One Nine Business

FAMILY CHILD CARE TRAINING PROGRAM

LEVEL ONE - UNIT NINE

THE BUSINESS OF FAMILY CHILD CARE

LEARNING OBJECTIVES:
1. Recognizing the importance of good business practice in operating a successful family child care program.
2. Reviewing regulatory and legal requirements, including the reporting of income for tax purposes.
3. Understanding the importance of utilizing written child care agreements and related forms with client families.
4. Recognizing the importance of maintaining appropriate child related, administrative and financial records.
5. Recognizing the importance of maintaining adequate liability insurance.
6. Understanding calculations of income and expenses for the setting of fees and the preparation of income tax returns.
7. Reviewing methods of determining child care needs in the community and of filling vacancies.

CHATTER BOX

"I really disliked the business side of care for a very long time. I used to just ignore it and hope it would go away. The result, of course, was that every time I had a new family in care I was digging around everywhere looking for a written agreement and usually ended up having to make one up from scratch. This meant that in my agreement with one parent I would get paid for Statutory Holidays and another agreement would leave it out altogether. Income tax season was a nightmare, I didn’t get half the deductions I was entitled to. Even though we were getting a refund most years, we never were able to file until the last minute because I spent months trying to find all the receipts I needed (and not succeeding). In short, I spent probably at least twice as much time as was necessary on the part of care that I liked least. I finally made a New Year’s resolution to clean up my business act. I went to a couple of workshops and had a friend help me develop a filing system that works. Do I love the business side of care now? Nope. Still dislike it in fact. But I spend much less time worrying about it now. Getting myself organized about the business of child care has enabled me to spend a lot less time on it and more time focussing on the kids."

THE BASICS As a family child care provider you are a self-employed small business operator. Managing the business aspects of care effectively can produce many benefits, including:
Increasing your net earnings through better financial management and the maintenance of required records to enable you to claim all the tax deductions you are entitled to;
Improving your relationships with parent/clients through the clarification, understanding, and mutual agreement about the responsibilities of both parties;
Increasing efficiency and reducing stress by developing, organizing and maintaining appropriate forms, records, receipts and files;
Providing more time to focus on caring for the children and less time spent on administrative tasks;
Enhancing the image of family child care by complying with all regulatory requirements and demonstrating a professional attitude in the operation of your family child care business.

REGULATIONS CONCERNING FAMILY CHILD CARE In Canada, child care is an area of provincial/territorial jurisdiction. Each province and territory sets their own legislation and regulations regarding child care in group or home child care settings.
There are two models of regulated home child care in Canada. Some provinces and territories license or contract with agencies to provide regulated care. Others directly license individual child care homes. While all of the provinces and territories currently have some system of regulated home child care, they also permit the provision of home child care outside the regulated child care system for a specified maximum number of children per home. The number of children permitted varies depending on the jurisdiction.
You should explore the option of working within the regulated child care system in your jurisdiction. It can offer many advantages and supports for caregivers and for families, including:
Financial incentives - Some jurisdictions offer operating, equipment and/or maintenance grants to licensed family child care homes; families who require financial assistance may be able to qualify for child care subsidies (most jurisdictions require that care be provided in a licensed/regulated child care facility in order to be eligible for subsidy);
Administrative assistance - Many child care ministries/departments and/or family child care agencies provide contracts, forms (e.g. child’s medical information, emergency contact, outing permission) and other administrative information and assistance to caregivers.
Resources, training and support - Most jurisdictions have available through their regulated system a variety of resources that may include orientation sessions and start-up assistance, workshops and/or courses, toy and equipment loans, home visits, mediation and assistance with problem solving, drop-ins or play groups for caregivers and children.

In addition to provincial regulations, some municipalities and local governments also have in place by-laws governing home child care. In some communities a business license is required to provide home child care. In others, the numbers and ages of children permitted in a day care home are restricted. It is important that you stay up to date with current regulations that apply to family child care in your community and province/territory and ensure that you are in compliance with any applicable laws. The blue pages of your telephone book provide listings of federal, provincial and municipal government offices to assist you in gathering the information you will need.

YOUR EARNINGS Your earnings from family child care are affected by a number of factors: The demand for child care in your community, the 'going rates' for care, the number and ages of children you care for and your own child care experience and training.

