Child Care Provider Business Issues

You will need to set up an efficient system to manage the many aspects of running a small business. Keep organized records of all your expenses and income. Maintain a separate checking account for business expenses. Save receipts, and spend time each day or week to record information. A good record-keeping system will provide the information you need for tax purposes, and will allow you to gauge your income and expenses on a regular basis. Here are some tips for the major business items that should be set up before you open your doors for business:

Accounting: Tracking Income and Expenses
Develop a bookkeeping system to track each family's fees due, payments made, balance outstanding, and other payments (e.g., state vouchers). Parents appreciate a receipt for payments, particularly if payment is made in cash. Keep your financial records in a secure place. You can request information for the Small Business Administration or by calling Parent Line.

Expected expenses:

Your own salary and benefits
Educational supplies and equipment
Food and kitchen upplies
Cleaning supplies
Your own professional training and development
Advertising costs
Insurance
Repairs and maintenance for the space you use for children
Other: legal fees, transportation, office supplies, etc.

Taxes
Like any small business, you will have tax responsibilities. Keep good records to use at tax time. Be sure to keep all receipts, and to track all income and expenses. When in doubt, check with your tax consultant or the Internal Revenue Service for current tax regulations.

Deductions include food served to children in your program; diapers; toys and equipment for children; liability and accident insurance; supplies (art, cleaning, office, etc.); field trip expenses; memberships and subscriptions to child care organizations; and professional development and training.

Partial deductions include use of your home for business, and depreciation of equipment used in the child care business (cribs, swing sets, high chairs, etc.)

Your child care income (less allowable expenses) will give you your net profit or loss. You must report all income, whether paid in cash, check, or other means; whether it comes from an individual or the state (if you accept vouchers, for example); and whether or not you make a profit in any given year (within certain IRS guidelines). Contact the IRS or a tax accountant to find the proper forms for filing federal, state, and social security taxes, and for the types of exemptions for which you may be eligible.

For resources regarding the business of child care, you can visit Red Leaf Press.

Insurance
Check with your child care licensor concerning insurance requirements.

Liability Insurance
Most homeowners have insurance, but there are special issues related to operating a child care business in the home. Your liability insurance should include coverage for accidents, property damage, and legal fees related to any claims. You will need liability insurance if you rent your child care space, and the policy may need to indemnify the landlord as well as yourself.

Automobile Insurance
If you use your car to transport children, you will need to obtain additional insurance.

Licensing

Contracts and Agreements
Licensing requires child care providers to provide information to parents about their program. To view the requirements:

For child care centers: http://apps.leg.wa.gov/WAC/default.aspx?cite=170-295-20

For family child care homes: http://apps.leg.wa.gov/WAC/default.aspx?cite=170-296-0500

Provider Licensing Forms and Documents
For licensing forms and documents for providers visit Department of Early Learning - Publications

Do you have questions about child care subsidies? Washington State Child Care Subsidies

Marketing
Good news travels fast, but as you start up you may find that you have vacancies. Think about different methods for advertising. First, be sure you keep your provider profile up-to-date with us. When you have openings in your program, let us know immediately. When parents are seeking care, we refer them to your program. Parent Line refers Clallam, Jefferson, and Kitsap county parents to both center based and family child care homes through phone, email, and website referrals.

Other marketing strategies:

Place an ad in local newspapers; make sure your ad stands out, and give concise, specific information about your program.
Print flyers or brochures to post on bulletin boards in places where parents are likely to go: grocery stores, children's bookstores, laundromats, libraries, workplaces, hospitals, and colleges.
Word-of-mouth referrals- Encourage parents to spread the word. Stay in touch with families that have used you as a provider in the past, as they may have friends or family in need of care.

The appearance of your home is a very important part of marketing your services. The inside of your home should feel inviting and comfortable. Is the area you use for child care well organized? Does it welcome children? Bulletin boards and displays of children's artwork can give a good impression.

Financing

There are resources available if you are considering building a new center or if your center or family child care home needs renovation or remodeling to better accommodate the children in your care. In general, there are seven ways to pay for a facility project:

1. Volunteer labor and in-kind donations of professional skills, materials, equipment and furnishings.
Bartering services (i.e. a parent or guardian could receive free or reduced child care services for a specific period of time in exchange for plumbing or carpentry work).
Lease reductions in trade for making building improvements (note: this does NOT provide cash to cover the costs of facility improvements but will reduce overhead costs thereby freeing up some money for the building project).
Use of operating surplus funds, agency funds, personal savings or investor dollars.
Grants and donations from public and private organizations and individuals (to receive public grants you most likely need to be a non-profit child care organization).
Government grants for specific capacity-building initiatives (see listing below of current grants in your area).
Bank and government loans.

Financing Links

ShoreBank Enterprise Cascadia (merged with Cascadia Revolving Fund) ShoreBank Enterprise Cascadia’s Non-profit Loans provide loans throughout Washington State.
Child Care Bureau - dedicated to enhancing the quality, affordability, and availability of child care for all families. The Child Care Bureau administers federal funds to states, territories, and tribes to assist low-income families in accessing quality child care for children when the parents work or participate in education or training.
The Child Care Facility Fund - This fund provides loans and grants to child care businesses to start or expand child care facilities. Loans and grants must be approved by a board comprised of child care and financial experts. For detailed program information, including eligibility requirements and application forms, please go to the web page, or contact Tom Stilz, Manager, Child Care Facility Fund, P.O. Box 42525, Olympia, WA 98504-2525, (360) 725-4045.
Community Development Block Grants- Community Development Block Grant Public Service Grants are awarded to counties throughout the state to support partnerships with local Community Action Agencies in conjunction with Community Service Block Grant funds, administered by Washington State Office of Community Development's Community Services Division.
Community Facilities Loan and Grant Program Purpose: To construct, enlarge, extend, or otherwise improve community facilities providing essential services in rural areas and towns with a population of 20,000 or less. Contact: Paul Johnson (360) 704-7761.
Department of Community, Trade and Economic Development (CTED) - a cabinet-level state agency, was created to strengthen community social service programs, provide affordable housing, assist companies to export their products and promote Washington's heritage and scenic beauty. The Agency administers more than one hundred programs ranging from farm worker housing, domestic violence, historic preservation to tourism, community development block grants, and early childhood education and assistance programs.
The Washington State Housing Finance Commission assists 501(c)(3) nonprofits to obtain below-market interest rates on loans to construct, purchase, rehabilitate or refinance capital facilities. The Commission issues tax-exempt bonds that range from $300,000 to several million. Examples of their projects include administrative offices, schools, housing, neighborhood and day care centers, as well as job training, cultural, athletic and social service facilities. Questions? E-mail or call 1-800-767-4663. In Seattle call (206) 254-5359 for more information. Washington State Housing Finance Commission, 1000 Second Ave., Ste. 2700, Seattle, WA 98104-1046.
Small Business Administration Loans (SBA): Loans available through commercial banks for small businesses:
- Microloan Program:
- Certified Development Company (504) Loan Program

Non profit child care centers may be eligible for foundation and corporation grants. Contact Philanthropy Northwest or your local United Way or county library for a list of foundations and

USDA Food Program Information

The Child and Adult Care Food Program (CACFP) provides federal funds to nonresidential child and adult care facilities to serve nutritious meals and snacks. The goal of the CACFP is to improve and maintain the health and nutritional status of children and adults in care while promoting the development of good eating habits.

USDA Food and Nutrition Programs

OSPI – Child and Adult Care Food Program