Start Up Questions

[Grover]

I am in the planning stages of opening my own home daycare (would like to open the beginning of July) and have a few questions.

First, a bit of background: I am a mother of two (9 and 6) and recently divorced. This will be my main source of income (I do receive some Child support to help out). I know having this as my main source of income will be challenging, but I believe with proper budgeting and planning I can do it. I have always wanted to do this and now I have decided I am going to take the leap and do it. My mother has her own in home daycare (and has since I was a baby), so I grew up in the home daycare environment.

My questions:

- I understand the new ratio rules under Bill 10 (or at least I think I do), but does that include my Foster child(ren)? I am open to receiving 1-2 school age Foster children, so they would be here before and after school. Will that affect my ratios, or will they be included as my own children (and not affect my ratios if over the age of 6?)

- There are a lot of "under the table" babysitters in my area (small town), and I want to stay competitive with them, but offer the added benefits of being a business and issuing tax receipts, proper contracts, etc. I am thinking of charging $2 or $3/day more (they charge $25/day, so I would charge $27 or 28/day) in order to cover the taxes I'll have to pay. Does that seem reasonable? Or will I have issues finding families?

- Do you usually offer family discounts? My mother only charges half price for additional children in the same family, and is just something she has always done, but I think that will be a big hit to my income if I only get families. What do you do? I was thinking of a smaller discount, but not half price. (maybe $5/day off for fulltimers)

- Are there any other benefits to registering as a business rather than just using the BIN instead of SIN on receipts? Or should I start as unregistered and then maybe next year register a business name? I am fine with just running it under my personal name.

- Do you HAVE to have a playroom? We live in a one-floor 3bedroom/2bath ranch-style home and do not have the space for a separate play room. We have always used the living room as our play area (and kept the majority of the toys in bedrooms). One day when I can afford it I would like to finish our basement, but right now it is an unfinished cement cold land down there. Is that okay? (I do have a large fenced in backyard that will be used often).

- Other than Registering a Business name if you choose to, is there anything else to Register for? Or can you just start issuing tax receipts under your own name without registering anything (and just submit this as income on your taxes)?


Thank you!!

[Suzie_Homemaker]

- I understand the new ratio rules under Bill 10 (or at least I think I do), but does that include my Foster child(ren)? I am open to receiving 1-2 school age Foster children, so they would be here before and after school. Will that affect my ratios, or will they be included as my own children (and not affect my ratios if over the age of 6?)All children in the household count. Foster children effectively are your children until they move on. Here in PEI, our own children count until they are 12 years old even if at school the whole time.


- There are a lot of "under the table" babysitters in my area (small town), and I want to stay competitive with them, but offer the added benefits of being a business and issuing tax receipts, proper contracts, etc. I am thinking of charging $2 or $3/day more (they charge $25/day, so I would charge $27 or 28/day) in order to cover the taxes I'll have to pay. Does that seem reasonable? Or will I have issues finding families?Lot of under table carers everywhere. I don't worry about what they are doing since if they breaking one rule, likely to break others like ratios. Charging just a couple dollar more is more than reasonable. I am about $10 more than cash carers.


- Do you usually offer family discounts? My mother only charges half price for additional children in the same family, and is just something she has always done, but I think that will be a big hit to my income if I only get families. What do you do? I was thinking of a smaller discount, but not half price. (maybe $5/day off for fulltimers)Up to you. I not offer discount. My income isn't great after expenses barely min wage if full. Here it full price for all. If they not want pay full price, they can go someone else.


- Are there any other benefits to registering as a business rather than just using the BIN instead of SIN on receipts? Or should I start as unregistered and then maybe next year register a business name? I am fine with just running it under my personal name.Unregistered day home not same as unregistered business. Dayhome don't need business reg but you right, without business reg number, you will be expected to provide SIN on receipt. Some do register business so not have to give out SIN.


- Do you HAVE to have a playroom? We live in a one-floor 3bedroom/2bath ranch-style home and do not have the space for a separate play room. We have always used the living room as our play area (and kept the majority of the toys in bedrooms). One day when I can afford it I would like to finish our basement, but right now it is an unfinished cement cold land down there. Is that okay? (I do have a large fenced in backyard that will be used often).For unregistered home, not need a separate playroom. For registered, it depend on provinces regs. Here we must have sleeping area separate from activities and under 2's separate from older when napping but if unregistered home, not needed. Fenced in yard is only required if registered too but check regs for your province.