If you are new to care, explore the demand for family child care in your community:
    Think about your neighbourhood or community. If it is sparsely populated, or populated primarily by older families you may experience some difficulty in finding clients. If, on the other hand, it is a heavily populated area with many young children and working mothers, a quality home child care program may be very much in demand. Check the volume of advertisements in local newspapers and on community bulletin boards of parents looking for care and caregivers offering care. Talk to friends, neighbours and acquaintances in your community about their experiences in looking for care. Talk to other caregivers, church and school staff or volunteers, personnel offices of major employers in your area and local child care programs to discover whether the demand for child care is steady. Ask:
1.   Whether they feel that there is a demand for child care in your community;
2. What ages of children need care;
3. Whether there are particular child care needs in terms of hours and days of care (e.g. for shift or part-time workers)
4. Whether they feel a quality home child care service could succeed in attracting   clients.
If the results of your inquiries are not as encouraging as you would like, this doesn't mean that you have to give up the idea of starting to provide home child care. If this is work you really want to do and you are committed to providing a quality service to children and families, with active and effective marketing you will succeed in finding a clientele. But you should be aware of the demand for care in your area as a measurement of how long it might take you to find clients.

CHATTER BOX

"The best thing I did when I was thinking about providing care was going to meet a couple of other caregivers and spending some time with them. A friend referred me to one caregiver and I just called an ad from the newspaper to contact the other one. I couldn’t believe both were willing to have me spend a day with them, watching them work and finding out what the job was really like. Both turned out to be a great source of support for me especially in my first year of care. I highly recommend meeting other caregivers to anyone thinking about doing this. I also think getting together regularly with other caregivers is a must for anyone who is providing care."

Making decisions about the ages, numbers of children, hours and days of care:
Your earnings are generally based on the number and ages of children you care for, the hours and days you provide care, the expenses you incur and the fees you charge. Determining the number of and ages of children and the hours and days of care requires some decision-making on your part.
Consider your own preferences, the needs of your family, the type of program you want to offer and the demand for care. Generally speaking, there is always a high demand for infant care. Part-time care, that may be two or three days a week or a partial day five days a week, and before and after-school care are also high on the demand list. Parents seeking care for shift or unusual hours also experience much more difficulty finding care. Full day care spaces for two to four year olds tend to be somewhat harder to fill as there is more competition for this age group with nursery schools, day care centres and kindergarten programs available as alternatives.

Setting your fees:
Of course your earnings are effected by the rates you charge for care. If your rates are not determined by the system you work with, you have to set and periodically review and change your own fees. To determine your rates you should consider several factors, including your training, experience and the type of care you intend to offer. However, a significant factor in determining your own rates will be the rates charged by other caregivers in your community. If there is a caregiver association, child care resource and referral or support program, family resource centre or home child agency in your community, contact them for information about average rates in your area. If such programs are not available, contact other caregivers in your community who you already know or who are currently advertising for clients and ask them what their rates are. Your rates do not have to be the average. In fact if you feel that your training, experience and the quality of care you are offering deserves rates well above average that is your decision. Being aware of the average rate will however, allow you to be aware of what potential clients may expect to pay for care.

How your child care policies impact on your earnings: Note: If you are participating with a child care agency or are a licensed operator, the system may have regulations regarding your policies. Check with the system before implementing or changing policies.
There are a number of questions that you should consider in terms of your child care policies that directly affect your earnings. Such questions include:
1. Will you charge by enrolment? (that is, will parents pay for the space days when the child would normally be expected to attend, whether the child attends or not)
2. Will you charge for: parents’ holidays?
parents’ illness?
child's illness?
caregiver's holidays?
caregiver's illness?
statutory holidays?
3. Will you reduce your rate for an additional child from the same family?

ACTIVITY

Consider the questions above regarding payment by enrollment, for holidays or illness, and for additional children from the same family. What do you consider fair? Why would you decide to charge or not charge in some circumstances?

