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Childcare Centers & Preschools: Payroll Setup Guide (2026)
Setting up childcare center payroll means the standard registrations, an EIN, state withholding and unemployment accounts, new hire reporting, plus the childcare center specifics: pay codes for licensing-tied payroll records and subsidy payment coordination and a documented classification for lead teachers and assistant teachers. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Step 1: accounts and registrations
Every childcare center starts with an EIN, a withholding account in each state where someone works (unless that state has no wage tax), an unemployment insurance account in each of those states, and access to each state's new hire directory. New employers deposit federal employment taxes monthly during the first calendar year because there is no lookback period yet.
Step 2: classify lead teachers and assistant teachers before the first check
DOL lists classifying staff who do not meet all the exemption tests as exempt teachers and then not paying them overtime as a typical problem in daycare centers. Other listed problems are taking an employee off the clock for lunch while they must still supervise children and paying a flat fee for early or late time instead of overtime.
Step 3: build the childcare center pay codes
Licensing-tied payroll records, subsidy payment coordination, part-time variable-hour staff and teacher certification pay each become a pay code with its own taxability and overtime treatment. Building them before the first run is cheaper than correcting a quarter of 941s afterward.
Parents who claim the child and dependent care credit or receive benefits under an employer dependent care plan use Form W-10 to obtain the care provider's correct name, address and taxpayer identification number, so a center must be able to furnish its TIN to families.
Step 4: set the records up to be kept
Child Day Care Services (NAICS 6244) is on OSHA's list of partially exempt industries, so establishments in that code do not have to keep OSHA injury and illness logs unless asked in writing by OSHA, BLS or a state agency. Fatalities, in-patient hospitalizations, amputations and eye losses must still be reported.
Under the federal Child Care and Development Fund rules, every licensed, regulated or registered child care provider and every provider paid with CCDF assistance must obtain a criminal background check for each child care staff member, including contract employees. The check includes an FBI fingerprint check, the National Sex Offender Registry, and state criminal, sex offender and child abuse registries for each state of residence in the past five years, and states must return results within 45 days.
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.
- DOL lists classifying staff who do not meet all the exemption tests as exempt teachers and then not paying them overtime as a typical problem in daycare centers. Other listed problems are taking an employee off the clock for lunch while they must still supervise children and paying a flat fee for early or late time instead of overtime. [DOL Fact Sheet #46]
- Parents who claim the child and dependent care credit or receive benefits under an employer dependent care plan use Form W-10 to obtain the care provider's correct name, address and taxpayer identification number, so a center must be able to furnish its TIN to families. [IRS About Form W-10]
- Child Day Care Services (NAICS 6244) is on OSHA's list of partially exempt industries, so establishments in that code do not have to keep OSHA injury and illness logs unless asked in writing by OSHA, BLS or a state agency. Fatalities, in-patient hospitalizations, amputations and eye losses must still be reported. [29 CFR Part 1904, Subpart B, Appendix A]
- Under the federal Child Care and Development Fund rules, every licensed, regulated or registered child care provider and every provider paid with CCDF assistance must obtain a criminal background check for each child care staff member, including contract employees. The check includes an FBI fingerprint check, the National Sex Offender Registry, and state criminal, sex offender and child abuse registries for each state of residence in the past five years, and states must return results within 45 days. [45 CFR 98.43]
Read the full guide to how to set up payroll for a new business, and the rest of the childcare center payroll library.
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Frequently Asked Questions
What registrations does a new childcare center need before running payroll?
An EIN, a state withholding account and a state unemployment account in every state with an employee, and new hire reporting access. State registrations are the slow step and can take weeks, so they start before the first hire date.
How are lead teachers and assistant teachers classified at setup?
DOL lists classifying staff who do not meet all the exemption tests as exempt teachers and then not paying them overtime as a typical problem in daycare centers. Other listed problems are taking an employee off the clock for lunch while they must still supervise children and paying a flat fee for early or late time instead of overtime.
What records must a childcare center keep from day one?
Child Day Care Services (NAICS 6244) is on OSHA's list of partially exempt industries, so establishments in that code do not have to keep OSHA injury and illness logs unless asked in writing by OSHA, BLS or a state agency. Fatalities, in-patient hospitalizations, amputations and eye losses must still be reported.
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: U.S. Department of Labor: Wage and Hour Division
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