Is it Easy to Start a Profitable In Home Day Care? Not Quite…

Thinking about opening a child care business in your home?  You are not alone.  Each year thousands of hopeful business owners decide to open a day care facility in their home.  It seems easy enough right?
Actually, it isn’t quite as easy as it sounds.
In fact it is very difficult to build a profitable in-home day care businesses.  There are 2 key reasons why the in home day care business model is difficult:

1. Capacity Constraints – Typically the state will determine the number of children that can be cared for in one home based daycare.  As an example in Kansas the maximum is 12 children under the age of 16 per home.  This limits the revenue potential for the home.  It is kind of like getting into the home rental business.  You are not going to get rich renting out one home because you can only charge so much for rent.  You would need many rental properties all producing a small profit to reach a sustainable and profitable level.  Likewise you will likely need multiple home day cares to really make the finances work well for you.
2. High Startup Costs – Because you will need to meet a long list of requirements set by your state (Example here), you will likely incur $10,000 or much more in startup costs to prepare a home to be compliant.  A few examples of startups costs include:
   1. Fire Extinguisher
   2. Toys indoor and outdoor
   3. Fence
   4. Bathrooms appropriate for children
   5. Office for reports and paperwork
   6. Plans, policies, and procedures
   7. Separate rooms for different age groups

The list can go on and on.

Financial Model Example for Home Day Care

So now I want to create a template that you can use to create your own financial projections for your in home day care.  I will publish the Excel template at the bottom of this post, but I am also going to show you screenshots on how to use our web app, ProjectionHub, to create your day care projections.

Sales Projections

Once you sign up for an account with ProjectionHub the first step is creating your sales projections.  In all likelihood you will be paid by the hour.
Hourly rates – for child care can vary drastically depending on your location, programming, experience, and most importantly the age of the children you are watching.  You can bill more per hour for an infant typically because infants require more caregivers per child.  Care.com has an excellent babysitting rates calculator that will estimate how much you can charge for care in your location.
Maximum revenue – Once you know an average hourly rate you will charge, the maximum number of children you can watch at any given time, and the number of hours you will be open each month, you can calculate your maximum monthly revenue.  This will be helpful because it gives you a quick dose of reality to determine whether this is worth your time.  As an example let’s say you are going to charge $7 per hour for a maximum of 12 children, for a maximum of 200 hours per month.  Maximum Total Revenue = $16,800/month
Now that we have some ball park numbers, let’s enter some actual sales projections into ProjectionHub:

So here is what I assumed to come up with these sales projection entries:

• There is a maximum of 3 infants because the typical child to caregiver ratio for infants is 3 to 1.
• The hourly rate for infants is $8
• The maximum number of billable hours per month for 3 infants is 600
• I started the projections in month 1 assuming a 50% utilization rate, so 300 billable hours
• I assumed a monthly growth rate of 3% for the first year
• For year 2 and 3 I kept sales at 500 billable hours per month

Assumptions for non-infants

• Up to 9 children
• Hourly rate is $6
• Maximum number of billable hours per month for 9 children is 1800
• I started the projections in month 1 assuming 1,000 billable hours
• I assumed a monthly growth rate of 4% for the first year
• For year 2 and 3 I kept sales at 1,500 billable hours per month

Cost of Goods Sold for a Day Care

Next you will need to enter estimated cost of goods sold for a day care.  Technically your labor costs and food costs should probably be considered cost of goods sold, but the problem is that we structured the sales projections by the billable hour.  So if we try to enter in wages and food costs in by the billable hour, I think we are going to have some difficulties, so I am leaving COGS blank.
Salaries
In this case your primary labor cost is for caregivers.  In our example we are assuming only 3 infants which means you will need 1 person caregiver at a time.  Let’s assume we pay the infant caregiver $12 per hour.  So we assume you will have to have this person 10 hours per day, 5 days a week, 4 weeks a month for a total monthly cost of $2,400 (Annually $28,800) plus employer taxes of approximately 10%.
Next for the non-infants we will assume that you pay $11 per hour for a annual cost of $26,400 plus 10% for taxes.  We will assume you will need 2 of these employees.

General Expenses for a Day Care

Next we need to add some general monthly expenses for a day care.  Here are expenses that I added:

• Accounting/Bookkeeping – $100/mo
• Insurance – $30/mo
• Maintenance – $50/mo
• Supplies – $30/mo
• Phone – $50/mo
• Utilities – $150/mo
• Food – $400/mo
• Rent – $700/mo  (you will likely pay rent or have a mortgage on the home)

Startup Costs for a Day Care

I would expect that you would want to have $20,000 in cash to start an in home day care.  $10,000 to pay your first few weeks of payroll and other expenses while  you wait to get paid from customers/government funding programs.  Then I expect the following startups costs:

• $1,000 in inventory
• $5,000 in renovations to your house to earn license
• $1,000 for equipment and toys
• $3,000 for furniture like cribs, tables and chairs

The total startup costs including the cash reserve is $20,000 so lets assume you are going to borrow $20,000 from the bank at 7% for 36 months.
We have now finished your projections, so let’s check out your results.


