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How To Start a Daycare: A Comprehensive Guide Part 1

By Edited Nov 13, 2013 0 0

Home daycare. A great income opportunity from the comfort of your own home or a daily torture session that will stress you to your breaking point?


Both can be true so it's important that you understand what you're getting into before you begin. Operating a childcare business can also be a lot more complicated than you imagined, especially if you plan to take in a larger number of children and operate for any length of time. In this 2 part insttruction guide I will take you through some critical information that you need to have before you begin your own home daycare operation. 

The Pros of Running a Home Daycare
-It's a recession-proof job that's always in demand.
-You can stay home, no commuting needing.
-You can utilize down time with the kids to take care of other matters around the house, or just kick back and relax.
-If you really love children you will have lots of opportunity for rewarding experiences.
-You can make some pretty decent income this way, especially if it’s supplemental income.

The Cons of Running a Home Daycare
-Obviously crying, fussing, and demanding kids can be very stressful.
-Fussy parents can also be quite stressful.
-If you really love children this love may be severely strained at times.
-There's never as much down time as you would like, especially being in your own home setting. Sometimes it can frustrate you to tears when you you simply want to make yourself a sandwich or make a phone call and you just can't get a moment to yourself.
-You may not have to commute to a workplace but at the same time your workplace and your home life will all blend together, possibly disturbing your sense of "home sweet home" even when the kids aren't there. 

childcare laws

The Legal Requirements for Running a Home Daycare
This all depends on your state and will require some research on your part. Be careful of relying on what others say because many don't really know what the laws are and will give you conflicting information. The best solution is to simply go to a state government website or even call a government number where you can talk to someone directly. Some states may require you to be registered or licensed. Many states will not require either as long as you don't watch more than a certain number of children. If registering is optional in your state then you will have to decide which is more preferable for you. Registering with the state may mean compensation for food and supplies as well as access for the parents to some kind of government aid, which for some will be absolutely necessary. On the other hand registering with the state can mean regulations, red tape, and even inspections. Also required by some states, whether you're registered or not, is CPR certification. Even if not required it's certainly a good idea and some parents may insist on it.

The IRS and Your Daycare
Of course many home daycare providers operate under the table but they do so at their own risk. Furthermore, parents are allowed to deduct their daycare expenses from their own taxes; but only if the daycare provider is operating above the table. Many parents who are new to daycare don’t understand this. Be sure to explain this to them whenever they first consider your daycare so  they realize that a cheaper daycare provider may end up costing them more in the long run if they cannot deduct their payments with them. To operate above the table with your daycare you will need to give receipts to the parents for their payments. To do this you will need to get a receipt book, easily found in any office supply store, and a Tax ID number, which you must request from the IRS. You can use your social security number but of course that would be a bad idea. A Tax ID number is a different number altogether and is used for this very purpose. Just be sure to write it on each receipt that you give out.

How to Find Clients for Your Daycare
Spread the word among friends that you are doing childcare. Advertizing on Craigslist is often a must. The local classifieds can work too but they cost. You can also put up flyers around a neighborhood or at apartment complexes but this is more work and won't reach nearly as many people. Still, it might be worth a try. There may also be a childcare provider association in your community which can end up getting you leads. Even if they don’t you still may want to become a member simply for support.

Number and Ages of kids
Think carefully about how many kids you want to take in as well as how many you can legally take in. More kids of course means more income, but also more stress and complications. The more kids you have the more organization and efficiency your operation will require. Fewer children can keep things a little bit more laid back and flexible. Also think about the age ranges of children you are looking for. You may find yourself changing your mind over time as to which you prefer. Much of the demand for childcare will be for infants but many childcare providers will only take in toddlers. Which is better? It depends on you. Infants offer the advantage of sleeping more (at least sometimes), having simpler needs, and staying put wherever you leave them. On the other hand they require a more complex feeding schedule and whenever they want something they want it right away and cannot be told to wait. A couple of infants in your house can sometimes result in a sense of constant crying which can really wear down your nerves after a while. Toddlers on the other hand offer the advantage of being more interactive, capable of responding to instruction, and are readily occupied with activities and TV (note: some parents will understandably want their children’s TV time to be restricted). However, toddlers can also be prone to boredom, whining, restlessness, getting into things they shouldn't and fighting over toys. This can require a lot more attention on your part to try to keep the peace. Running back and forth to respond to screams of "he took my toy" can run you ragged.

