THE PROCESS FOR BUYING A CHILDCARE CENTRE
Are you looking to enter the childcare industry and buy a childcare business? Or are you already qualified or experienced in the industry and want to own your own center?
The steps below should be followed in the listed order:
- Entity Creation: Consult with an accountant
- Qualifications: If you lack childcare qualifications, consider enrolling in a Certificate IV or Diploma to demonstrate to the Early Childhood Regulatory Unit (ECRU) that you are serious about learning. While not legally required, having qualifications or experience in childcare can strengthen your Provider application.
- Provider Application: Submit your Provider application in the name of the established entity, such as a company or trust.
- Study: Be prepared for the exam—it is challenging.
- Provider Number: Once you receive your Provider number, you have approximately two years to secure or open a business, or the number may be canceled.
- Business Selection: Decide whether to buy or establish a business. For first-time buyers, purchasing an existing business is often less risky. An existing business may have qualified staff, management in place, established resources, and has already been approved by ECRU with a Service Approval. With a start-up, there’s no guarantee of obtaining a Service Approval.
- Complete Business Transfer: Finalize the conditions of the business offer and complete any necessary contract requirements, including the transfer of Service Approval.
- Congratulations: You now own a business in the childcare sector, one of the most in-demand industries in Australia. With guaranteed government funding, high demand, and potential profitability, it is also a sector that is resilient to automation
Step One – Entity Details
The first step in purchasing a childcare business is deciding on the entity under which you wish to purchase it. This could be a company, a company and trust, or another entity structure. A company can be established through ASIC or with the help of your accountant. Establishing a company and trust will require assistance from an accountant or lawyer. The best option for you should be discussed with your accountant.
If the company has three directors, ECRU will likely require all three directors to undergo the exam/interview process. Therefore, if there is someone in the company who is trained in childcare or has educational experience, it is advisable to have that person as the sole director.
This way, they will be the only individual required to go through the approval process, improving the chances of success. If there are multiple directors and, for example, two directors are required to take the exam and one of them fails, ECRU will usually fail both directors. Shareholders, on the other hand, are not required to go through the approval process but will be vetted.
ECRU requires the director (the person applying for approval) to hold shares in the company. The percentage of shares required will depend on the entity structure and should be confirmed with ECRU before submitting the provider application.
Step Two – Enroll Childcare qualification
If you are new to the childcare industry, it may help with the provider approval process if you can confirm to the approval body, ECRU (Department of Communities), that you are committed to childcare by showing that you are enrolled in a childcare qualification.
While it is not a legal requirement to have qualifications or experience in childcare to purchase a centre, in recent times, ECRU has not looked favorably on applicants (even those who have passed the exam) who cannot demonstrate their dedication to the industry beyond merely purchasing a business.
Step Three – Apply for Provider number
To own and operate a childcare business, the entity purchasing the business must hold a Provider Number. The individuals associated with the entity, such as the directors, must be approved by the Education and Care Regulatory Unit (ECRU).
The Provider Number is obtained through the Department of Communities – Childcare Section in the state where you live or where you are purchasing the childcare business.
Once approved, the Provider Number is valid across all of Australia, allowing you to own multiple businesses nationwide under a single Provider Number.
The Provider Number is linked to the entity (e.g., company or company/trust) that will own the childcare business or businesses.
The application fee for the Provider Number is $241 for the 2022–2023 period.
Please note, the Provider Number is not permanent. If you do not purchase a center within approximately two years from issuance, the Department may cancel the number.
The application process includes credit checks into the company’s history and on all the company’s directors.
Sellers rarely accept offers from buyers without a Provider Number due to the time required to obtain one and the risk of the buyer not being approved. The process, which includes an exam, has become more difficult since May 1, 2022, leading to a higher failure rate.
While the Department of Communities currently quotes a 120-day processing time for Provider Number approval, as of July 2022, the process is taking 180 days or longer. For more information, refer to Section 15 of the Act.
Become an Approved Childcare Provider
In Australia, early childhood education and care providers must be approved to operate a service and administer the Childcare Subsidy (CCS).
The approval process has recently changed. Prior to 1 July 2023, applications for CCS were managed through the Provider Entry Point. To simplify the process, all applications are now submitted via the National Quality Agenda IT System.
