Average Daycare Business Annual Income

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If you plan to become a daycare owner, first decide if you’ll be running the daycare out of your home or in an outside facility. Either way, owning a daycare isn’t a high paying business; but if you love working with children, it may be just the right fit for you.

The average daycare business annual income is around $40,000 and will vary from state to state, depending on many factors. Your location and the number of children you’ll be caring for are probably the two biggest factors that will define your income.

 

Location, Location, Location

Your location will play a huge role in your annual income, whether your daycare is in your home or at an outside facility. Not only will your state play a role in this, but it comes down to your city and even your neighborhood. Do you live in an area that has a high demand for childcare services? If you live in a densely populated city, this may be the case. You can charge higher hourly rates for childcare in these types of locations, but your real estate costs will also be higher.

States with high urban densities include California, New York, Nevada, and Hawaii, among others. Lower urban densities include states like New Hampshire, and states like Kansas that are in middle America, as well as some of the southern states.

Age of Children You Care For

What age children will you care for? Studies have shown that those caring for infants can command the highest fees, so as a daycare owner your annual salary will be higher. Caring for older children like preschoolers and school age children can still be lucrative, but you need to decide on the age you feel you are best suited for. if you provide care for all ages of children your annual salary will be greater than if you limit yourself to one age group.

Daycare facilities caring for the largest number of infants will earn the highest income. This is because infant care is much more labor intensive and as a provider, you can increase your fees accordingly. An infant is designated as a child from birth to one year old. There will be more diaper changes and more feedings your employees will need to administer to the infants you care for. Caregivers will also need to provide constant care and attention for infants, and you’ll need to provide separate infant care rooms with cribs and diaper changing and feeding areas.

Owner Responsibilities

As the owner of a daycare business you’ll be responsible for maintaining the facility, balancing the books, and fostering solid public relationships between parents and teachers as well as between yourself and parents. You will also need to make sure you satisfy all the legal requirements of owning a business. Developing your leadership skills and learning as much as you can about your business will help you keep it afloat.

Maintaining your daycare will include things like making sure the building is in good, safe condition. Plumbing is a big concern for daycares as is cleanliness of all equipment and toys used by children. Hire a building inspector to make sure your daycare space is in good and safe condition.

Legal Requirements

A license from the state your childcare business is located will ensure minimum requirements are met. Topics such as supervision of the children, child to teacher ratio, building safety including emergency exits, cleanliness, repairs, and potential dangers should all be taken into consideration. All children must be up to date on immunizations, and proper nutrition standards have to be met. Your childcare workers will also need appropriate training to work in a childcare situation.

Providing all of these requirements will be a big part of your financial outlay and will affect your annual salary. Plan ahead for these expenses and find ways to get them done in the most economical way. The National Database of Child Care Licensing Regulations includes contact information and websites for state licensing departments.

Daycare Supplies

Make your daycare as colorful and inviting as you can. A bright, happy environment attracts parents and the visual stimulation is good for children. You should also provide indoor and outdoor play equipment like swing sets, slides, monkey bars, ladders, kids love playing on them and challenging themselves physically. A good variety of equipment will increase your daycare enrollment and your annual salary.

You’ll need to invest in a wide variety of teacher supplies like shelving, bins, pens, and pencils. For the kids you need arts and crafts supplies like paper, crayons, glue, playdough, and paint. This list is in no way complete, and the number of supplies you’ll need for your business can seem endless and will need to be restocked often. Games and activities of all kinds will help your kids grow intellectually and develop skills that will ready them for school. Parents appreciate this kind of atmosphere.

Provide the best equipment you can afford for the children in your care. Educate yourself on recalled products and know that the most common area where children get hurt is on the playground. Discarding non-working toys and making sure all play equipment is in good working condition will be money well spent.

Tax Breaks

Whether your daycare is in home or out, you will have to pay taxes on your income. To make the best salary possible as a daycare owner, research what tax breaks you’re eligible for by going to the IRS website or consulting with a tax adviser. Tax deductions specific to the industry may include advertising charges to get your name out in the public, meal expenses, supply charges for art and recreation, continuing education fees for yourself and your employees. If you run your daycare out of your home, you might be able to make a deduction of the space in your home you use for the daycare.

If you’re going to claim this deduction for your home daycare, you must have a dedicated area set aside that is used exclusively for your daycare. The area can’t double as your living room, for example. If you should need a lawyer at any time for your daycare business, fees paid to the lawyer are deductible. Whether you operate an in-home daycare or one in an outside facility, make sure you save all receipts in an orderly fashion to use when tax time arrives.

 Be Prepared for an Emergency

As a daycare owner it’s your responsibility to have an emergency plan in place. Your plan should cover health-related accidents, fire, natural disasters and even violence. Keep parents in the know about your plan and how you intend to carry it out for each specific situation. Also keep your employees knowledgeable and trained on all the aspects of your plan.

Invest in fire extinguishers and smoke detectors and any outside training, like CPR for your workers. These are expenses that will cost extra but will pay off in the long run as parents and the community come to know and trust that their children are in the best and safest hands. Practice regular fire drills with employees and children as well.

Three Ways to Increase Your Revenue

If your daycare is in a brick and mortar facility and isn’t open on weekends, why not rent it out to other organizations that need a space, either temporarily or permanently? Groups who might need space include church groups, scouting groups, Weight Watcher groups and mommy and me groups. The list is endless, and you could potentially bring in an extra $1,000 a month this way.

Consider adding family-focused or child-supportive services and products to your daycare business. This can be done whether you have an in-home daycare business, or one located in a brick and mortar building. Run a children’s birthday party business on the side or a party planning business. Other add-on services you could provide include a hair-cutting service, child/family portraits, prepared dinners, sponsor enrichment programs like Bricks 4 Kids and make sure you get at least a 10% cut of the business they do.

Join affiliate/referral programs and get a commission each time someone buys a product or service off of your special referral link. You can create a list of specific children’s books and/or games that you recommend to parents. If they buy using your link, you get paid. It could be a great source of passive income.

Paying and Keeping the Best Teachers

The average daycare worker today is earning around $10.00 an hour. Daycare workers supervise and monitor children, prepare and serve meals, enforce good hygiene, change diapers, organize activities, develop schedules, and keep records. But this list isn’t complete because every daycare has its own special needs. If your workers are fulfilling all of their requirements, they are earning their pay, and they do a lot for their hourly wage.

Paying your teacher’s salaries is a big part of your operating costs, so it will really pay you to find the best employees you can, train and motivate them in order to keep them working and doing their best for the money you pay them.

Related Questions

  1. How can I increase my daycare income?
  • Advertise your day care in family and lifestyle magazines
  • Partner with child/education agencies that refer parents looking for the right day care
  • Market your daycare to offices and homes in your area with flyers and also online
  1. How should I set prices for my daycare services?
  • Conduct some pricing research on daycare centers in your area by going in person and searching online
  • Inquire of friends and family how much they pay for childcare and what services they look for in daycare
  • Calculating how much to charge is based on three things: Labor and supplies, overhead and profit.

Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.

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