Running a nursery is a full time job and then some. Between the children, the staff and the parents, sorting the finances can feel like the thing that never quite gets done. Then year end arrives and suddenly it all matters at once.
The good news is that it does not have to be stressful. With a little preparation you can walk into year end calm and in control. Here is a simple guide to getting your nursery year end accounts ready whatever stage you are at.
Know your year end date and what you file
Your first job is to know two things. When your financial year ends and how your nursery is set up.
This decides what you file and by when.
Many nurseries choose a 31 August year end so it lines up with the academic year. Others use 31 March or the date they started trading. Check yours if you are not sure. What you file then depends on your structure:
Limited companies file accounts with Companies House and a Corporation Tax return with HMRC.
Charities file with the Charity Commission and follow the Charities SORP.
Sole traders and partnerships report through Self Assessment.
If you are a limited company your accounts are due at Companies House nine months after your year end. Your Corporation Tax is due a little sooner at nine months and one day. That gap catches people out so put both dates in your diary now.
Get your income and funding in order
Nursery income comes from more than one place and year end is the time to make sure it all adds up. Gather everything early:
Parent fees including any deposits
Early years funding for free entitlement hours
Grants and any other support you receive
The big one is early years funding. Reconcile the funding you received against the places you actually delivered and your headcount. This is where errors like to hide so it pays to be thorough.
While you are there bring your bank reconciliations up to date and chase any unpaid parent fees. If a fee is never coming in then record it as a bad debt so your accounts reflect reality.
Sort payroll and staff costs
Staff are almost always a nursery's largest cost so payroll deserves proper attention at year end. A few key dates to know:
Give every employee on your payroll on 5 April a P60 by 31 May.
Report any benefits and expenses on a P11D by 6 July where these still apply.
Pay Class 1A National Insurance by 22 July if you pay electronically.
Check your pension records too. Auto enrolment contributions all need to be correct and up to date. Remember the National Living Wage rose to £12.71 an hour from April so make sure your pay rates and your budget reflect it.
Capture your expenses and go digital
Every allowable expense you record is money off your tax bill so try not to leave any behind. Typical nursery costs include:
Rent, utilities and food
Toys, resources and learning materials
Staff training and DBS checks
Insurance and professional fees
Larger items like furniture, outdoor play equipment or a new kitchen may qualify for capital allowances so keep those receipts separate. One more thing on VAT. Most childcare is exempt which sounds simple but actually makes VAT trickier rather than simpler. If you are registered or unsure it is worth getting advice.
Keeping digital records also sets you up for Making Tax Digital. If you are a sole trader or landlord earning above £50,000 you are already in scope for Making Tax Digital for Income Tax. Those earning above £30,000 join from April 2027.
Start early and give yourself room
The single best thing you can do is start early. Year end is far easier when your records are tidy all year rather than pulled together in a panic the night before.
Aim to have everything ready well ahead of your filing deadline. It gives you time to check figures, ask questions and set money aside for any tax due. Filing early does not mean paying early so there is no downside to getting ahead.
Let Profectus take the pressure off
Year end is so much lighter with someone in your corner. At Profectus we help nurseries get their numbers straight and keep them that way through our Finance Fixer service. You focus on the children and we will handle the finances.
Book a discovery call with Renu and head into year end feeling calm, clear and in control.
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