Should You Expand to a Group Home?

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Expanding your family child care business may sound like a good idea: you will earn more money and be able to accommodate more families.

But, before you take this step you should take into consideration some additional consequences:

Each state has its own child care licensing rules that govern how many children you can be in your care. Check your state regulations to learn about possible additional requirements: more training classes, more indoor and outdoor equipment, more space that needs to meet licensing requirements, and additional staff.

Additional Staff

Often the biggest change when expanding your business is the hiring of an assistant. This may be required under your state’s law or something you want to do on your own. As I’ve written about before (“Are Helpers Your Employees or Independent Contractors?”), anyone who is helping you care for children should be considered your employee, not an independent contractor.

This means you will pay Social Security/Medicare taxes, federal and state unemployment taxes and perhaps have to purchase workers compensation insurance.

Let’s look closely at these costs:

If you paid an employee the federal minimum wage ($7.25 an hour) for 40 hours a week this equals $290 a week. Your share of Social Security/Medicare taxes are 7.65% and federal unemployment is .06% for a total of 7.71%. State unemployment taxes vary a lot as does the cost of workers compensation insurance. We’ll use an estimate of 3% state unemployment tax and $20 a week for workers compensation. Total weekly cost to you: $341 (7.71% + 3% + $20).

If you cared for two full-time additional children you would need to charge $171 a week to cover these costs. If you cared for three children you would need to charge each $114.

In addition, you are likely to have higher food costs and perhaps pay for some additional supplies or training for your employee.

Therefore – if you pay minimum wage for a full-time assistant you will probably need the income of between two and three additional full-time children to break even financially. Run these numbers for your own situation.

This is often the biggest surprise providers discover when hiring an assistant. A few providers have told me that their assistant makes more money per hour than they do! Some providers have dropped their assistant and no longer offer group care because of this and because of the inability to keep their enrollment up.

Non-Financial Issues

Deciding to expand your business to a group home is not all about money. There are the non-financial benefits of having another adult to be with you and the children all day. This can relieve some of the stress for you. Having another adult can also help increase the quality of your care, although this can be offset somewhat with the increased number of children. Your decision to expand your business should always be based on your plan to increase the quality of your care.

In addition, you should check with your local zoning laws and homeowners association bylaws to see if there are any restrictions to hiring an employee in your home.

It’s up to you to decide whether to take the step to expand your business or not. You can make a smarter decision if you know what you are getting into.

What has your experience been in expanding to a group home?

Tom Copeland – www.tomcopelandblog.com

Image credit: www.mtdemocrat.com

Money Management smallFor more information about the financial consequences of hiring employees, see my book Family Child Care Money Management and Retirement Guide.



Categories: Employees, Money Management, Money Management & Retirement, Record Keeping & Taxes

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7 replies

  1. I chose to go Group a few years ago. I had no intentions of adding an assistant. In KS if you are a group provider your ratios change with group for one provider. For example I can care for up to 9 full time children between the ages of 2.5 and 5. And if I should take a younger than 2.5 year old I just revert back to the regular license ratios.

  2. nine children between the ages of 2.5 and 5! Sorry but I think my sanity would suffer along with the quality of care for each individual child. They reason I left working in a center 30 years ago was because I felt like I was herding sheep. I care for 5 children, alone, but husband is also puttering around the house. When my own two children were young I paid for an assistant and yes I made less money then her (5 paying children plus my 2) but I figured it helped me out so I could take my own kids to Dr appointments etc, .(There were no Drs. with evening hours back then. ) PA regs allow 6 children (unrelated)to one adult, no more then 2 infants. Zoning is also a major issue in PA with how many children you may care for

  3. For me having a large family child care is about having another adult work with me. I like having someone else around to help out. I do not break even with what I pay my full time helper now, taxes, workers comp insurance and the added liability to cover a large home but my sanity is better for it. I could not go back to working along at this point – even if I went back to a small home I would want a helper at least 4 hours a day 3 to 4 days a week to keep my sanity in check.