daycare calendar
Your Time Schedule
Assuming you are wanting to do childcare full time, the ideal will be to occupy all of your spots  with full time children with consistent hours. Doing so however may require some patience. Many parents will contact you asking for a day here and a day there. This may be tempting at first but before long you may end up with a complicated schedule with lots of gaps. Filling a spot with a child who only needs a spot on 3 days a week will often mean leaving a spot unfilled 2 days a week, unless you are lucky enough to find another parent who needs those exact 2 days. Doing things this way you may end up quite busy with kids coming and going each day but due to the staggered schedule, end up making less than you would if you simply had all Monday-Friday children.

What to Charge
Ask around to see what others in your area may be charging. You'll likely find quite a range of prices, probably somewhere between $25-$35 a day. It's important that you don't price yourself out of the market on one hand but don't short change yourself on the other. I would strongly advise you to never haggle with a parent over your prices. We're talking about human beings here, and about your diligent efforts,  not a lamp at a flea market. If you take on part time arrangements I would suggest that you charge a bit more to help offset the loss of possibly having a spot left open on other days. If a parent only needs four days a week it may be to their advantage to go ahead and pay for a full time spot and have the option to use that 5th day now and then. You’ll encounter a variety of situations and requests but it’s best if you can try to be consistent with all of your clients. If one parent learns that you cut a deal with another parent they may not be too happy to find out that they are paying more.

Business Hours
Think about what your hours and your policies about your hours will be. Most parents will probably need you to be open by 7 in the morning and to remain open until at least 5 in the afternoon. Will you be willing to go beyond those hours? If so will you charge extra for that? How much extra?  What if a parent shows up late to pick up their child? What kind of a grace period  will you allow? For most parents this may happen now and then due to traffic or other problems but some parents may test your limits and even take advantage of any flexibility you show. I've seen parents slowly push the pick up time later and later. I've even seen parents come an hour late and act like it's no big deal. It is a big deal. You have your life outside of childcare and they need to respect that. Because of this a policy of extra charges for late pickups is something worth establishing up front. With most parents you may never need it but it's a lot easier to establish  before a problem develops than to wait until one does.

What You Are Charging For
Unless you are doing "drop in" care where a parent only arranges and pays for care on a day to day basis, you are charging a parent for their child's regular spot in your daycare. Consequently, they need to pay for that spot each day whether their child is there or not. Otherwise, every time a parent has the day off and keeps the child home or has a relative in town who is willing to babysit you will lose money that day on the spot you have reserved for them.  It's essential that you explain this to a parent up front so they understand. It may seem unfair to them at first but they have to realize that this is your business and that you need consistent payment for each spot you hold in your daycare.  Furthermore, the large commercial daycare centers operate this way so it is perfectly reasonable for you to do the same.

childcare payment
Getting paid
Establish a payment schedule from the beginning. I would suggest payment on Monday morning of each week, for that week. Some parents will be great about paying, other parents, not so much. Some will "forget the check" now and then or maybe always seem to have run out of checks and be waiting for more to arrive. Sometimes a father will assume the mother paid or vice versa. It's amazing how some parents will consider the childcare payment the lowest priority in their budget. Again, insist that they respect you and be responsible with their payments, just as you respect them and are responsible for their children. You may love children but this is still your business, not a personal favor.

Check out part 2 of this guide for more essential information regarding food and supplies, potty training, and dealing with sickness and other problems.



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