Existing providers are now required to use the National Quality Agenda IT System to add new services to their current approvals. Learn more about adding a new service.
This information is relevant to:
- Prospective providers who intend to apply for CCS approval.
- Existing providers who want to add or remove a service from their approval.
- Prospective or existing providers who have purchased a service.
- Existing providers who have undergone a restructuring of their legal entity.
Please carefully review the following information before applying. You may also complete an e-learning course on the approval process available on the ACECQA website.
If you need assistance during the application process, contact: CCSassessments@education.gov.au.
For technical issues with the National Quality Agenda IT System, email nqaits@acecqa.gov.au.
Families wishing to apply for the CCS should visit the Services Australia website.
Steps to Become an Approved Childcare Provider
- About the Approval Process
To operate a service and administer the CCS, you must receive approval from both the Australian Government and your state or territory government. This page outlines the approval process. - Check Your Eligibility
You must meet specific eligibility criteria to administer the CCS at your service. This page explains who the Australian Government will approve for CCS administration. - Get Ready to Apply
When applying for CCS approval, you’ll need to provide various information and evidence. Preparing this information beforehand can help speed up the application process. This page outlines what you’ll need to do before applying. - Submit Your Application
Once you’ve gathered all necessary documents and information, you can submit your CCS approval application. This page explains how to complete and submit your application. - After You Apply
After submission, your CCS application will undergo a detailed assessment. This page provides information on what to expect during the assessment process and what to do once you receive a decision. - Add, Remove, or Relocate a Service
Once approved, providers must notify authorities of any changes to their services, including opening, closing, or relocating a service, or if the provider’s legal entity changes. This page outlines the required steps in these cases. - Suspension of Approvals
Your National Law or CCS approvals may be suspended if you fail to meet obligations or submit a voluntary suspension request.
Step Four – Provider Application Assessment / Examination
Effective from May 1, 2022, the Education and Care Regulatory Unit (ECRU) now conducts online assessments for Provider Approval suitability, consisting of an exam followed by an interview.
The online knowledge assessment (OKA) includes 46 multiple scenario-based questions for each center-based care or family day care provider application, with a time limit of 75 minutes.
Several applicants have reported not completing the assessment within the allotted time.
You have the option to flag and skip a question, allowing you to return to it later.
Exam Details:
- The duration for the online knowledge assessment (OKA) is 75 minutes
- There are 46 multiple scenario-based questions for each centre based care or family day care provider applications
You will have online access to the necessary documents for the assessment. The setup includes two screens, making it easy to navigate and use.
Most questions are scenario-based and require you to reference the relevant laws and regulations.
Confidence in navigating these documents is crucial. If uncertain about a question, you can flag it and return to it later.
Below is an overview of the documents and information that should be studied.
A thorough understanding of the Regulations and the Act is essential, as some questions may reference multiple regulations (e.g., 76/22/14 or 42/1/23).
Key Areas to Know for the Rating Assessment:
- Space requirements (SQM inside and outside)
- Fencing requirements
- Child-to-staff ratios
- Healthy eating policies
- Document retention and maintenance requirements
- Child protection responsibilities
- Notification of incidents
Some applicants may have their spouse, sibling, friend, or the Centre Manager of an existing business appointed as the Company Director to obtain the Provider number, serving as the company’s sole director. Alternatively, if the center has a capable manager willing to take on the role of Company Director, they may hold the Provider number. Once you own the center and gain experience, you will have a much better chance of passing the exam and being approved by ECRU in the future.
If you score above 80%, you will be invited for an interview.
The interview typically takes place around four weeks after the exam and lasts about an hour. It will again assess your knowledge of childcare.
Resources are available in the ACECQA website
To prepare for the assessment, PMCs are encouraged to read the information provided in the links below:
- Australian Children’s Education & Care Quality Authority (ACECQA) (website)
- Education and Care Services National Law (WA) Act 2012 (the National Law)
- Education and Care Services National Regulations 2012 (WA) (the National Regulations)
- Guide to the National Quality Framework
- My Time, Our Place: Framework for School-Aged Care in Australia
- Belonging, Being and Becoming: Early Years Learning Framework for Australia
The National Law & Child Care Subsidy Approval Course is designed to help you understand your responsibilities as an approved provider/PMC. The course has 5 modules (detailed below) which are available to view on the ACECQA website via the ‘Opening a new service’ page.
