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Daycare/Pre-School in Panama: Requirements Research Paper

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Updated: Jun 15th, 2020

The education system in Republic of Panama is divided into 2 parts – primary and secondary. The primary section consists of the pre-school, elementary, and secondary school. In this paper, we will discuss the various requirements for starting a daycare/pre-school in Republic of Panama. Children in the age group of 1 year 6 months years to 5 years may attend the pre-schools and daycare facilities. Once the child attains the age of 5 year, she has to be enrolled in Kindergarten.

License Requirements

All schools opened in Panama requires accreditation from the Ministry of Education (Ministerio de Educación), or MEDUCA, which oversees any matter pertaining to education in the country (Ministry of Education, Panama, 2013). However, to begin a daycare or preschool license or accreditation is not necessary. Hence, most of the daycare facilities in the country are unregistered (Ministry of Education, Panama, 2013).

However, registering the business with the Mercantile Division of the public registry is important task to start a legal preschool or daycare (Starting a Business in Panama, 2014). The first step in doing so would be to notarize the articles where the owners name and domicile, and domicile of the school has to be mentioned including a few other identifications. This process would take 1 day at the cost of US$75 (Starting a Business in Panama, 2014). Further, in order to get the daycare business registered, it is important to pay a tax of US$250 to the Mercantile Division (Starting a Business in Panama, 2014). Hence the registry can be obtained in a complete cycle of 3 working ways (Starting a Business in Panama, 2014).

The day care will be a single proprietorship establishment. The requirement to start a single proprietorship business is to file personal taxes and business taxes. The business taxes are taken care of when US$250 is paid to the Mercantile Division of Panama Government.

A few other legal requirements that has to be covered before beginning a child care facility are city safety codes, fire safety regulations according to the city’s regulations, and health regulations required for a daycare/childcare facility.

The physical space where a preschool or childcare is opened is very important. Proper space requirements must be met before opening such a center. In republic of Panama, the architectural plan of the physical space has to be submitted with the municipality of the city. The city will approve the plan for a preschool or daycare facility. This can be obtained with a payment of US$1 from the local municipality. The Fire Safety approval can be obtained from the Fire Department Safety Office on a payment of US$10.

A preliminary budget

A preliminary budget analysis will consider the costs that can be ascertained to start a childcare facility in this section. The financials will discuss the possible income for 1 year and the expenses, including startup expense for one year. A break-even analysis will be provided in this section.

The financial analysis presents the possible financial target of the organization for the first 1-year of its operations. I assume that in the first year the childcare will have at least 50 children in the first year. The ratio of caregiver/teacher to students or toddlers admitted is estimated to 1:10 and supporting staff is hired on a ratio of1:5. Therefore, for every caregiver/teacher there will be 2 supporting staff. The financial statement is separated into three distinct parts – income, start-up expense, and operating expense.

The income part is segregated into admission fee, monthly tuition fee, and annual registration fee. Income in the first year is expected to be $255000, with admission fee at $1500 per child and tuition fee at $300 per month for 50 children. No annual registration fee is added because it is a new start-up.

Table 1: Estimated Financial Statement for the first 5 years of operation.