- Other than Registering a Business name if you choose to, is there anything else to Register for? Or can you just start issuing tax receipts under your own name without registering anything (and just submit this as income on your taxes)?Yes - unregistered business day home can just issue receipt under own name and submit as income on taxes but you will be required to give SIN on your receipt.

[Fun&care]

I am in ontario and not registered as a business nor with an agency. I claim my income every year and have never had to hand out my SIN to my clients.

You don't necessarily need a playroom but I think you do need a play area and have age appropriate toys and equipment etc. that is appealing.

I would never give a sibling discount. It's kinda like showing up at the gas station and asking for 1/2 off your tank of gas because, hey, you own two cars. Ummmmm.....no. It isn't any cheaper to care for a sibling and in fact puts you out not one, but TWO spots at once when they leave do it actually makes them higher risk clients.

[Grover]

Thank you!

Suzie_Homemaker - I am pretty sure in Ontario is different from PEI. Everything I have read says only children under the age of 6 count towards the ratios. Maybe there are others in Ontario who could confirm that for me?

Fun&care - very good points!

[babydom]

I am in Ontario and also a foster parent. Yes foster children COUNT AS DAYCARE CHILDREN not as your children. So your foster care kids count till age 10 now and then when Bill 10 comes in they will count until age 13yrs. I do not offer a family discount. A spot is a spot. U don't have to reg as a business. Just issue receipts every jan or end of yr. I never give out my SIN unless asked. I've only been asked twice so far. No playrm needed. But set up a corner in your living rm with books and age appox toys. Also if the basement is safe, or block off unsafe areas with gates.....on a hot summer day it will be nice and cool to go down there and use ride on toys, just make sure kids wear shoes. That'll b fun when it's raining too and u can't get out. :). Have fun. Feel free to ask any more questions u may have :)

[Grover]

Thank you for clarifying on the Foster children! That will be an impact and I may just have to always have at least one spot free to account for always having at least one foster child. (Have spots for two, but only doing one at a time right now)

We already have a corner of the living room as our reading nook, but since my kids are older now there aren't as many toys. I will work on a set up for the daycare kids of course.

Thanks again, I appreciate the info, advice and suggestions!

[Lee-Bee]

Where abouts are you in Ontario? What is the going rate for an actual home daycare (not the under the table sketchy ones you mention at $25 a day). I would just worry that being the sole income for a family of 3 (plus foster kids)...and having to leave at least one daycare space open at all times (for a foster child) leaves you with little to no income at all. You can have 5 kids, minus one for a foster child spot. That leaves 4 potential openings for daycare children. That is 4x27 (what you mention above). That is only $108 a day. Minus taxes and CPP. Minus food and minus any craft supplies, toys, daycare equipment, cleaning supplies, toilet paper, and house expenses.

Can you live on that much money? Where I am you couldn't even pay rent in a tiny, one bedroom apartment with what money you would have left after expenses...let alone food and costs of living and children.

I know there are others on here that do this as the sole income and have children. Maybe it can be done, but if I see a lot of concerns here that would have me very worried about starting out! Not to mention it often can take months to fill your spots when you first open, many months in some areas. Are you situated to have no income come July...and minimal income until the fall if your spaces don't fill up?

Not trying to dissuade you or sound mean here...just trying to ensure you have planned for the worst case scenario before taking this career move!

[Grover]

Lee-Bee.. no worries, thank you for bringing up some important points!

Right now I am looking over the numbers to charge $27/day and have 4 fulltime spots. I also receive child support, CTB and will be getting UCCB again come July to help out with my own children's costs (which will account for an additional $920/month). I also get a small amount for fostering to cover the expenses of the child in my care which helps.

I plan to put a portion of the daycare income away each week to help cover taxes and CPP, so I am debating on whether to charge $28/day to help out a little more (need to ask around more in my community, all the moms I know pay $25 under the table). I am thinking about $50/week should be set aside for taxes and CPP, but I am really not sure if that is enough/too much. I might need to talk to an accountant about that.

