A daycare payment agreement is a written contract between a childcare provider and a family that sets out what care will be provided, what it costs, when payment is due, and what happens when something goes wrong. A clear agreement protects the provider’s income and gives the family a documented record of expenses they will likely need at tax time. The sections below walk through what belongs in the document and how to execute it.
Identify Everyone and Everything the Agreement Covers
Start with names and contact information. List the full legal name and contact details of the provider or business, the full legal names and contact details of each parent or guardian, and the name and date of birth of every child enrolled.1Wisconsin Early Childhood Association. Creating a Child Care Contract If someone other than a parent is responsible for payment, such as a grandparent, include that person’s name and contact information too.
Add at least two emergency contacts with current phone numbers. Separately, list every person authorized to pick up the child along with their relationship to the child, and state that staff will verify photo identification for anyone they do not recognize.
The Provider’s Taxpayer Identification Number
Parents need the provider’s taxpayer identification number to claim the Child and Dependent Care Credit on IRS Form 2441.2Internal Revenue Service. Publication 503 – Child and Dependent Care Expenses – Section: Care Provider Identification Test For an individual provider, that number is a Social Security number or Individual Taxpayer Identification Number; for a business, it is an Employer Identification Number. Providers typically supply this using IRS Form W-10, which the parent keeps for their own records rather than filing with the IRS.3Internal Revenue Service. About Form W-10, Dependent Care Provider’s Identification and Certification Including the TIN in the agreement itself gives families one document that works both as a care contract and as substantiation for the credit under Internal Revenue Code Section 21.4Office of the Law Revision Counsel. 26 US Code 21 – Expenses for Household and Dependent Care Services Necessary for Gainful Employment
Tuition, Fees, and How Payment Works
The financial core of the agreement is tuition. Write in the exact base rate for each child, whether billing is weekly, biweekly, or monthly, the day payment is due, and the accepted methods: check, direct deposit, electronic transfer, or a childcare billing platform. Putting the dollar figure in writing eliminates ambiguity later.
Registration Fees and Deposits
Most programs charge a one-time registration or enrollment fee, commonly between $50 and $300, usually non-refundable. Some providers also collect a security deposit that is either applied to the final week of care or refunded after the child’s last day, minus any outstanding balance. State clearly which upfront charges are refundable and under what conditions.
Sibling Discounts
If the provider offers a discount for families enrolling more than one child, write in the exact reduction. A percentage off the second child’s tuition is common, with 10 percent frequently cited, but there is no industry standard. Spelling it out prevents disputes when the invoice arrives.
Late Pickup and Late Payment Charges
Late pickup fees compensate staff who stay past closing. A charge of $1 to $2 per minute after the scheduled closing time is typical, with some providers setting a minimum of $10. State the per-minute rate, when the clock starts, and which clock the provider uses.
Late tuition payment penalties are a separate matter. A flat fee of roughly $15 to $25 per day or per occurrence is common, though amounts vary widely. Include the grace period if any, the daily or per-incident charge, and what happens if the balance remains unpaid beyond a set number of days. Vagueness here is where disputes start.
Absences, Holidays, Illness, and Closures
Few clauses generate more frustration than the one about paying for days a child does not attend. Many providers require full tuition regardless of absences because fixed costs like rent, utilities, and staff salaries do not drop when a child stays home. Say so directly, and list any exceptions such as a limited number of vacation days a family can take without charge.
List closed holidays by name: New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving, and so on. Note whether those are paid for the provider; most are. If the facility closes for a winter break or summer week, include those dates and the payment expectation.
Illness Rules
Define the symptoms that require a child to stay home, such as fever above a stated threshold, vomiting, diarrhea, or contagious conditions, and how long the child must be symptom-free before returning. A 24-hour standard is common. State explicitly whether tuition is still owed during illness absences, so parents are not caught off guard.
Emergency and Extended Closures
A force majeure clause addresses what happens to payment when the facility closes because of events outside anyone’s control: a government-ordered shutdown, a natural disaster, a public health emergency. Spell out whether tuition is paused, reduced, or continues during the closure, and how the provider will communicate with families. Without this language, both sides end up arguing over a gap in the contract.
