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  1. #1

    EI as a daycare provider / Maternity Leave

    Hello All!

    I am getting ready to head back to work after maternity leave and I am weighing the pros and cons of opening a home daycare vs going back to working in a center. One of the major bonuses to working in a daycare would be that I am paying into EI and can therefore collect EI if/when we have another baby. Is there any way to pay into EI as a home daycare provider?

    TIA!

  2. #2
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    Hi. I remember some caregivers being able to do that. Call the ie administration Office and ask.

  3. #3
    Euphoric !
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    EI became available to self employed individuals a few years ago. It is not the same program that is available to employees so it is worth taking a good hard look at it.

    You have to opt into EI and once you have opted in, you cannot make a claim on it for a full year. This is so self-employed don't opt in once pregnant just for the mat leave benefits when they haven't contributed on an on-going basis. If after opting in, you have never used the self employed EI, you can opt out again however, if you do ever use it, then there's no ability to opt out for the duration of your time being self employed.

    The situations in which a self employed person can claim are very limited. Mat leave, terminally ill minor child, something for other direct relatives being very ill, sort of events.

    The big, big, thing most people don't realized is mat leave payments will be 55% (I think that's the standard rate) or your profit not your gross business income.

    Let me explain :-

    So many new providers and indeed clients think that day homes are great income because $40 daily rate x say 5 children = $200 a day = $1000 a week. That is not your income! That is never your income.

    Like any other business, you have expenses - food, toys, increased utility bills, insurance etc.Your business costs come off your day care fees before you end up with your profits which are your income.

    As a home based business, one of the benefits is that you can claim tax benefits on the cost of some of your household costs because you are using your personal home as a business premises. While you don't get that money back like a tax return, it does reduce your taxable income. For instance, if your fees total $40k in a year, but have property tax bills, house insurances, car expenses, power bills, internet, office expenses, food costs for the day care totally $10k, then while you don't get that $10k back, they will reduce it of your tax bill but only taxing you on the $30k income.

    The down side of all this is while you will strive as a self employed person to reduce your tax bill by writing off as many expenses as you can, the effect of that is your profit levels on paper get lower and lower. If you ever claim EI, it's going to be a percentage of your profit not a percentage of your total fees before allowable expenses. The 55% you will get might make it so EI isn't worth it. Lots of provider's just decide to save their income for their planned pregnancy, so they have their bills covered when closed, and then start up again once their mat leave period is done. You have to work out what you expect to earn based on your local fees and the number of children you can have. Factor in that you won't be at capacity all the time. Figure out how much it's going to cost you to run the day care and then you'll know what your profit will be. Work out what 55% of that figure is to decide if it's worth you opting into EI

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