How to Start a Daycare Business from Home

Do you genuinely enjoy caring for children? Do you get a sense of fulfillment helping them reach their full potential and could spend days and days finger painting, reading stories and answering mind-bending questions without getting frustrated or bored?

According to data from the U.S Bureau of Labor Statistics, daycare businesses will see substantial growth in 2020. This makes sense as working parents will always need to find someone to look after their kids so a daycare business doesn’t run the risk of becoming obsolete.

If you have the proper training and the idea of working from home appeals to you, this might be a great business idea. Many start a daycare at home because they want to be able to stay home and take care of their own kids, since it’s so hard to get a place in a preschool, kindergarten or daycare. The lists are so long you have to sign up before even giving birth so you know there’s a need.

Licensing

To turn this idea into reality, the first thing you need to do is contact your state’s Daycare Licensing Agency and find out what the requirements are. Every state has different guidelines and they don’t all require a license. It depends on how many children will be under your care, but you will need to register.

For example, if you’re from New York like us, the licensing process is handled by the New York State Office of Children and Family Services (OCFS). According to their guidelines, you will require a license if you plan to look after three or more kids that aren’t members of your family for more than three hours per day. Failure to comply with these guidelines can result in fines of up to $500 per day.

Considering you will be operating your daycare from home and depending on how many kids you’ll be providing care for, you’ll fall under Family Day Care Home – three to six children, more than three hours per day, or Group Family Day Care Home – seven to twelve children for more than three hours per day.

Keep in mind that this also depends on the age of the children and you will be required to do further training and make adjustments to your home.

Business Plan

After looking into the licensing requirements, the next step is to come up with a business plan. You’ll want to look into what daycares already exist in your area to see what needs aren’t being met. This way you can make adjustments regarding schedule and see how much you can charge for tuition.

Now is the time to decide how many kids you will be looking after, the minimum and maximum age of enrollment, what time you’re going to start your day and at what time do the kids have to be picked up, if you’ll be providing food for the kids and if you will be hiring an accountant or bookkeeper and someone to help you with the kids.

We recommend you start small so you have time to adjust, the daycare fees in New York are quite high so you don’t need to enroll 10+ kids right off the bat. Give yourself time to adjust to your new life.

In regards to hiring some extra help, you need to consider the fact that you might get sick or have to take days off and you’ll need someone to be there in your place.

As for hiring an accountant, this will be very useful since you’re operating as a home business and you qualify for some tax deductions. If you decide to provide food for the kids, look into the Child and Adult Care Food Program (CACFP), this is a food reimbursement program for home daycares. You might need to get financing to get your business started and an accountant can help with that as well.

Make Your Home Suitable

Now you have to ask yourself if your home is compatible with your business idea and plan. If you’re living in a rented house you’ll need to get permission from your landlord. Then you have to consider how much space you have and safety. You might have to make some alterations and you’ll need to obtain planning permission.

Then there’s the cost of maintenance. Once you’ll be operating a daycare from your home you can’t put off repairs as you did when it was just you and your family using the space. For example, if your boiler breaks and you can no longer have heating and hot water you need to repair it or replace ASAP or you risk the parents filing a complaint and getting a fine or losing your license. In such a situation, if you can’t afford to replace the boiler, the best course of action is to search for temporary boiler rental nyc until you can gather enough money to buy a new boiler.

While these kids are in your care, you are responsible for their safety and well-being so you need to create an environment that puts them first.

You’ll need to invest some money in equipment. This will include toys and games but you’ll also need to buy outdoor play equipment since you are required to provide outdoor playtime for the kids in your care.

Then you need to look into insurance for both the property and the equipment. You’ll also need liability insurance in case you get sued.

Funding

The costs involved in starting a home daycare can get a bit high with all the adjustments you’ll have to make so you might need to get funding. You could, of course, borrow money from relatives and friends but if that’s not an option you can contact the Small Business Administration office as you might qualify for a federal loan or grant program.

Another option is to get a business loan from a commercial bank. Then it’s better to contact several banks and compare interest rates. Regardless of what kind of loan you apply for, you’ll need to have a business plan to present to them.

Consult an accountant or check with the IRS as there are tax write-offs associated with a daycare business from home. You can deduct some of the utilities, insurance, equipment, toys and food. The IRS has many comprehensive guidelines on their website that you can use.