What you need to know when starting or buying a childcare centre

The Australian childcare industry offers a rewarding opportunity to nurture young minds and contribute to the community. However, starting or buying a childcare centre involves significant legal and operational considerations.  

This article provides a guide for aspiring childcare business owners in Australia, outlining some of the legal requirements that you’ll need to navigate. 

What government incentives are available? 

The Australian Government recognises the critical role childcare centres play and offers financial incentives in some situations to support their establishment and operation. Some of the grants and concessions you may be able to access include: 

• Capital grants: The Community Child Care Fund (CCCF) limited supply grant supports the establishment of early childhood education and care (ECEC) services in identified priority areas experiencing disadvantage in regional and remote areas of Australia or where there are no or limited similar services. 

• Other grants: Various state and federal grants are offered to support eligible child care centres in disadvantaged and vulnerable communities, to enable services to remain sustainable into the long-term, or to support early childhood education and care.  

• Tax Concessions: Childcare businesses may also be eligible for various tax concessions, including depreciation deductions for capital equipment and buildings. 

State or Territory Departmental Approvals  

You will need to apply for:    

Provider approval – to become an approved provider. Provider approval is recognised nationally and allows you to apply for service approval/s.   

Service approval – to operate an education and care service at a particular centre. Service approvals relate to the individual site/premises and the type of care provided.

Australian Government Child Care Subsidy (CCS) approval 

You will need to apply for approval to administer Child Care Subsidy payments. This is known as Child Care Subsidy approval under the Family Assistance Law. 

Both State and Federal approval applications are submitted through the National Quality Agenda IT System (NQA IT System).  

Who will need Working With Children Checks? 

All staff working in a childcare centre, including educators, volunteers, and management, must have a valid Working With Children Check (WWCC). The WWCC is a national screening process designed to protect children from harm. 

What is required for building and regulatory compliance? 

Childcare Centres must comply with strict building codes to ensure the safety and well-being of children. These codes address various aspects including: 

• Accessibility: Ensuring easy access for children with disabilities. 
• Amenities: Providing adequate toilet and bathroom facilities for the number of children and staff. 
• Fire Safety: Having appropriate fire alarms, exits, and fire-resistant building materials. 
• Ventilation and lighting: Maintaining a healthy and comfortable environment for children. 
• Play areas: Offering safe and age-appropriate outdoor and indoor play spaces. 

What else needs to be considered? 

1. Staff Qualifications: Educators working in childcare centres must possess the required qualifications as outlined by the NQF. Early Childhood Teachers and childcare workers need to meet specific educational pathways.

2. Ratios: Strict child-to-educator ratios are mandated by the NQF to ensure adequate supervision and quality care. These ratios vary depending on the age of the children.

3. Insurance: Having appropriate childcare-specific insurance coverage to protect against potential liabilities is crucial.

What else is there to consider when starting vs. buying a childcare centre? 

When you’re starting a childcare centre there’s a wide range of complexity and costs involved. Some of the elements that you should start thinking about include:  

• Finding a suitable location: Conduct thorough research to identify a location with a demand for childcare services. Consider factors like demographics, existing childcare options, and accessibility. 
• Developing a business plan: Create a comprehensive business plan outlining your vision, financial projections, staffing strategy, and marketing plan. 
• Securing funding: Explore financing options, including government grants, bank loans, and private investors. 
• Get Financial Advice; from your accountant or other financial adviser. 

If you are considering buying a childcare centre, as opposed to starting one yourself, the considerations are slightly different, but no less important. If you are considering purchasing an already established childcare centre, you should consider: 

• Due diligence: When considering buying an existing childcare centre, conduct thorough due diligence, including reviewing financial records, enrolment numbers, licensing history, and building certifications. 
• Get Financial Advice; once again, from your accountant or other financial adviser. 
• Legal advice: Seek legal counsel to review and negotiate the terms of the business purchase contract ensure a smooth transaction and address any potential legal issues. 

There is also the big issue of whether you secure the property on which the childcare centre is situated by buying it, or by leasing it. It is crucial that you get the terms of any purchase contract or lease carefully looked at by your lawyer and negotiate any changes you need before signing. 

In summary, starting or buying a childcare centre requires careful planning, financial investment, and an in-depth understanding of the legalities involved. Remember, it’s vital to stay updated on the latest government regulations and industry best practices to ensure your childcare centre thrives and delivers exceptional care for young minds.