How To Start My Own Childcare Business – Most importantly, the LLC structure gives its owners limited liability that can protect their assets from lawsuits and debts.
Cases may arise in a day care center, for example, a negligent employee leaves a child alone during work or a customer’s child is accidentally injured in your day care center.
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LLCs are also cheaper, more flexible (from a tax standpoint), and can add some credibility to your daycare.
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You should form an LLC if your business involves risk and/or if your business can benefit from tax options and increased credibility.
LLCs provide security protection. This means that your assets (eg car, house, bank account) are protected if your business is sued or defaults on payments.
Example 1: If a 4-year-old breaks his leg during your babysitting experience, his parents will sue you for negligence, damages, and injuries. Your personal belongings will be safe here, unless damaged by your own actions.
Example 2: A negligence lawsuit is filed against your daycare after a 12-month-old baby was left alone for hours. Assuming it was the result of your employer’s negligence and not your own, limited liability ensures that you are not held liable for charging the plaintiff.
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Example 3: If a young child is accidentally left in your daycare without the supervision of one of your employees, you may be sued for negligence. Because you’re not neglecting yourself, organizing your business as an LLC ensures that your assets are protected regardless of circumstances.
Example 4: During an outdoor vacation, a young child climbs on the roof of a jungle gym and falls, breaking his arm. Your parents are suing your daycare center and they want you to pay the fees and medical expenses.
To protect your LLC’s privacy, you need to protect your LLC’s corporate identity. LLC Tax Benefits and Daylight Savings Options
LLCs are taxed as a corporation with exceptions, such as sole proprietorships or partnerships. This means that the company’s income goes toward the sole proprietor’s tax.
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The company’s income is then subject to income tax (depending on the owner’s tax rate) and self-employment tax.
Sole proprietorships and partnerships are taxed like LLCs but do not offer tax shelters or other tax options.
An S corporation (S corporation) is an IRS tax entity that can elect to be an LLC. The S Corp structure allows the owners of the business to be treated (for tax purposes) as employees of the company.
S corporation tax status can reduce self-employment taxes and allow investors to contribute up to $401,000 in pre-tax dollars or health insurance premiums.
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S corporation status requires the company to pay employees/owners a fair wage for their work.
In addition, the company may need to spend more on bookkeeping, bookkeeping, and payroll services. To reduce these costs, you need to save $2,000 a year in taxes.
We believe that a daycare owner can benefit from S corporation status if they can earn a good salary and at least $10,000 in profits per year.
You can create an S corporation by forming your LLC. Our How to Start an S Corp guide walks you through the process.
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A growing business can also benefit from the credibility of an LLC when applying for loans, grants, and small business loans.
For many new business owners, the state where you live and plan to operate your business is the best state to form an LLC.
Note: You may be required by law to have insurance. For example, many states require LLCs to carry workers’ compensation insurance when hiring employees.
Example 1: After the parents drop off the child from the hospital, the child becomes agitated and runs toward the glass doors with a toy in hand. The impact shatters the glass and the child is so injured that he needs braces. General liability insurance will likely cover all damages related to lawsuits.
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Example Two With general insurance, you can protect your company and pay for any damages in the event of an accident.
Example 3: During an outdoor vacation, a young child is able to climb to the top of a jungle gym without a caregiver watching. While dancing, they fall from the top of the structure and break their arms. Your general insurance may cover related medical bills and any other damages.
While general liability insurance is the most important type of insurance, there are many other types of insurance that you should know about. Below are some types of insurance that cover day care centers:
Your personal auto insurance policy does not cover accidents or situations where a service vehicle causes property damage to another vehicle on the road. Commercial vehicle insurance is required for all vehicles used for business purposes.
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If one of your employees is injured or sick on the job, workers’ compensation insurance can help cover their medical bills and lost wages. This type of insurance is required in most states for any business that employs part-time or full-time employees.
If you run your daycare from home, your home insurance may not cover accidents related to your business. Commercial home insurance can be tailored to your needs and provides additional protection for your home in the event of an accident or liability.
Running a business that includes child care involves a variety of risks, and the cost of lawsuits can wipe out your insurance coverage. Commercial roof insurance gives you peace of mind, knowing that you have additional protection in the event of a crime-related loss that exceeds the limits of your basic insurance policy.
Choosing the right business structure depends on the circumstances and needs of your business. However, unless your business is a low-risk business (such as a hobby), an LLC is probably a better option.
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If you are on a limited budget, you can also start a day care from home. In this case, all you have to do is purchase equipment, training and marketing materials, and business insurance.
Typically, you can open this type of daycare for $10,000 to $4,000. Of course, if you are planning to open your own commercial daycare, the total cost will be much higher.
Learn more about the cost of starting and maintaining this business in our How to Start a Daily Care guide.
Many parents are willing to pay a high price for the good care of their children, making it a potentially lucrative business. Small daycare owners can earn up to $50,000 per year. In addition, there is the option of opening a daycare away from home or renting commercial space, making it suitable for owners on different budgets. Do you want children? Are you ready to be your own boss? Then opening a day care center might be just the thing for you. And there’s never been a better time to start in-home care: Families desperately need child care options, especially programs for babies and toddlers.
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We have helped hundreds of startups open home daycare centers. Here are the top 3 reasons people like you are opening daycare centers in 2022:
Ready to learn how to open a day care center in your home? you are here Click here to get started with a guide to opening a daycare. Our interactive guide takes you step-by-step through the process, starting with important information about the licensing process depending on where you live (every country is different!).
Just looking for all the information? Read on – We’ve covered the basics below, but when you’re ready to take the next step, be sure to check out the guide.
Let’s go through each step. Note that this is a general conclusion and that specific instructions and information may vary by country.
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You don’t need to have extensive childcare experience or a master’s degree in early childhood education to get your daycare license.
All you need is real, important information with babies and toddlers. In many countries, being a parent is enough, and most of our successful providers are mothers with young children at home. Some are early childhood education specialists and have worked with children for years.
We believe that you can run your own childcare at home. So, let’s dive into everything you need to succeed.
Licensing procedures vary in each state. Some do everything in an online portal. Some still use pen and paper. That’s why we’ve created country-specific guidelines to help you know what you need to get your home care started. Get a guide to learn how to open a daycare center in your area.
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In many states, such as Massachusetts and New York, it takes 2 to 3 months to obtain a license. This includes online training, background checks and home inspections. Again, many have to be put away
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Hi, I am Erick Norman. A blogger specialist in Kitchen Design.