How Rate Increases Work
Costs climb over time, so address how tuition changes get introduced. At minimum, state how far in advance the provider will notify families before a rate change takes effect. Practice varies; some providers give two months’ notice, others include new rates with annual re-enrollment paperwork. What matters is that the notice period is defined in the contract rather than left to custom. Providers who want more predictability can tie annual adjustments to an external benchmark like the Consumer Price Index with a cap on the single-year increase.
Starting Care, Ending Care, and Trial Periods
Define when care begins and how either side can end it. A written notice period of two to four weeks is typical. State whether notice must be delivered in writing, by email, or both, and whether tuition is owed through the end of the notice period regardless of the child’s last day of attendance.
Providers should reserve the right to terminate immediately for serious issues: persistent non-payment, behavior that threatens the safety of other children or staff, or repeated violation of the agreement’s terms. Spell out the circumstances and any grace period. A common structure gives parents five to ten business days to settle an overdue balance before care is suspended.
Trial Periods
Some agreements include a trial period, often two weeks, during which either party can end the arrangement without the standard notice. If you include one, define its length, whether tuition is prorated if care ends mid-trial, and whether the registration fee is refundable during this window.
Safety and Liability Clauses
A daycare agreement is more than a financial document. It also records the family’s consent to policies that affect the child’s daily care.
Authorized Pickup
List every person authorized to pick up the child by full name, relationship, and phone number. State that staff will require photo identification from anyone they do not recognize and that no child will be released to an unlisted person without advance written or verbal authorization from the parent. Updating this list when circumstances change is the parent’s responsibility.
Medication Authorization
If a child needs medication during care hours, require a separate written authorization from the parent that specifies the medication name, dosage, schedule, and prescribing physician. Medications should arrive in their original labeled container. Many states require this documentation before staff can administer anything, including over-the-counter products.
Liability and Insurance
Courts have historically been skeptical of blanket waivers that try to release a provider from all responsibility for negligence. A more practical approach is to disclose whether the provider carries general liability insurance and to offer a certificate of insurance on request. Some states require written disclosure to parents when a provider does not carry liability coverage.5Bright from the Start: Georgia Department of Early Care and Learning. Applicant’s Guide to Licensing for Child Care Learning Centers Parents deserve to know what coverage exists before an incident happens.
Families Using Child Care Subsidies
Families receiving childcare subsidies through the federal Child Care and Development Fund face additional terms. Federal regulations cap the family co-payment at 7 percent of household income regardless of how many children are enrolled.6Administration for Children and Families. 2024 Child Care and Development Fund Final Rule – Frequently Asked Questions The agreement should separate the subsidy-covered portion from the family’s co-payment and note whether the provider charges families for any difference between the subsidy rate and the provider’s standard tuition. States handle that gap differently; some allow providers to bill the difference, others do not.
Signing and Keeping the Agreement
Once every clause is filled in and both sides have reviewed the terms, every parent or guardian and the primary provider should sign and date the document. Signatures beneath an attestation that the signer has read and agrees to the terms are what turn a template into a binding contract.7Bright from the Start: Georgia Department of Early Care and Learning. Creating a Child Care Contract Use a consistent date format throughout.
Electronic signatures are legally valid for this kind of agreement. Under the federal ESIGN Act, a contract cannot be denied legal effect solely because it was signed electronically.8Office of the Law Revision Counsel. 15 US Code 7001 – General Rule of Validity If you use a digital signing platform, make sure the signer affirmatively consents and receives a copy of the completed document.
How Long to Keep It
Give every signing party a copy. Providers should store the original, paper or digital, in a secure location: a fireproof cabinet for paper, encrypted cloud backup for digital records. The IRS recommends keeping financial records for at least three years from the date you file the return they support, and up to seven years in certain situations such as claiming a loss deduction. Employment tax records should be kept for at least four years after the tax becomes due or is paid.9Internal Revenue Service. How Long Should I Keep Records? Keeping daycare agreements for at least seven years covers most audit and dispute scenarios that might surface after the care relationship ends.