Business Plan Requirements
A business plan must be submitted to ECRU, usually prior to sitting the exam. If an applicant does not currently own a business or has not yet started building a center, they should base their plan on their ideal center.
The business plan should include:
- Costings
- Financial projections
- Budget
- KPIs (Key Performance Indicators)
A business plan template is available on the ABB website under “Resources.” Additionally, advisors specializing in business plans are available for a fee. It is recommended that provider applicants start working on their business plan as soon as they submit their Provider application to ensure it is ready when requested.
A business plan will also be required by PRODA once a center is purchased or is about to open. The PRODA business plan should be an extension of the Provider business plan.
As a successful applicant once advised, “Study, study, and study.” Be very familiar with the Regulations and the Act.
The Provider certificate will arrive in the post.
See resources below:
- Applications and notifications forms
- Business Plan Template
Step Five – Receive Provider Certificate with number
If the interview is successful, you will be advised approximately 3 – 4 weeks later and receive your Provider number certificate in the mail.
Step Six – Buy a Business
Once you have received your Provider number, you can then proceed with your purchase or look for a childcare business and advise the broker/owner you are already in possession of your Provider number.
Step Seven – Conditions of Business Contract
Childcare Centres – Existing Childcare Providers
Once you have a Provider number, the next step is to transfer the existing Service Approval for the Centre being sold.
Finance must also be approved in writing by a finance provider before lodging the Transfer of Service Approval.
The transfer of service must be completed within 42 days from the receipt of a correct application by the Department of Communities.
If the buyer is purchasing the Centre under a new company, they will need to apply for a NEW provider number for that company. This may require completing the full Provider process mentioned above, including passing the exam.
CCS – Child Care Subsidy (Funding for Parents with Children in Childcare) – PRODA
If the buyer has a contract in place to purchase a business, has applied for and received their Provider number, they should immediately lodge their application for CCS funding upon receiving the Provider number. This application can take 42 days or longer.
If you are an existing childcare operator with a PRODA account and already receiving CCS funding, your new service/business must be added to your existing PRODA account.
Whether you are an existing operator or a new applicant, as the buyer of a childcare service, ensure this process is completed before settlement to avoid any disruption in CCS payments to parents. The form for PRODA should be lodged at the same time as the Transfer of Service, or earlier if possible.
For any questions, please contact the relevant Government department.
The Transfer of Service can only be lodged with a valid Provider number.
As of 2023, the fee for this process was $130.
Step Eight – Settlement
Settlement on a childcare business typically takes place on a Friday, as government funding is allocated from Monday to Friday. This usually occurs two weeks after the Transfer of Service becomes unconditional, as stated in the letter received from ECRU.
Please note that childcare centers are in high demand and difficult to acquire. Entering the industry may require flexibility from the buyer regarding both location and price.
If a center has been operational and profitable for more than two years, a buyer may be able to secure financing for 50% of the business price, or 60% to 70% of the combined business and property price if purchasing both simultaneously. Finance brokers who specialize in child care center financing can be found under the “Resources” section of the ABB website.
The price of childcare centers varies widely, ranging from $100,000 to over $4,000,000 for an individual center (excluding property), depending on factors such as net profit, location, size, and age.
Currently, individual child care businesses in the Perth metro area are selling for a multiple of 3 to 4.5 times net profit, including add-backs. Group sales can achieve multiples of 6 to 7 times net profit.
Regional locations, typically more than two hours from Perth CBD, generally sell for multiples of 2.5 to 3 times net profit.
We hope you have found the above useful.
Click HERE to access the PDF version of the Childcare Process!
Are you buying a business in Perth? Do you have a Perth business for sale? For more information on how you can get the best results, contact Angela at Advance Business Brokers today.
