Although few family child care providers ask this question of themselves, it is an important one for any person who runs their own business.
I recommend that you set a goal for how much money you want to make in the upcoming year.
Your goal could be to earn what a teacher in a local child care center makes, or 10% more than you made last year, or earn the federal minimum wage ($7.25 per hour as of 2015).
Let’s say your goal is to earn $9.00 an hour after your business expenses.
Step One: Calculate Your Annual Income Goal
First we need to know how many hours you work in a year. If you have been in business for a full year, look on your last year’s IRS Form 8829 Expenses for Business Use of Your Home, line 4. This represents the number of hours you worked last year.
If you have been in business less than one year you may not know this number. If so, use an estimate of eleven hours a day, five days a week. This is the average number of hours child care providers care for children, according to several national studies. This is equal to 2,750 hours (let’s allow for one week of vacation and one week of holidays).
Next, add the number of extra hours you work after children are gone. This includes time spent cleaning, activity preparation, meal preparation, record keeping, time on the Internet, and so on. The national average is 13.9 hours a week. If we use 12 hours a week (50 weeks a year) this totals 600 hours.
When we add 2,750hours to 600 hours our total is 3,350 hours a year. Multiply this by $9 an hour and we get $30,150. This means our goal is to earn $30,150 after paying for all business expenses.
Step Two: Determine Your Business Expenses
If you have been in business for more than one year, use the number on your last year’s IRS Form Schedule C Profit or Loss From Business, line 28. This represents your total business expenses, not counting your house expenses from IRS Form 8829. Because your house expenses don’t represent an expense caused by your business, we won’t count them.