My mortgage is pretty good (small town, we have good prices and low property tax), so I am only paying $700/month total for mortgage with property taxes included (3bd, 2bath, 1300sqft brick ranch), then $300 total for my utilities. That leaves the balance for my other expenses and savings.

It is looking doable on paper, I would have to stick to a strict budget, but that has already become a habit since becoming a single mom. It will be tight if I lose a child and don't have a replacement right away, which is where the safety net fund will come in. But, I am also making it clear I need notice so I am hoping that helps find replacements as children leave. My mother never had an issue keeping her spots filled in this area so I am hopeful it is the same for me as long as I get my name out there and network with the other daycares in the area as well. It is a small community, so word gets around pretty quick (about anything).

I am planning to start up in July and currently I work full time at a decent paying job (but oh so boring), so I am going to be purchasing things needed and stocking up on some items while I have my full regular pays right now, then I will have my vacation pay out when I am done here as well to help get me through summer.

I am also planning on posting my openings as soon as I decide on my rates and finalize my paperwork so I can get the word out there right away to get some kids lined up for July. I may have to take more older kids for summer just to fill spots then keep postings up for younger kids for September.

It is going to be a challenge the first little bit, but I am trying to plan out as much as possible financially so I can prepare myself as much as possible.

[babydom]

Was also thinking like lee-bee. 27$/day seems so low for ont. Avg is 35-50$ a day. What city r u in?

[Grover]

I am in a small town about 45 minutes from London. Population 2000 :)
I know three home daycares in my area that all charge $25/day. They are all under the table though.

[babydom]

Ya they charge and take that 25$ with them. They loose nothing on taxes. Which is illegal. If you are doing it right with recipts then U'll have to pay taxes and therefore won't walk away with 27/28$ a day. I'd charge 30-33$/day :)

[Suzie_Homemaker]

Think about it this way - $27 a day x 4 places = $108 a day if full.

Depending on what you provide and what parent provide, you still have expenses to come out.

Even if parent bringing all food and drinks, you will have higher heating from all day heat compared to being able to lower temp when you working outside home. Flushing toilet in the day mean higher water. Toy and crafts.

If you are working 10 hour a day, $108 divided by 10 hour is $10.80 an hour if full. What is min wage in your province? Although you be saving own day care cost by being home, can you manage on $10.80 an hour if your ex loses job and so no child support?

I always thought that Ontario was more expensive then PEI living. Our mortgage is $327 bi-weekly and we have about 8 years left on it. Our cable/TV/internet bundle is $169 a month. Our water is $215 every 3 months so about $72. Our power bill which includes heat is $260.00 a month. Our house insurance with day care insurance is $88.00. Our property taxes are $2,700 a year so about $225 a month.

[Grover]

I would love to charge $30/day, I am just worried I will have a hard time finding families if all of the other local daycares are $25/day (even if they are illegal). Being a small town there isn't as much of a range. I am going to ask around more to see if there are any higher ones around (and legal ones).
I am thinking in my area $28/day might be the most realistic pricing.

Time to be an open book... let me know your thoughts:

My mortgage is $252 biweekly and my property taxes are $84 biweekly, which is $728/month if you multiply out by 26 payments/year and divide by 12 months.

My utilities are on equal payment plans for Hydro and Natural gas:
$115/month for Hydro
$95/month for Gas
Water works out to be about $75/month (billed every other month and is usually $130-150 depending how much we are home)
We do not have cable TV or Satellite.
We do Netflix if we watch TV, which is $7.99/month.
Insurance for the house right now is $65/month but will go up $11/month to cover 4 children in my care (as quoted by my current insurance company at $33/child per year)
Insurance for my car is $105/month
My car payment is a big ticket item at $450/month (2011 Ford Explorer)
My current grocery budget is $400/month but will be increased to $650/month (I shop sales, price match as much as possible and get points for free groceries, which I average $20-$30/month of free groceries)
Currently I spend about $100 a month at walmart on kid supplies (Crafts, misc fun items)
YMCA membership $80/month (assistance program based on my current income, this may go down a bit once I am making less money doing the daycare)
Cell phone is $95/month
Landline and Internet bundle is $91/month ($82 without the landline, so I keep it as an emergency line)
I have $350/month in debt repayments
I have $100/month I budget to put in savings.
$200/month for taxes and CPP fund? (I'll only make about $26,880/yr daycare income and that is the whole household income amount)
$200 misc fund for the little extras that come up (school book fairs, new shoes, etc.)
I am thinking about getting Blue Cross coverage for benefits - quoted at $125/month for base coverage which includes dental