  4. I’m having a hard time obtaining workers comp insurance here in California. No one can tell me for sure if I even need to carry it. The policy I have sounds like its for a center…and its very expensive. Does anyone know where I could find good information about it? (In CA we call it a large license; 12 preschoolers and 2 school age with 2 adults)

  5. I wish more comments were posted! I have been a large group provider for over a year and I don’t ever want to go back to family. Before it was 7 children, yes that is PLENTY for one provider and now it’s 12 children with enough staff. 8-12 requires 2 people so I have one full time and one part time employee. I have 11 children on my busy days and 8 on my light days because my own child (infant) counts as the 12th enrolled. I LOVE having someone to share the role of diapering and above all I enjoy splitting the kids up into groups to lessen chaos and/or noise and focus on more age appropriate independent time!
    WHO you have as staff makes or breaks the whole experience! I found an AMAZING girl who started college (temporarily taking a break, so I hope she takes a long break to stay with me longer!) she is so respectful to me and treats me like a boss. I tell her everyday how much I appreciate her and compliment her on things. Training someone in to treat the children how you would and someone you can trust is so important! It’s scary bringing someone into your home too….you never know if they’re creeps, just saying!
    I have email conversations and at least ONE phone conversation to get a feel for a person then decide whether the position is still available and give them an in-person interview. I have an application I made myself and a required background check I give to everyone I meet, but I have interviewed about 6 people before I found the 1 girl I hired. With that said give yourself lots of time to find someone and if you’re nervous about taking this step just have them part time when you don’t need the help and then decide whether having a helper is going to work for you.
    I have a part time employee to come after nap to work with my full time employee so I can take the rest of the day off! Yes I am paying $8-$8.25/hour EACH but I charge higher rates for care and I have expectations of the girls on what they do when they work together and the extra 2 hours in the late afternoon are worth it to be with my own infant.
    I wanted to go bigger to always have a person to work with. (Ex. before a child would have to go potty when we were outside. I use to have to bring ALL the children inside and wait. Now I can just take a few children who want to go inside. I use to have the kids get their lunches one at a time as I was getting it done. Now I have my employee with the big kids while the little kids start eating and then the rest come inside wash up and sit down to a plate on the table ready to say a group prayer.) I could go on and on for how much I LOVE having a larger group daycare. My future goal is to have a small center so I find taking these smaller steps is so educational and wonderful.
    The ONLY thing that doesn’t work (so far) for having more children and staff is being all in the same room. Even if we’re all on the floor playing with children near us it just gets too loud. It’s best so far for us to break up into groups once or twice in the morning and again later in the day for half hour or more for activities. The kids are happier with more to do and being able to be in different parts of the house more. They enjoy spending time with all of us as well so they’re not bored.
    Financially it’s still beneficial. Whether I have 1, 2, or 3…. employees I still would pay for the insurances they don’t increase much between having a full time helper or a few part time helpers. So my weekly staff expenses for 50-60 hours of total work is about 4 children. Since I have 11 enrolled I am still having 7 of those children’s income go straight to me. Above that I am done working at 3 pm everyday to be with my own child. I get someone to help with all our daily tasks and offer ideas. It’s also just nice to have a great career and have a friend (your staff) you can talk to about how to make things better and what fun things you should try (like a new menu item or craft project!)
    So when I worked alone with 7 children I worked 11 hours a day ALONE with no other adult to help with anything (meals, diapers, toileting including those not-so fun messes, play time, reading, art, outdoor running around time, lack of conversations with a young group and more and more)! Then every evening I had to clean for 20 minutes or more(after a long day you just speed clean and get it done) and then every weekend I did meal planning and deep cleaning. It took EASILY 60-70 hours a week and no break. Now I’m much happier……….I’ll sum it up with that!

    • Hi! I see your post is from almost 3 years ago and I was wondering how having your staff is still going for you and what additional advice you would have for someone just going into group family childcare. This post was very good that you did and I am now going to hire a staff person to work with me. I am not a bookkeeper type of brain. What do your recommend for simplifing all the things that need to be done for a staff person??? Also, what other ways do you use your staff for help? Are you willing o share your interview questions and application form??? I can tell you are a quality provider and would find value in the process you use. Plus, how would this change what I would need to add to my policies??? I am excited to hear from you! Thankyou!!! Cathy

      • There is no shortcut when hiring a staff person to help you care for children. See my blog section on hiring employees. You must withhold and pay Social Security taxes, withhold federal and state income taxes and pay federal and state unemployment taxes. I’m not a provider so I don’t have sample interview questions. Read my blog for articles on contracts and policies. See also the book I’ve written about this.

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