Getting Started in Family Child Care
Being a family child care provider can be a satisfying career. You can make a concrete difference in the lives of the children and parents you serve. It is also a chance to own and run your own business. Many family child care providers start their business while they still have young children of their own, and continue providing family child care long after their own children are grown. Here's a guide through some of the necessary steps in starting and running a family child care business.
Some things to think about before starting a Family Child Care Home:
- Would you enjoy spending a lot of time caring for young children?
- Would you enjoy communicating with parents about their children's growth and development?
- Is your home suitable (e.g., absence of lead paint) for a family child care home?
- Does your home have sufficient space to allow you to care for young children? (Space is needed for projects and activities, indoor and outdoor active play, meals, naptime, and a sanitary diapering area.)
- Do you have outdoor play space (enclosed yard or fenced public park within easy walking distance)?
- Will your family be supportive of your running a family child care program in your home?
- If you have children of your own, will they adapt well to sharing their home with other children for a significant amount of time during the week?
- Can you keep track of the business details of running a family child care home?
Click here for the Family Home Child Care Licensing Rules - WAC 170-296.
We can help you determine the level of need in your community. You can estimate community need on your own by checking your local papers for the number of advertised openings from other child care providers. Conversely, if many parents are looking for child care, there may be a shortage of care in your area.
Community demographics, available from the town or city government, can help you estimate the need for child care. If there are many families with young children, and/or a high birth rate, you can expect that many parents may be seeking child care in the near future.
You will need to set up an efficient system to manage the many aspects of running a small business. Keep organized records of all your expenses and income. Maintain a separate checking account for business expenses. Save receipts, and spend time each day or week to record information. A good record-keeping system will provide the information you need for tax purposes, and will allow you to gauge your income and expenses on a regular basis. Here are some tips for the major business items that should be set up before you open your doors for business: Tracking Income and Expenses Develop a bookkeeping system to track each family's fees due, payments made, balance outstanding, and other payments (e.g., state vouchers). Parents appreciate a receipt for payments, particularly if payment is made in cash. Keep your financial records in a secure place. You can request help with developing a system from us or the Small Business Administration in your area. Expected expenses:
- Your own salary and benefits
- Educational supplies and equipment
- Food and kitchen supplies
- Cleaning and diapering supplies
- Your own professional training and development
- Advertising costs
- Repairs and maintenance for the space you use for children
- Other: legal fees, transportation, office supplies, etc.
Like any small business, you will have tax responsibilities. Keep good records to use at tax time. Be sure to keep all receipts, and to track all income and expenses. When in doubt, check with your tax consultant or the Internal Revenue Service for current tax regulations. Deductions include food served to children in your program; diapers; toys and equipment for children; liability and accident insurance; supplies (art, cleaning, office, etc.); field trip expenses; memberships and subscriptions to child care organizations; and professional development and training. Partial deductions include use of your home for business, and depreciation of equipment used in the child care business (cribs, swing sets, high chairs, etc.) Your child care income (less allowable expenses) will give you your net profit or loss. You must report all income, whether paid in cash, check, or other means; whether it comes from an individual or the state (if you accept vouchers, for example); and whether or not you make a profit in any given year (within certain IRS guidelines). Contact the IRS or a tax accountant to find the proper forms for filing federal, state, and social security taxes, and for the types of exemptions for which you may be eligible. As a self-employed small business owner, you will be responsible for filing quarterly federal self-employment taxes. These are usually filed as estimated tax. Failure to file and make payments on time can subject you to interest and penalties. For more information, contact us, and you may want to contact the IRS, your state's Revenue Department, or a tax consultant.
Check with your state's licensing unit and us concerning insurance requirements -- and for suggestions on a group policy or an insurance agent with experience in child care insurance.
Most homeowners have insurance, but there are special issues related to operating a child care business in the home. Talk to an agent with child care experience. Your liability insurance should include coverage for accidents, property damage, and legal fees related to any claims. You will need liability insurance if you rent your child care space, and the policy may need to indemnify the landlord as well as yourself.
If you use your car to transport children, you will need to obtain additional insurance.
Contracts and Agreements
Set clear expectations about payments in the parent-provider agreement, which will make it easier to talk about fee issues later. Once the interviews and visits are completed, formally enroll the child into your program, and discuss any topics you may not have covered in earlier conversations. Give parents a copy of a signed contract. Some providers print a brief handbook with information about policies and program philosophy. Prior to enrollment, parents should complete and sign release forms for situations requiring emergency medical treatment or dispensing medication, and for authorization of individuals to pick up the child from your program. Many states require annual health checkups for children in child care, with up-to-date immunization records. Health forms should be signed by the child's pediatrician. Keep all forms on file.