Year 1 Year 2 Year 3 Year 4 Year 5
Expected No. of Children 50 75 90 120 150
Admission Fee (@$1500/child) 75000 112500 135000 180000 225000
Tuition(@$300/child/month) 180000 270000 324000 432000 540000
Annual Registration Fee ($500/child/annum) 0 12500 7500 15000 15000
Total Gross Income 255000 395000 466500 627000 780000
Operating Expenses
Legal/License 2000 0 0 0 0
Creating playschool ambience 7000 0 0 0 0
Stationary ($10/child/month) 6000 9000 10800 14400 18000
Kitchen/Cleaning Supplies 500 200 200 200 200
Medicine kits 500 200 200 200 200
Mats and Pillows 1000 50 50 50 50
Startup Promotion 1000 0 0 0 0
Others 200 50 50 50 50
Total Start-up Cost 18200 9500 11300 14900 18500
Staffing Cost
Caregivers/Teachers (1:10)
Caregivers/Teachers 5 7.5 9 12 15
Salary per month 1500 1500 1500 1500 1500
Salary to Caregivers/teachers 7500 11250 13500 18000 22500
Support Staff (1:5)
Support Staffs 10 15 18 24 30
Support Staff salary p.m. 800 800 800 800 800
Salary to Support Staff 8000 12000 14400 19200 24000
Total Salaries 15500 23250 27900 37200 46500
Rent (@3500/pm) 54000 54000 54000 54000 54000
License/Permits/Taxes 250 250 250 250 250
Advertisement ($100 p.m.) 1200 1200 1200 1200 1200
Utilities 1000 1000 1000 1000 1000
Supplies/Equipment 1000 1000 1000 1000 1000
Food Cost ($3/child/day) 156000 234000 280800 374400 468000
Maintenance repair 0 1000 1000 1000 1000
Miscellaneous 500 500 500 500 500
Operating Expenses 229450 316200 367650 470550 573450
Total Operating Expenses 247650 325700 378950 485450 591950
Total Net Income 7350 69300 87550 141550 188050
Taxes 0 0 0 0 47012.5
Net Income after Tax 7350 69300 87550 141550 141037.5

The operating expenses include the startup cost and the operating expenses. The operating expenses include the salary, rent, advertisement, supplies, utilities, maintenance, etc. The preschool/daycare center is run in a rented house. The rent cost is expected to be $3500 per month. Taxes are exempted from the calculation of the net income as according to the business taxes regulation of Panama, no business with net annual income of $150000 is expected to pay any tax. Thus, it is exempted from the business taxes, which 25% of the income after expenses, expect for year 5 when it starts paying taxes. The daycare center attains breakeven cost in the first year, with a net income of $7350.

Advertisement in the first year would cost more than subsequent years, as it is necessary to create awareness for the daycare/preschool in the city. Advertising strategy would include promoting the preschool in local newspapers, cable channels, billboard, and pamphlets.

The daycare center provides food to children, as it is necessary to feed the toddlers who are there in the center for more than 6 hours. Hence, quality of the food is a factor that must be considered seriously. The other facilities that must be considered while starting up a daycare are medicine and first aid facilities as the children coming to the daycare center are children who require constant observation.


The facilities that the daycare / preschool will provide are two fold – a day care for toddlers from one and half years of age to 3 years and preschool for 3 to 5 years old children. The daycare/preschool will provide premiere childcare services as well as pre-schooling for children who are able to study for some time. The daycare services will be available 5 days a week for 6 to 7 hours. The children staying in the daycare will be provided with two meals. Various activities will be arranged to help the children grow and learn with other children. The school/daycare system provides stationary and other facilities to the children. Music and art classes are regularly held in order to motivate the children to learn and enjoy.

Organizational structure

The organizational structure of the day care system will be informal with only three levels. The top most individual on the top of the organizational structure would be the principal who will be responsible looking after all the administrative and executive functions of the school. She will be the overall in charge of the school and look into all matters from hiring, financial accounting, administrative, admissions, etc. Her approval will be required for any important decision-making. She will approve the curriculum and schedule for the school, which will be implemented for regular classes. The other two positions coming next in the hierarchy are administration and accounts.

The administrator will be responsible for looking after all the possible administrative decisions and working of the school. Maintaining cleanliness, ensuring supplies, food quality, security, etc. are looked after by the administrator. The accountant will be responsible for book keeping and anything related to the financial matter of the school. The accountant will be responsible to handle all money matters and provide a regular cash flow and income statement to be approved by the principle. Both the administrator and the accountant will report to the principal.

The third stage is that of the teachers/caregivers. As there are two distinct age groups of students, the young toddlers and the older toddlers, they are divided into two separate sections. The first group is the ones who require caregivers whose responsibility will be mainly baby-sitting the children. However, they will also be responsible to play and provide basic teaching such as manners, eating habit, etc. to the children.