As you can see the first year is just marginally profitable, with a projected net income of $13,683.  This is your take home in the first year.  In years 2 and 3 we projected a fairly aggressive occupancy rate, and the net income increases to just under $50,000 per year.
So now the question is whether it is worth it to you?  You can see that if everything goes right you can expect just under $50,000 in net income per year and free cash flow of closer to $40,000.  Then you have to pay taxes on the net income and by the time it is all said and done you have to consider that you are going to have up to 12 kids in your house for 10 hours per day, 5 days per week.  Is being able to take home about $40,000 per year worth it?  You might decide that you can go get a job that is less stressful and produces the same amount of income.
No matter what you decide, it is important to know the facts and know your earning potential before you take the risk and make the investment to start an in home day care.  Good luck!
You can download the completed Da

到美国内华达州(Nevada)注册公司有啥好处?

世界企业家网站(bossline.com)提醒：内华达（Nevada）是公司最受保护的一个州。 其公司法吸引了许多美国公司和外国公司去当地注册,因为它有力地保护公司老板。 目前,在内华达注册的公司数仅次于德拉瓦州注册的公司数,在美国位于第二位。 一般来说,去该州注册公司有以下几个原因。

一是该州不征收州的公司和特许权税,仅收少额的年度维持费。 而且,该州没有个人所得税。 二是该州是美国两个不与国税局交换信息的州之一,另一个州是德州。 它与国税局没有交换协议。 国税局从该州不能获得公司的税务信息。 三是公司和所有人分开责任。 在内华达州,公司受到保护,其所有人、管理人员和董事也受到强力的分开责任保护。

在内华达注册公司的最大好处是：公司的面纱（corporation veil）很难刺破。 何谓公司的面纱？公司面纱刺破就是公司没有按照公司法运作时,导致法律诉讼,最后公司所有人承担债务。 也就是公司股东对公司的财产和债务应当承担债务责任。 假如债权人可以指证公司不遵守公司章程,让法院判定所有人和董事将承担公司的债务,即面纱被刺破。 在过去 26 年,内华达公司的面纱仅被戳破两次,而这两类案件都涉及到重大欺诈。

尽管公司存在非法活动,但公司的管理人员和董事个人都会受到相当的保护。 内华达的公司法允许保护所有的管理人员、董事、雇员、股东、公司代理的所有活动,只要他们以公司的名誉进行,并且他们有理由相信这是合法的活动。

内华达州法律对所有的公司的董事和管理人员均有一个有限责任的保护。 因此,内华达被认为对董事和管理人员最为友好。 例如,该州公司法保护管理人员不对公司损失负金钱责任。 在内华达,向公司董事发放多少福利也属于保密的范围。 假如你的公司出现官司,原告提出的赔偿要求超过公司和你个人财产的范围,你可以选择在内华达应诉。 在内华达,你就相对不用担心了,因为你不大可能须要承担这个债务。 但是,假如你在其它州注册,你很可能承担个人责任,即你的公司面纱就会被戳破。

由于内华达州取消公司联合债务,你在内华达不用担心与股东的联合债务责任。 责任分摊的裁决是,每人只对他或她自己导致的损失负责。 这样,假如你没有做错事,你赢的机会很大。 假如你个人被起诉,你在内华达公司将不会因为你要偿还债务而被迫解散。

在内华达,你仅需要一个合法的目的就可以注册一个公司（corporation）或有限责任公司（limited liabil-ity corporation）。 目前,美国有 14 个州对注册有限责任公司（ LLC）要求具有商业目的。 这些州是加州、印第安那、爱阿华、路易士安纳、马里兰、密西根、明尼苏达、纽约、北达科他、俄勒冈、宾州、罗德岛、德州和维吉尼亚。 否则,有限责任公司不能防止债权人讨债而保护公司的财产。

因为内华达没有州税,许多跨国跨州公司去内华达成立。 为了达到省税目的,公司一般使用以下名称,如智力控股公司（intellectual holding company）、管理公司、租赁公司（leasing company）、帐户代理（account factoring）和独立合约者。

是否要在内华达注册公司的主要考量是,你的公司在那是否有关联和真实存在。 税务局用下面的标准衡量与该州的关联：有无办公室、物流中心、仓库、雇员或者独立合约者；在该州仍从事某种活动。 有人会问世界企业家网站(bossline.com)：德拉瓦和内华达两个州都是避税天堂,对公司非常友好。 那么究竟去哪个州注册公司最好呢？因此,我们需要进行比较。

德拉瓦长期以来一直是美国许多工业的基地。 因此,德拉瓦州的官僚作风少,在德拉瓦注册公司比较方便简单便宜。 但是,内华达没有公司、特许权和个人收入税。 内华达在这几个税收上占据优势。 内华达对管理人员、董事、和股份东提供法律保护,比德拉瓦州相对更高。 内华达没有与国税局分享税务信息,而德拉瓦与国税局签订分享协议。 但是,在内华达注册公司可能会产生问题,因为国税局对内华达公司查帐比其它州的公司机率要高。