September 2024
The following are contacts and recommended suppliers:
SETTLEMENT AGENTS – PERTH WA
Williams and Hughes
Greg Mohen – Consultant
Ground Floor, 25 Richardson Street WEST PERTH WA 6005
Telephone: +61 8 9481 2040
Facsimile: +61 8 9481 2041
Mobile 0431 992 841
Email: Greg.Mohen@whlaw.com.au
WEST END SETTLEMENTS
Erica Settineri l Licensed Conveyancer/Director
Shop 6, 7 Scarborough Beach Road
North Perth, WA 6006
Work Tel.: 08 9443 3044 Fax: 08 9201 1392
E-mail: erica@westendsettlements.com.au
Johnson Hicks Conveyancing
Matthew Hicks
Senior Business and Property Conveyancer
Director – Johnson Hicks Conveyancing
Suite 7/88 Broadway, Nedlands WA 6009
PO Box 3182 Broadway Nedlands WA 6009
PH: 9386 8251 FAX: 9386 2826
E: matthew@johnsonhicks.com.au
MAS Ronson (part of Lyons Babington)
Yat Yau
Ph: 08 9481 1173 Fax: 08 9485 0374
Street Address: Level 2, 33 Richardson Street, West Perth, 6005
All correspondence to: PO Box 1961, West Perth, 6872
Email Address: yat@masronson.com.au
Capital Legal Pty Ltd
Elisia Giardina l Solicitor
Office: Level 2, 43 Kishorn Road, Applecross WA 6153
Postal: PO Box 1062, Canning Bridge WA 6153
Work Tel.: (08) 9364 5444
Fax:(08) 9364 8444
E-mail: elisia@capital-legal.com.au
Website: www.capital-legal.com.au
WA Property Lawyers
Stephanie Le Roux
Personal Assistant to
Brian McCormack, Corinne Adams, Eden Coad and Sarah Wright
Tel: (08) 9380 3600
Address: 96 Outram St, West Perth WA 6005
Email: info@wapropertylawyers.com.au
Greenstone Legal
Jade Lattimore
Director
Tel.: 0438 303 763
Web: greenstonelegal.com.au
Saint James Conveyancing
Marisa Durante-Maynard / Jill Nelson-Coulon
Tel.: (08) 9240 7525
E-mail: marisa@conveyancerperth.com.au / Jill@conveyancerperth.com.au
FS Legal Perth
Chandhi Hettiarachchi
Principal/ Solicitor
Five Star Legal. Unit 5/365 High Road, Parkwood WA 6147
Tel.: 08 6146 6282
E-mail: chandhi@fslegalperth.com.au
www.fslegalperth.com.au
Composite Law
Robert Ross – Director
Suite 4, 28 Outram Street, West Perth WA 6005
T: (08) 6162 2399
F: (08) 6162 2335
E: robert.ross@compositelaw.com.au
P: PO Box 7920, Cloisters Sq, WA 6850
www.compositelaw.com.au
NQF Childcare Australia
https://www.acecqa.gov.au/nqf/national-quality-standard
Childcare Management Companies
Some management companies that may be able to help you and will be able to provide a quote to manage your centre depending on the level of management required.
While we don’t recommend any particular management company, the following links from a Google search may be of assistance:
Elite Childcare Management
www.elitechildcaremanagement.com.au
Early Learning Management: Child Care Management System
Leading Edge: Childcare – Management, Consultant & Training
www.leadingedgechildcare.com.au
Giggletree – Childcare Management, Childcare Consulting, Childcare
Advance Childcare Management
Brisbane Childcare Consultants | Childcare Management Group
www.limelightmanagementgroup.com.au
Our Services – Foundation Early Learning
www.foundationearlylearning.edu.au
Impressions Childcare Management
First Years Consultancy
Roz Brabazon – 0437 894 432
CHILDCARE INFORMATION
Childcare Resources
https://www.childcarecentredesktop.com.au/
Management Service for Enrollments/CCS for Childcare owners
Management Service for Enrollments-CCS for Childcare owners
Childcare Property’s in hot Demand
https://advancebusinessbrokers.com/listed-articles/investors-swoop-on-childcare-centres/
Australian Children Education & Care Quality Authority (ACECQA)
http://www.acecqa.gov.au/regulatory-authorities1/contact-your-regulatory-authority
WA Department of Community Services Childcare
https://www.acecqa.gov.au/sites/default/files/2017-12/PA09_TransferofProviderDeclaration.pdf
(PA09 Transferring provider declaration (service approval))
Tel: 62103333
Education and Care Regulatory Unit (ECRU)
https://www.dlgc.wa.gov.au/LegislationCompliance/Pages/Education-and-Care.aspx
Provider Application (PA01) Including Police Clearance Provider
https://www.acecqa.gov.au/sites/default/files/2018-07/PA01_ApplicationForProviderApproval.pdf
Approval Declaration of Fitness and Property (PA02)
https://www.acecqa.gov.au/sites/default/files/2018-09/PA02_DeclarationOfFitnessAndPropriety.pdf
PRODA-Childcare funding application for Children Providers
https://proda.humanservices.gov.au/pia/pages/public/registration/account/createAccount.jsf
PRODA Funding application for Existing Childcare Operators
PRODA Funding application for Existing Childcare Operators
Childcare Subsidies for Childcare Business Owners
https://www.education.gov.au/child-care-subsidy-system
Transfer of Service Application CC
PA09_TransferofProviderDeclaration Feb 20-2
Improvements to Childcare Benefit for Childcare Buyers & Owners
The following videos cover the improvements and changes to the Childcare Benefit system effective 01 July 2018.
