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Childcare Centers & Preschools: Setting Up Direct Deposit (2026)
Direct deposit for a childcare center is set up once per employee with a bank authorization, prenoted, then paid through ACH on the pay schedule the state allows, with licensing-tied payroll records and subsidy payment coordination settling on the same file. BEG runs childcare center payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
Setup for childcare centers
Each employee signs a direct deposit authorization with routing and account numbers, the account is prenoted with a zero-dollar test before the first live deposit, and split deposits are recorded per employee. Federal law does not let an employer make direct deposit mandatory to a bank of the employer's choosing, and most states require a paper or pay card alternative for employees who do not opt in.
Since the 1972 FLSA amendments, preschools and daycare centers are covered enterprises regardless of annual dollar volume and whether public, private, for profit or nonprofit. Every nonexempt employee must be paid at least $7.25 per hour for all hours worked and overtime after 40 hours in each workweek, not after 80 hours in two weeks.
Timing and the childcare center pay cycle
The ACH file goes two banking days before payday for the funds to land on the date, which means hours for lead teachers and assistant teachers close earlier than the payday itself, and licensing-tied payroll records for the period is settled on that file or on a documented later settlement date. Off-cycle runs, final checks and corrections use same-day ACH where the bank supports it.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Since the 1972 FLSA amendments, preschools and daycare centers are covered enterprises regardless of annual dollar volume and whether public, private, for profit or nonprofit. Every nonexempt employee must be paid at least $7.25 per hour for all hours worked and overtime after 40 hours in each workweek, not after 80 hours in two weeks. [DOL Fact Sheet #46]
Read the full guide to how to set up direct deposit, and the rest of the childcare center payroll library.
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Frequently Asked Questions
Can a childcare center require direct deposit?
Federal Regulation E bars an employer from requiring deposit to a particular bank; the employee chooses the account. Many states add that a no-fee alternative must be offered, so a written opt-in with an alternative is the safe policy.
When does the childcare center pay file have to be released?
Two banking days before payday for standard ACH. Same-day ACH is available for off-cycle runs and corrections at a higher per-item cost. Since the 1972 FLSA amendments, preschools and daycare centers are covered enterprises regardless of annual dollar volume and whether public, private, for profit or nonprofit.
What does managed payroll cost for a childcare center?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Licensing-tied payroll records, subsidy payment coordination and part-time variable-hour staff are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Childcare Centers & Preschools. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: IRS: Understanding Employment Taxes
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