for your childminding business

Managing your Accounts

Business Income

Childcare Funding

Managing Your Accounts

Finance Best Practice 

Here are some things to think about to help you manage your finances.

Have a clear strategy

Having a solid business plan in place with help you with forecasting your income and developing your strategy when it comes to understanding where your income is coming from.

Setting your price

Your income needs to exceed what it costs for you to provide the service.  Understanding your costs is vital and includes fixed costs such as rent/mortgage, utilities etc), and costs such as subscriptions, insurance and memberships along with varied costs such as food, activities and equipment will help you understand how much you need to charge and whether to take on funded places (or how many places to offer).

When setting your price there are some key considerations:

  • What are other childminders in your area charging?
  • Does what you offer exceed other providers in your area, and does your price reflect that? 
  • Can you take on funded places/how many places can you offer?
  • What happens to your numbers if you are not at full occupancy.

Looking forward  

It's important to keep track of your income and outgoings to make it easier when completing your annual tax return. Set aside some time every week to look at your finances and plan ahead to see what upcoming costs there might be such as ongoing training, new equipment and if you offer funded places keep an eye on the ages of the children you look after and how this will affect your income.


  • It is good practice to invoice monthly in advance on the first of the month to avoid cash flow issues, and add any extras from the previous month to the new invoice (e.g. any extra hours or trips).
  • Use a standard template – every invoice should include your bank details and your hourly or daily rate - our Accounting Start-up Pack includes an invoice template.
  • Encourage parents to pay by BACS or direct debit, and don’t accept cheques.
  • Make it clear that you expect all invoices to be paid within 10 days of receipt.
  • Use online banking and check your bank account carefully and regularly. Be careful with parents who pay with a combination of childcare vouchers and BACS transfers – get parents to confirm how they have split payments - you can use our Accounting Start-up Pack to help you keep track of all your payments.



Write a Business Plan

Putting together a business plan will help you to organise the financial side of childminding. If you are starting out, spending time on planning will give your business the best chance of success. 

Complete a Cash Flow Forecast

A Cash Flow Forecast is a tool for recording how much money you are likely to have coming in and out of your business at any point. Use this free cash flow forecast template.

Accounting Start-up Pack

Pack includes:
  1. Account Spreadsheet Template
  2. Invoice Template
  3. Sales Receipt Template

Business Income

Income Tax

You will need to register yourself as ‘self-employed’ with HMRC if you will be running your own childminding business.

If you are self-employed, it is your responsibility to pay your own Tax and National Insurance to HMRC and keep all accounting information up-to-date including income and expenditure. The Finance Act 1994 and the Finance Bill 2016 state that accurate accounting information must be kept. Further information on this can be found on the HMRC website.

    National Insurance Contributions

    There are two different types of National Insurance contributions. The amount you are required to pay is dependent on how much you earn per year. Typically, most childminders will pay Class 2 but it will be higher, the more you earn.

    Class 2 National Insurance – if your profits are £6,205 or more a year
    Cost - £2.95 per week (rate for tax year 2018-2019)

    Class 4 National Insurance – if your profits are £8,424 or more a year
    Cost - 9% on profits between £8,424 and £46,350 (rate for tax year 2018-2019)

    There are certain allowable expenses that HMRC have agreed for registered childminders, please see further information here.


    If you are currently receiving benefits from the government, you will need to inform the agencies you are with that you are starting your own business. Any benefits that you are currently receiving maybe stopped.

    Childminders in Rented Accommodation

    If you live in rented accommodation, you will need to speak with your landlord and check that your rental/leasehold agreement allows you to run a childminding business from the property. Please ensure that you get written permission from the landlord before moving forward with registration.

    It is important to note that you may need to make changes to the property to provide a suitable environment for young children. For instance, adding stair gates, making sure all cupboards are security-locked etc. You will need to make sure your landlord is also happy for you to make these changes.

      Childminders with a Mortgage

      If you have a mortgage on the property, you will need to check that there isn’t a clause in the agreement preventing you from running your business from your home.

      You may be required to make some small home improvements so that your property is suitable for young children, for example fixing broken fencing in the garden, installing security, adding stair gates etc.



      Register as Self Employed

      You will need to register yourself as ‘self-employed’ with HMRC if you will be running your own childminding business.

      Business Records You Must Keep

      You must keep records of your business income and expenses for your tax return if you’re self-employed.

      Check Your Allowable Expenses

      In calculating any taxable profits, HMRC allow as deductions from childminding income expenses which are directly attributable to childminding.

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      How to Get Paid On Time

      Download our Free Guide

      Childcare Funding

      30 Hours Funded Childcare

      Since September 2017, 3 and 4 year-olds of working parents (or sole parent in a lone parent household) are eligible for 30 hours of funded childcare per week over a period of 38 weeks a year.

      How will this affect me financially?

      Each Local Authority will pay a different rate so please check the amount you will receive per hour so you can start to work out your calculations and make an informed decision about the next steps you’ll take.

      Is it complusory to offer 30 hours funded childcare?

      No, as a childcare provider, you do not have to offer the 30 hours childcare to eligible parents. In fact, you’re well within your rights to simply say ‘no’! However, you need to think about whether parents will vote with their feet and take their business to one of your competitors who are offering the full 30 hours.

      Providers who opt-out of the 30-hour scheme can still deliver the universal 15 hour offer.

      How will I receive payment?

      Childcare providers are paid monthly from the Local Authority using rates worked out for their area by the Early Years National Funding Formula.


      Find out more on the Childcare Choices Website

      Find out how the funding schemes affect you as a childcare provider and how they can benefit your parents at the Childcare Choices website.

      Follow Guidance on Early Years Funding

      Find rates and guidance on early years national funding and operational guidance on local authority funding of providers on the Government website.

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