INCOME TAX AND RECORD KEEPING An important responsibility of operating a business is the maintenance of accurate and complete income and expense records for income tax purposes. Maintaining such records also ensures that you will be able to make all the deductions from your child care income that you are entitled to as a self-employed person. You should maintain records and supporting documents (receipts, bills, invoices, etc.) for:
1. Any income from your child care business;
2. Attendance records for each of the children in your care;
3. Any expenses related to your child care business.
Deductible expenses which may be wholly or partially deductible for tax purposes and for which you should save receipts, bills, invoices, etc. include:
- accounting and legal expenses;
- automobile expenses;
- bank charges;
- capital cost allowance (depreciation for larger items purchased in whole or in part for child care use like a refrigerator or play structure);
- field trip costs;
- food;
- household supplies (e.g. cleaning and paper products);
- household expenses (e.g. heat, light, gas, mortgage interest and taxes, rent);
- insurance;
- play supplies;
- postage and stationary;
- repairs and maintenance of home and equipment;
- telephone charges related to the child care business;
- training;
- wages paid to an assistant, for alternate care, or for child care for your own children while you attend training, shop for the child care business, etc.
* Note: This list is not exhaustive and you may have other expenses which can be deducted for tax purposes. If in doubt about whether an expense is deductible, maintain all receipts and contact Revenue Canada for clarification.

ACTIVITY

Make a list of expenses you incurred today that were partially or fully a child care expense.

INSURANCE As a small business operator you should ensure that you are adequately covered by liability insurance. Such insurance should provide coverage in the event that a child, parent or other person visiting your child care business is injured on your premises, or in the case of the children, while in your care or the care of an assistant or alternate. When providing family child care, you are in fact using your home for business purposes, so your normal householder’s insurance policy may not cover children or others in the event of injury. Liability insurance for family child care normally comes in one of two forms. It is sometimes added on as a rider to your existing household policy. In other circumstances a separate liability policy for the child care business is used. Ensure also that your policy provides coverage when the children are on outings with you or your alternates or assistants. Your insurance broker or agent should be able to assist you in obtaining the necessary coverage and in recommending an amount of coverage appropriate to your needs.
If you are using a vehicle to transport children ensure that your automobile insurance will cover children in the event of an accident.
You should also consider acquiring disability insurance, in the event that you suffer an injury or a long-term illness. As a self-employed person, you are not entitled to Employment Insurance in the event that you are unable to work for health reasons.
If you are not living with a partner who provides you with coverage under a medical and dental insurance coverage, you may also want to explore the availability of a group plan through a child care organization or to contact your local Better Business Bureau to find out whether there is a Small Business Association in your community or province - they are another potential avenue for a group medical and/or dental policy.
Ensure that all communications regarding insurance coverage with your agent(s) or broker is in writing to prevent misunderstandings.

BUSINESS FORMS AND INFORMATION     In this section we will discuss a number of business forms important for your family child care business. Some of these forms, like the written agreement and children's medical history and emergency contact and medication authorization forms are essential. Others forms, like the child care policy statement and consent forms for outings are tools that experienced caregivers find invaluable. Remember, your child care agency or licensing office may provide, or have regulations regarding your child care policies and those must be complied with.
Child care policy statement:
You should think through and put in writing your child care policies regarding:
your child care philosophies;
your child guidance views and practices;
- financial issues (e.g. will you charge by enrolment, for holidays, sick days, etc.);
- children's illness, that is, how ill is too ill to come to care;
- under what, if any, circumstances will you administer medication to    children in care (e.g. "only prescription medications in their original container   will be administered with written instructions from the parent");
- who is responsible to find alternate care if the caregiver is not      available (parents or caregiver);
- your views and practices around child guidance, toilet training, parent    participation, etc.;
other issues of importance to you.

Written agreements:
Unlike your child care policies, which simply state your policies and how you operate your family child care, the written agreement is a mutual agreement between the parents and caregiver regarding the services which you are providing and for which the parents are paying. Your written agreement should include:
The child, parents and caregiver's name and address;
The term/length of the agreement (e.g. one year);
The hours and days for which care is being provided;
The rate and frequency of payment;
Any additional financial provisions (e.g. payment is/is not required for statutory holidays,
child’s absence, rates of overtime payment);
Provisions for terminating the agreement;
Any other issues (e.g. responsibilities of parents and caregivers) that you wish to include in the agreement;
Signature and date areas for both the parents and caregiver.

Medical history and emergency contact forms:
You should have a completed medical history and emergency contact form completed by parents before care begins. Information that should be recorded includes:
The parents' name, home and work addresses and telephone numbers;
The name, home and work addresses, telephone numbers of at least one emergency contact if parents cannot be reached in an emergency;
The name, address and phone number of the child's physician;
The child's:
name, address and date of birth;
health insurance number;
record of immunization;
blood type;
known allergies (including medication allergies);
existing conditions;
history regarding childhood ailments;
information regarding susceptibilities (e.g. prone to ear aches, headaches).