The teachers or instructors who teach the classes would be responsible for imparting basic teaching using visual-auditory schema to help the children learn and adapt fast. The support staffs are people who are there to assist the instructors/caregivers. It is not possible for one teacher to handle 10 children. That is why, for every five children there will be a support staff, thus with every teacher, there will be two support staffs to help. The work of the support staff will be ensure that the children eat properly, and are comfortable.

Organizational Structure.
Figure 1: Organizational Structure.


The organizational structure presented in figure 1 shows that in total in the first year there will be 15 personnel for 50 students. The high student staff ratio ensures that all children are looked after with greater care. The ratio of student to caregivers/teachers is 1:10 while that of the support staff is 1:5. Hence with every teacher, there will be two support staff. The principal will recruit the personnel, the salary of the caregivers will be $1500, and that of the support staff will be $800. The salary of the personnel is above industry standard in Panama. The teachers and caregivers should be able to motivate the students, facilitate a healthy learning process and teach them to solve problems, make choices, and think independently (Click, Karkos, & Robertson, 2013).


The philosophy of the organization will be to provide international quality childcare facility. In order to maintain high standards in their standards, the daycare facility will ensure that they adhere to the requirements of daycare centers stipulated by the government of Republic of Panama and that of other developed countries. The philosophy of the organization will be to serve with a smile.

This daycare facility will aim at developing an integrated program that will help in the development of the children through a wholesome learning process with involvement of the teachers, children, and parents. Thus, the philosophy of the institute will be open communication between the staff and the parents of the children in order to build a safe and stimulating environment.


The mission of the day care facility will be to provide safe and high quality childcare facility to preschool age children and toddlers. The aim will be to provide a vibrant and appropriate environment for toddlers to learn and grow. The motto will be to facilitate growth of the children and developing their interest in seeking knowledge. The institution will aim to provide cognitive development to the children and help in growth of the child’s social, physical, emotional and mental growth (Diamond, Barnett, Thomas, & Munro, 2007).

Curriculum area and scope

The curriculum for a daycare/preschool will be restricted with fun, games, and learning. The children during this age are highly adaptable and capable of learning many new things. Activities based on fun and games that teach children numbers, alphabets, and creative work will be an integral part of the curriculum for preschoolers (Cheyne & Rubin, 1983). Blocks are an effective tool to teach mathematics to children (Clements & Sarama, 2007). Audio and visual aid helps in getting children’s attention and helps them learn fast (Maker, 1986; Jetter, 1978). Hence, audiovisual tools will be an integral part of the teaching method used in the school.

Parental engagement in children’s education is important as it encourages children to be more creative and cooperative (Arnold, Zeljo, Doctoroff, & Ortiz, 2008; Delgado-Gaitan, 1991). This helps in getting greater outcome. We believe that educating the parents is necessary to help them handle their children and help them understand their child better. Parental participation in the child’s activity helps in increasing child’s readiness for school (Gormley & Phillips D, 2008).

Another important feature of the daycare facility would be flexibility (De Schipper, Tavecchio, IJzendoorn, & Linting, 2003). We believe children cannot be restrained in a set of rules. Hence, the teaching method that will be used at the school is quality based and not quality based. We understand that not all children are alike, and hence their learning capability and interests are varied.

A time frame for implementation

The time required for planning and startup the daycare will be almost 1 year. The first 2 months will be required to plan the overall project, making business plan, getting investors or arrange for private funds, etc. in the next 1 months, identifying the property and location best suited for the daycare and school is essential. Once the place is identified and the capital is gained, the place has to be registered and the school has to be registered. Rest of the legal formalities has to be completed before starting the school.

Then another 2 months will be required to decorate the classes and the daycare center. In the next two months before the school is opened, recruitment of the staff will be conducted, and other necessities for the school facility will be purchased. In the last 5 months before the school starts, advertisements and admissions will be conducted and the new recruited staff will be trained (Katz, 1972) to start the school in new session.

12 months time to plan and start a Daycare/Preschool.
Figure 2: 12 months time to plan and start a Daycare/Preschool.


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