and the reconciliation becomes impossible — which reads to the funder as money to recover.
The mechanics of pay codes, RECE wage floors, and statutory costs on top of grant dollars live on our daycare payroll page.
Ratios make rooms cost different amounts — cost them that way
Staff-child ratios under the Child Care and Early Years Act are the real driver of cost per space, and they differ sharply by age group. An infant space carries roughly five times the staffing of a school-age space, so centre-level margin is a fiction — a full preschool room can quietly subsidize a half-empty infant room for years. We track labour and occupancy by room so each program shows its own cost per licensed space:
| Room | CCEYA ratio | What it means for the books |
|---|---|---|
| Infant (under 18 months) | 3 staff per 10 children | Highest labour per space — vacancies here hurt most |
| Toddler (18–30 months) | 1 staff per 5 children | Mid-cost rooms; watch the infant-to-toddler transition dates |
| Preschool (30 months–6 years) | 1 staff per 8 children | Usually the margin engine — track occupancy tightly |
| School age | 1 staff per 15 children | Outside CWELCC — market fees, so price it on its own costs |
The school-age line deserves its own emphasis: before-and-after-school programs sit outside CWELCC, charge market fees, and follow different economics. Keeping them in separate revenue and cost accounts stops CWELCC assumptions from leaking into pricing decisions the funding formula does not cover.
February receipts and the HST you absorb
Childcare for children 14 and under is HST-exempt, which cuts both ways: you charge no tax, and you claim no input tax credits — the centre absorbs HST on rent, food, toys, and supplies at full cost, so budgets must be built gross. On the parent side, annual receipts feed the child care expense deduction on their returns, and the number must be what the family actually paid after subsidies and fee reductions. Because our books split parent-paid from funder-paid all year, receipt season is a batch print, not a research project.
The monthly close gives an operator the numbers that run the centre: enrolment against licensed capacity by room, revenue by source, funding reconciliation status, wage-grant tracking, and cost per space. If you hold US citizenship or pay US curriculum franchise fees, there is a genuine cross-border file too — see our daycare cross-border tax page, and our bookkeeping services page for how the monthly close runs for every client.
Common questions.
How should CWELCC funding be recorded?
As an advance until it reconciles: separate accounts per funding stream, deferral of unearned amounts, and a chart of accounts mapped to the funder’s eligible-cost categories. Unspent or ineligible amounts can be recovered, so the ledger has to prove where every dollar went.
Are daycare fees HST-exempt?
Yes — childcare for children 14 and under is exempt, which also means no input tax credits. The centre absorbs HST on rent, food, and supplies at full cost, so budgets and per-space costs must be built on gross prices.
What goes on a parent’s tax receipt?
Only what the parent actually paid — not the municipal subsidy portion and not the CWELCC fee reduction. Books that split parent-paid from funder-paid all year make February receipts a batch print instead of a reconstruction.
Related reading
Books that survive a funding reconciliation.
Book a consultation and get a plain answer on exactly what applies to you.