ACTIVITY

Make a list of administrative, consent and information forms provided by the system you work with or are licensed by. If you are working independently, identify some possible sources of forms that you might access.

Medication authorization form:
It is an important practice, before agreeing to administer any medication to a child in your care, to have parents complete and sign a form that includes the following information:
The child's name;
The amount of the dosage;
The time of the dosage;
Special instructions for administering (e.g. before or after a meal);
Possible side effects that you should be looking for;
The date that administration of the medication should begin and end;
The parent's signature.
Outing consent forms:
Outing consent forms are often handled in one of two ways. Some caregivers have parents sign a specific consent form for each outing or activity. These forms would state:
The child's name;
The parent's name and signature;
Date of the outing;
Location of the outing;
Method of transportation to and from the outing;
Any other information (e.g. admission fees, or special items that the child should bring on the day of the outing).
Other caregivers prefer to have parents sign a general consent form. Such a form may state that the parents give their consent to the caregiver to take the child on field trips or other outings, by automobile, bus or on foot. These consent forms also include information such as the child's name, the parent's name and signature, and the date on which the form is signed.

MAINTAINING ADMINISTRATIVE AND FINANCIAL RECORDS An important part of taking care of your business is maintaining files and records. To keep the information you need in an organized way, you must develop a system for filing and storing records.

CHILDREN'S FILES Maintain a file for each child that includes:
Child care agreement
Medical information/history form
Emergency contact form
Child Information form and/or notes on child's habits, preferences, child care experience, family members, etc. from the pre-placement interview
Updates on child's progress and notes from meetings/interviews with parents
Completed medication authorization forms
Completed outing consent forms
Completed accident/illness reports

FINANCIAL FILES Receipts, invoices, bills (maintain a separate file for each category of expense, for example food, play supplies, household expenses, automobile expenses)
Expense journal
Attendance journal
Income journal
Bank statements and cancelled cheques
Budget
Statements of income and expenses from previous years

BUSINESS FILES Insurance records
Licensing records/agency agreements
Written agreement forms
Medical information/history forms
Emergency contact forms
Medication authorization forms
Outings consent forms
Advertisements/flyers
Receipt forms

PROGRAM FILES Newsletter/magazine/journal articles relating to child care
Brochures, pamphlets, etc. related to child health, safety, nutrition
Arts, crafts and activity ideas
Menu plans and recipes
Information on community resources, places to visit and events

PERSONAL FILES Résumé
First Aid Certificate
Diplomas, certificates, and other proofs of participation and/or completion of diploma programs, degrees, courses, seminars, conferences, workshops, etc.
Letters of reference, letters of thanks from clients
Association memberships
Newsletters
Information on upcoming conferences, workshops, etc.

NOTEWORTHY For quick reference maintain an updated index card for each child that includes the following information:
Child's name
Date of birth
Address
Home Phone #
Health Insurance #
Doctor's Name
Doctor's Phone #
Allergies
Existing medical conditions
Parents name
Parents place of work
Parent(s) phone # at work
Emergency contact name
Emergency contact phone #
Make a duplicate card for each child to take with you on any outings with the children (if you usually travel by car, keep the cards in the glove compartment).

NOTEWORTHY - Label your file folders clearly.
- If some of your files contain a lot of smaller items (cash register tapes for play supplies, etc.) tape or staple the sides of the files closed so items don't slip out.
- Keep anything that has to be filed in a file basket or large envelope for weekly or monthly sorting and filing.

How long you should keep files will depend on the type of file and the circumstances. You should maintain a day care child's files for as long as the child is in your care and for at least one year after care ends. Financial records should be maintained for at least six years after filing an income tax return. You will likely want to keep your program and personal files from year to year.

CHATTER BOX

"I love my program files and keep them forever. When I started two new little ones last year I dug out files from 3 years ago when my school-agers were toddlers and preschoolers. It was fabulous to come across all those ideas, recipes and activities - just like taking a refresher course! One of my school-agers joined us in a finger-play the other day (he was home for a professional development day from school). At the end, he sat back on his elbows and said, ‘This takes me back to the olden-days when I was young.’ And he’s all of six now!"