- Top 3 ways your child care is about to get cheaper (Please click HERE to view the video)
- How your child care is about to get cheaper (Please click HERE to view the video)
- Child Care Changes – Subsidy (Please click HERE to view the video)
- Child Care Changes – Scrapping the Cap (Please click HERE to view the video)
- Child Care Changes – Safety Net (Please click HERE to view the video)
Designer specialising in Childcare property design for new or refurbishment of centres
SPH architecture + interiors
143 Cambridge St, West Leederville
08 9284 1888
ACCOUNTANT
Marpik Accountants Pty Ltd
Mat Honner
E-mail: mat@marpik.com.au
Tel. (08) 9447 1003
Kim Ovard – Tax Accountants
Tax Agent 25333735
Unit 3A ,23 Edinburgh Avenue, Kinross,6028
E-mail: kim@kimovardtaxreturns.com.au
Tel. (08) 9305 5515
Foreign resident capital gains withholding clearance certificate application form (NAT 74883).
To access the form, visit ato.gov.au/FRCGW.
https://www.ato.gov.au/FRWT_Certificate.aspx
FINANCE BROKERS
ANZ
Brad Hewett
Relationship Manager • Commercial Banking – Health
Email: Bradley.Hewett@anz.com
Phone: 0468 578 241
Address: Level 5, 240 St Georges Terrace, Perth WA 6000
Towner Finance
Michelle Towner | Director
Winthrop & Mandurah
E: michelle@townerfinance.com.au
Ph: 08 9332 2554 | Mob: 0418 99 88 44
Bendigo Bank
Shaun Rigby – Business Banking Manager
Level 3, 225 St Georges Terrace, Perth WA 6000
E: shaun.Rigby@bendigoadelaide.com.au
m: 0427 355 458
Small Business Finance Lender
Liberty
Brett Foster
Tel.: 0438 775 570
E-mail: bfoster@libertynetwork.com.au
Able Finance
Jon Elliott
Tel.: 9328 3600
E-mail: jon@ablefinance.com.au
Southshore Finance
Mr. Steve Greenwood or Michael Coombes
Tel.: (08) 9474 1999
E-mail: steve@southshorefinance.com.au
Crediflex Finance
Adam Barbuzza
Tel.: 0439990946
E-mail: adambarbuzza@crediflex.com
Works with traditional and non-traditional lenders such as Liberty finance.