=3642/month (if my math in my head is right)


$28 x 4 children full time = $560/week
If I base my totals on months being 4 weeks: $2240/month
CTB = $200/month
UCCB = $120 (starting in July)
Child Support and Foster Income (prefer not to disclose the exact amounts of these ones)

Total Income = Approx. $4000/month
(which gives me a bit of cushion for when I go over budget... unless I missed something, which I probably did)

[superfun]

A couple things I noticed quickly, which you should increase in your budget, is your water bill, because there's a lot more washing, and flushing the toilet, with all the extra little people in the house. And secondly, if yours is the only income, you'll need more savings than that. It will have to cover so many things, not just the potential empty space of a daycare child for a month or two. If you get a flat tire, and in the same month you lose a daycare kid, and then you need to replace a hot water tank, etc. I've found that all the bad things tend to happen at once, so I'd be increasing my savings for sure.

[Suzie_Homemaker]

You also forgot to budget for fuel for car which is lot over a month.

[Grover]

Ah! Suzie-Homemaker, thank you! Knew I was forgetting something!!
Right now, with driving back and forth to work I am spending about $60/week on fuel. When I have a daycare it will just be gas for around town and to go to the YMCA, so estimated at $30/week... so thats another $120 based on 4week months.

Superfun - Agreed, I need more savings. Honestly, I don't put any away right now, so anything is better than what I have right now. I will work on that and see what I can do.
Also, yes, water will increase. I compared with my mom (who has children in the day) and she only spends about $10 more a month than I do. My range was on the high side of what we have paid, so I don't think I will be too off that budget amount.

Thanks everyone for the input! I appreciate it!!
It is getting tighter as we find more things to account for...

Any other single moms out there that make this work? What is your secret

[Fun&care]

The thing is though that bill 10 could really throw a wrench in all this. Keep in mind- you are only allowed 2 under 2 at any one time. The only way to get older kids is if you get a mom coming off mat leave with two siblings but honestly they are hard to come by. The vast majority of inquiries in my area, but I believe in most, is for care for 12 month olds. So you may fill two spots relatively easily but you could potentially wait a whole entire year before being able to fill two more because you have to wait for the young ones to turn 2. And this isn't just at start up. Anytime you have an older child leave (for mat leave, or because parents are moving, decided to put child in preschool or a spot opened up in the daycare center down the road...these things happen quite a bit in this industry) you are left waiting for the younger ones to age which could take several months up to a year, depending.

It is totally a personal decision but honestly, if it were me, if I was a single mom and had a decent paying, reliable job I would just stick to that. I feel like daycare is risky for someone in your situation but maybe that's just me.

[Grover]

Fun&care - You are very right. I am starting to doubt myself. I really wanted to find a way to make this work, especially with my kids coming up on Summer vacation and me needing to find care for them, but I need to be sure I am not going to put us in a bad situation financially.

Thank you!

[5 Little Monkeys]

This may come across as "braggy" but I really don't mean too!! This is just my situation...

We are mortgage free, no debt other than a car loan, no children and normal monthly utility bills like everyone else. I put money away in savings but than that is used to pay off my taxes every year. I am starting this year to put money away for the summer months. If I succeed in saving enough, I am strongly considering turning into a 10 month a year daycare and taking summers off. I have a partner but he is off summers and goes on EI. (We do buy what we want when we want for the most part so our savings definitely could (and should) be higher!!)

Even with all of that, I find having a hdc can be stressful financially from time to time. Yes there are always children needing care but you never have a guarantee that a family that is the right fit for you (age, likeability, able to afford your fees) will fill the empty spot ASAP. Sometimes it can take a few months. For me personally, that stress is high enough as it is and I couldn't imagine throwing single mom with no other source of income into the mix. However, others do it so it is totally doable but I'd make sure you have a strong backup plan just in case you need to close and work out of the home again.

It's a very rewarding and fulfilling job IMO so I really do wish you the best of luck and hope you are able to make it work for your family though :) Good luck!!

