Getting Started in the Business of Family Child Care


The best part of being a family child care provider is caring for children.

Probably the worst part is taking care of the business side of what you do.

For new child care providers and for those who are getting ready to open, there are many business issues that should be addressed as soon as possible. (And, if you are an experienced provider who hasn’t dealt with these issues before, it’s never too late!)

Here’s a checklist of the key business issues you should address:


[  ] Contact your local child care licensing agency and meet all state child care laws.

[  ] Join the Child and Adult Care Food Program to receive either $540 or $1,140 per child, per year for serving nutritious food.

[  ] Contact your local Child Care Resource & Referral Agency and take advantage of their many services (training, marketing, support).

[  ] Join your local, state and National Family Child Care Association and receive a series of benefits (networking, advocacy, training, more).

Record Keeping/Taxes

[  ] Save receipts for all expenses associated with your house (cleaning supplies, toilet paper, light bulbs, welcome mat, dishwasher detergent, etc.

[  ] Keep records of all meals and snacks served to the children in your care. By using the standard meal allowance method of claiming food expenses, you can deduct about $1,140 a year per child.

[  ] Track all the hours you use your home for your business, particularly those hours when you are doing business activities when children are not in your home.

[  ] Purchase the Minute Menu Kids Pro software program to help you track income, submit Food Program claims, record expenses, and much more.


[  ] Create a written contract and policies with parents that establish the rules you want to make and enforce these rules consistently.

[  ] Include these two rules in your contract: 1) Parents must pay at least a week in advance, and 2) Parents must pay for the last two weeks in advance.

[  ] Put in your contract that parents are required to give you at least a two-week notice you can “terminate the contract at will.”


[  ] Identify at least three benefits of your program. A benefit is something that will directly help a child or parent: “My program’s planned activities are geared towards each child’s interests.”

[  ] Offer a finder’s fee for current families if they refer a new parent to your program.

[  ] Print out business cards and flyers and pass them out. Vistaprint has very inexpensive prices.


[  ] Contact your homeowner’s insurance agent to make sure your house and contents are covered while using them in your  business. Get it in writing.

[  ] Contact your car insurance agent to make sure your insurance covers you every time you use your car for your business. Get it in writing.

[  ] Purchase professional business liability insurance. Get coverage for $1 million per occurrence and $2 million aggregate.

Money Management

[  ] Pay off any credit card debt as soon as possible.

[  ] Save at least 10% of your profit towards your retirement.

[  ] Establish a Roth IRA by investing in a stock market Index Fund that tracks the Wilshire 5,000 benchmark.

Taking care of children is only half your job. The other half is taking care of your business. The above checklist will get you headed in the right direction.

Tom Copeland –

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Business Planning Guide smallFor more information see my book Family Child Care Business Planning Guide.

Categories: Contracts & Policies, Insurance, Legal & Insurance, Marketing, Money Management, Money Management & Retirement, Record Keeping, Record Keeping & Taxes, Starting Your Business

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2 replies

  1. hello,
    i am starting a new daycare. i currently work full time managing a restaurant. i was wondering if i should wait until January to open or open when i get my license this year. will my taxable income on my current job combined with opening the daycare this year affect my taxes? I am trying to figure out the best course of action of when to leave my job and start up. what are your thoughts?

    thank you for your help


    • Income you earn from child care will be taxed at a higher rate than your current income because you will have to pay the employer and employee share of Social Security/Medicare taxes (15.3%). But higher taxes shouldn’t be a reason not to start right away. You may need to withhold more from your income by filing quarterly Estimated Taxes (IRS Form 1040ES).

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