ADVERTISING One of the most effective (and least costly) methods of finding clients is through word-of-mouth. Parents looking for child care are more comfortable when someone has been personally recommended to them and often start their child care search by asking friends, neighbours, family members and others for recommendations. Once people in your community become aware that you are providing quality child care, you will find that many of your new clients come through referrals from other people. So whether you are an experienced or new caregiver looking for clients, the most important thing you can do is to talk to people in your community, including:
family;
friends, and parents of your children's friends;
neighbours;
your partner’s co-workers;
other providers in your area;
neighbourhood schools (speak to the secretary);
neighbourhood churches (speak to the secretary);
major employers in your area (speak to the personnel department);
day care centres and nursery schools in your area (speak to the Director).

ACTIVITY

What has been your most effective means of finding client families? Think about the children in your care now. How did you make contact with those families?

    Both for child care referrals, and for the many other supports and resources you can receive, you should consider registering and/or participating with:
     child care resource and referral programs, registries and referral services;
family/home child care agencies;
family resource centres/programs;
community centres, community information offices;
caregiver associations.
    If you are not getting sufficient response through your community contacts, (this is often the case when you are just beginning to provide care), you'll want to try some other methods. Start with the least costly and most practical for you, then try other methods as required. Family child care is like most businesses, it takes time to get started and to find the right clients.
Post notices on bulletin boards in:
local libraries               community centres
major employers              apartment lobbies
supermarkets          laundromats
family resource centres      drop-ins, play groups
Place ads in:
      community newspapers
Penny Saver/Bargain Finder/Bargain Hunter-type publications
local newspapers
community radio bulletin boards
Respond to parents' advertisements for care in:
community newspapers
Penny Saver/Bargain Finder/Bargain Hunter-type publications
local newspapers
notices posted on bulletin boards
Distribute notices/flyers to homes in your area.

ACTIVITY

Write up a thirty word ad and a sixty word ad for your community newspaper. Compare your ads with those already in the paper. How would you improve yours?

ADVERTISEMENTS/NOTICES Make your advertisements and notices brief, informative and appealing. Check other caregiver's advertisements to get ideas. Keep the following points in mind in developing your advertisements or flyers:
- Provide basic information including your location, phone number, hours and days of operation. Some caregivers prefer not to put their name on advertisements and instead simply list a phone number or the name of their family child care business and the best time of day or evening to call for information;
- Avoid using negatives. For example, say "Will care for children two years and over," instead of "no infants."
- Even in a short advertisement, use words and phrases that tell something about you and your child care (e.g. warm, caring, active, friendly, quality home child care, home-away-from-home).
- If you are placing an advertisement in the newspaper, investigate and compare costs carefully. It is sometimes less expensive to put an ad in for a full week than for two or three days. Also, check to see if the ads are listed alphabetically. If so, and if there tend to be a large number of ads for child care, consider wording your ad so that it doesn't end up as the 50th ad on the page.
- Use an illustration on notices and flyers to attract attention. For instance, have a child’s drawing at the top of the flyer and put the information under the illustration. Photocopy the flyer and have the children help you colour the pictures. Make sure that you have tear-off sections at the bottom of notices with your phone number on them.

for more information

Publications/Books:
Using Your Home For Child Care - available from Revenue Canada
Home Child Care: A Caregiver’s Guide, Lee Dunster, available from Home Child Care Publications, 2085 Alton Street, Ottawa, Ontario K1G 1X3

Other resources/people who can help:
Provincial Ministries responsible for child care;
Child Care Support Programs and Family/Home Child Care Agencies
Family Resource Programs
Caregiver and Child Care Associations and Organizations
Revenue Canada

EVALUATION OPTIONS:
8) ASSIGNMENT
9) QUIZ

ASSIGNMENT

Develop a written agreement to use with parents. Include the information outlined for written agreements in this lesson, as well as other issues that you feel are important.

QUIZ

1. What are at least three benefits of working within the licensed child care system (e.g. becoming a licensed caregiver or working with a child care agency)?

2. What are at least three of the factors that will affect your earnings?

3. What should you consider in deciding the number and ages of children you will care for?

4. What are the three types of information you must maintain for tax purposes?

5. List at least five child care expenses that are fully or partially deductible for tax purposes.

6. What forms of insurance should you have in place when providing home child care?

7. List at least five areas about which you should develop child care policies.

8. What information should be included in a medical history and emergency consent form?

9. What types of information should you be maintaining in each child’s file?

10. Marsha is an experienced caregiver who has just moved to the area. What are at least four ways you would suggest to Marsha to advertise her child care services?