[Fun&care]

I've always viewed home daycare as a type of job that is meant as a supplement to a partners income. I think that is how it is for the vast majority of providers. Not all, as there are providers here who make it work as their sole income but I think that is pre-Bill 10 in many cases. The Bill makes it next to impossible to support a family with daycare being the sole income source. Heck, for many it isn't even worth it as a second income anymore either.

I do wish you the best of luck no matter what you decide though!

[Suzie_Homemaker]

The thing is though that bill 10 could really throw a wrench in all this. Keep in mind- you are only allowed 2 under 2 at any one time. The only way to get older kids is if you get a mom coming off mat leave with two siblings but honestly they are hard to come by.

This will vary on area. Might not be doom and glum for all.

We not allowed more than 2 under 18 months. We not allowed more than 3 combined infant and toddler ages - under 35 months. We only allowed 5 max and our own kids count until they are 12.

But I usually manage to fill all 5 places even with only two infant or three infant/toddler combined. So it likely area specific. And this not high demand area. We are a good 45 mins out of Charlottetown which most populated area so we have limited client anyway.

There is some people who manage to earn enough from this as single parents. Most provinces have restrictions similar to what is coming for Ontario already and those single income providers have managed to survive but it will be tight for sure. My husband is semi-retired now, and our children are grown up but even with small second income, I do see difference in tightness of money. We have some mortgage left but no other debt and no car loan so like other provider, luckier than most. But there have been times where I've had whole year of one vacancy or other when fishing industry is poor or when local companies close meaning some go West. I think if you expect to be full at all times, it might be naive.

[MsBell]

I am a single mom doing it, and my honest advice is....don't! I started before I separated, and just continued on after, and now i feel totally trapped in this business. Many ladies have already stated very important expenses and reasons that you need to consider, so i won't repeat them, but i will add a few.
1. damages and emergency repairs that will pop up need to be budgetted in, as well as long term expenses that you will have. for example, just this last week, my lawnmower keeled over, fortunately my boyfriend fixed it. I needed a new roof two years ago, I am still paying that off. I needed to buy a new printer last month, lets not get started with my car....there will always be an unexpected expense.
2. unpaid sick days, I needed minor surgery, had to take off two days for that, a day for pre-op appt, and a day for post-op (not to mention the time I had to take for the testing to find out my issue....not one of thoses days were paid, that's over a week. i am guessing that if the parents in your area wont pay $30/day for care, they also won't pay for your sick days?
3. your kids expenses will likely grow in the next few years, my daughter is in grade 8, son in grade 5, school and extra activities get expensive (just this month I have trips to pay for, graduation, sports, etc) my daughter has a cell phone, and everyone her age does, my son does not, and he is one of the only kids in his class that doesn't.
4. Hopefully your ex takes the kids, my ex does....sometimes, but not equally and often travels for business. that leaves me with kids 24/7 which can be too much. as other have said, you can only have two under two, so chances are you will have kids that will be outgrowing naps, so I have weeks where I have kids with me all day, no breaks.....you will need alone /adult time, and if your ex is not there (I don't mean to assume, I just know how it is for me)you will have to get a babysitter, or have family or friends that will help out (I am lucky to have that) Also you will work 50 hours PLUS you will spend time planning, interviewing, cleaning, shopping that you don't do now, so this job is way more then the hours you spend watching kids
5.You will have clients that are simply not fair or considerate, they will not pay you on time, leave without notice, or perhaps you will get a client that you just cant work with and you will want/need to terminate....I budget on a half full daycare, that way, if I have a slow time, I can handle it, and when I am full, I have extra
6. Your kids might not like having their home as a daycare, and even if they do, they and you, will need some room in your home that does not get used by the daycare. I am lucky that I have a spare bedroom for my kids as a "game room" and daycare kids do not use my basement rec room. It is also hard for my kids to have me there, but to understand that I am not availble to them because I am working, that can be very stressful

Right now, for me to go out and get a job, I am 10years out of the "workforce". I would have to take a low-paying job (retail, factory etc) or go back to school. I just cant afford that right now, without disrupting my kids lives (and I don't want to do that)
Now there are many reasons why this works for me too (I have never paid extra taxes at the end of the year, my kids are big expenses, I claim all I can, and I have a great accountant that helps me stay in line. I got almost $700 back this year) I am my own boss, and I have no commute, I can wear yoga pants everyday (or even Pjs if I wanted!)