Chantal Sforcina – Senior Aussie Broker
Aussie Home Loans
Level 10, 28 Freshwater Place Southbank, VIC 3006
M 0410 074 966
P 03 9679 9333
E-mail: Chantal.Sforcina2@aussie.com.au
BANK FINANCE
LoanSuperMart – Commercial Loan broker
Diana Goh l Principal Broker
Tel.: 0406 370 022
E-mail: diana.goh@loansupermart.com.au
ADVERTISING AND MARKETING
PWD
Oliver Wood
Managing Director
D. 08 6146 0195
M. 0406 934 820
E. oliver@pwd.com.au
A. 3 Loftus Street, West Leederville, 6007
W. pwd.com.au
ARCHITECTS
Specialist in Childcare centre designs plans
RECHITECTS
Leo Chong | Architect Reg No.2465
Director
D. 08 9277 3393
M. 0433490048
E. leo@rechitects.biz
A. Level1, 6/6 Leigh Street, Burswood 6100 WA
MIGRATION SERVICES
Contact Pauline Yong – Email: enquiry@rayfordmigration.com
Rayford Migration Services: MALAYSIA OFFICE
Company detail: About Service provided: Australia 188 and 132 information: Business Visa Australia
Rayford Migration Services: SINGAPORE OFFICE
INSURANCE – BUSINESS
Phoenix Insurance Brokers Pty Ltd / Johnson Insurance Brokers Pty Ltd AR 1283293 and Murray Johnson AR
Murray Johnson | Dip of Financial Services (Insurance Broking) ANZIIF (Snr Assoc) CIP |
Mobile: 0418 563 599
Phone: (08) 9754 2286
Website: www.phoenixins.com.au
Address: 5A Fairbairn Road Busselton WA 6280
PO Box 1448 Busselton WA 6280
AFSL: 229847
GENERAL INFORMATION
Stamp Duty – WA
Department of State Revenue http://www.finance.wa.gov.au/cms/content.aspx?id=2055
Small Business Development Corporation
http://www.smallbusiness.wa.gov.au/
Lots of useful information and assistance for small business
Chamber of Commerce WA
http://www.cciwa.com/
Membership required but great resources for small businesses
The Western Australia Police for National Police Certificate
https://www.police.wa.gov.au/Police%20Direct/National%20Police%20Certificates
Working with Children Check
https://workingwithchildren.wa.gov.au/
Current Guide to National Quality Framework for Childcare Centres in Australia
https://www.acecqa.gov.au/sites/default/files/2018-11/Guide-to-the-NQF_0.pdf
Withholding Tax for Foreign Investors Property Sales over $750,000
Business Plan Template
BOOK-KEEPING SERVICES
Centauri Bookkeeping
Lidia Lovric Hrbut – Registered BAS Agent
M: 0408 192 895
T: 9571 8444
E: centauri@iinet.net.au
LEGAL SERVICES
Composite Law
Robert Ross – Director
Suite 4, 28 Outram Street, West Perth WA 6005
T: (08) 6162 2399
F: (08) 6162 2335
E: robert.ross@compositelaw.com.au
P: PO Box 7920, Cloisters Sq, WA 6850
www.compositelaw.com.au
Williams & Hughes
Greg Mohen – Commercial Counsel
Ground Floor, 25 Richardson Street, West Perth WA 6005, Australia
Telephone: +61 8 9481 2040
Facsimile: +61 8 9481 2041
Mobile: 0431 992 8411
Email: Greg.Mohen@whlaw.com.au
VALUERS/CHILDCARE
OPTEON
Duncan Cameron | FAPI CPV, BSc, BBus (Val & Land Econ)
Director – Specialised & Advisory
D. 08 9488 4802
M. 0413 449 477
E. duncan.cameron@opteonsolutions.com
A. Level 2, 1 Hood Street, Subiaco, WA 6008 Australia
W. OPTEONSOLUTIONS.COM
Doug Shorten | AAPI CPV, BBS (VPM)
Senior Valuer
D. (08) 9488 4866
M. 0418 991 077
E. doug.shorten@opteonsolutions.com
MMJ Real Estate (WA) Pty Ltd
Chris Geers – Managing Director
Address: Level 6, 12 St Georges Terrace, Perth WA 6000
Phone: 08 9325 5880
Fax: 08 9325 5881
Mobile: 0410 493 057
Email: chris.geers@mmj.com.au
Web: www.mmj.com.au
CBRE | Valuation & Advisory Services
Rick Gismondi AAPI CPV | Valuer
Address: Level 25 | QV1 250 St Georges Terrace | Perth WA 6000
Phone: 08 9320 0058
Fax : 08 9481 1296
Mobile: 0416 194 227
Email: rick.gismondi@cbre.com.au
Website: www.cbre.com.au