It can be done, but it's never easy.

Also I just wanted to add, there are everyday expenses that do add up. toilet paper, dish soap, laundry soap, tissues, hand soap, papertowels,cleaning supplies, etc they don't seem like much, but they do add up. water, heat, electric will all go up when you are home all day.

[torontokids]

I would encourage you to stay put in your job. There are too many risks. I think one thing that gets missed when choosing this profession is how little time you get with your actual kids once you open a home daycare. I did this to spend time with them but I am unable to 1) take them to the Dr. 2) go volunteer in class 3) spend time with just them in the summer (unless on vac). Also, you will be wiped in the evenings, have to program, clean and cook in the evenings

You also need to factor in your closures for vacation and that that time is unpaid.

[kindertime]

If a daycare is "under the table" I am assuming that means the money they charge parents is not claimed on their taxes as income. And I am further assuming that if they aren't claiming it on their taxes, they aren't providing the receipts to the parents either.

Well, that's your 'hook' so to speak. You can give receipts for the parents to claim, the others can't. I'm sure the CRA would love to hear about these daycares.

If, you think they may be illegal, meaning operating with way too many kids, then I'm sure the Ministry would love to hear from you too. If you plan to make this your profession and you will act professionally, then you should expect it of others too.

[innisfildaycare]

I wouldn't be discouraged. Work your finances out and go with what works best for your family. If starting an in home daycare is something you really want to do, you can make it work. Cut down costs by price matching LITERALLY EVERYTHING from groceries to toys and everything in between. Having a job outside of the home is ALOT harder then working inside the home, IMO, based on my own experiences. Most companies aren't too thrilled when you say you would like to take the morning off to volunteer at your childs school, or that you might have to take 1 week off of work to stay home with one sick child, only to turn around and have to stay home the next week with your other child who then caught it and then the week after, once you have become sick. Most companies, dont allow paid time off or sick days. Most companies only offer vacation in consecutive weeks which means, any additional days off are not paid, hence the fact that taking time off work outside the home is just as hard as trying to take time off while running an in home daycare. While I was doing daycare (6 years) I spent tons and tons of time with my boys. Yes, I was running a daycare, but my boys were with me. Its now, that I have been back to work that I dont spend alot of time with them. When I am home, Im busy cooking, cleaning, laundry etc. When I did daycare, anything i did with the daycare kids (as part of my job) always included my boys. We played games, we sang, we danced, we learned, we walked, we painted, we colored on and on and on. Now, my boys say to me "mommy, you never do anything with us" my heart breaks!! Hence the fact that I am re-opening my daycare in July. YES, I am leaving an amazing job with amazing employers and YES I will suffer from a huge pay cut, YES we will be extremely tight with money, YES my salary will never be stable or steady BUT my boys will have their mommy back! And although my boys wont be small forever, Im willing to give up everything for them right now no matter how stupid I may be right now at the moment or how much I will regret it later.

[Suzie_Homemaker]

I can see it easy to get trapped in this business.

Although income not great, and high risk, the benefit of tax allowance mean that if work outside the home, I would need earn about $10k more than I do to come out the same.

Sure, outside employment saves cost of health insurance (most of time) but knowing I can deduct 40% of my power, heat, water, house insurance, property taxes, cable, internet, house maintenance from tax bill does have a value.

Having done this long time now, I can see that I have de-skilled myself in many areas meaning if I took job outside home, I would realistically be in min wage employment. Having that $10.35 an hour is more than I get after expenses, but risks are that I not get my 9 hours a day are high. Lot of employers only taking part time worker for min wage jobs so that is a worry and also need to pay utilities etc in full would have to be considered.

I can see how carers get trapped in this business and so if you have FT job already, which pay more than min wage, gives health insurance, paid leave, sick pay and maybe some pension, I would not be willing to give up for high risk of day care as only income.

I would say if leaving work force to become carer, you need to be aware that income will be tight and it very hard to return to work force after a few years being out of it, unless you re-train for something. As we age, we must consider that it likely health will fail before retirement, and those sick days add up. If have serious health issue, even for few months, that can be enough to lose income completely and can you manage with no income?