Grants for family child care?

 

Where are the Grants for Family Child Care Providers?

By Tom Copeland,published with permission

"Where can I get a grant to help me start or expand my family child care business?"

It's a common question for many family child care providers who don't have a lot of cash on hand.

The answer is discouraging.

The federal government does not offer any direct grants to family child care providers. Private foundations and corporations are unlikely to give grants to providers. Other than a few special programs, the only source of grants is through Child Care Resource and Referral agencies.

Child Care Resource and Referral

In most states, these agencies offer selective grant programs that are funded by the federal Child Care Development Block Grant and sometimes state dollars. Usually the grant cycle is every two years. Contact your local CCR&R agency for more information. They will know about any grant programs in your area.

Online Services

There are several online services (here and here and here) that purport to offer access to grants for family child care providers. These sites charge a registration fee of $30 and will send you a list of grant prospects. Although I haven't tried to use these services, I don't believe they are helpful because there are no federal grants directly available to you.

Has anyone tried to use these services?

Other Possible Options

Some states or private organizations may offer grant programs. One example is VOICE, a New York union that offers up to $500 grants to New York providers living outside New York city.

Why no Grants?

Why aren't there more grant programs available other than those through your local Child Care Resource and Referral agency?

Family child care providers are for-profit businesses. (Although it may not feel like it!) Few government programs or private foundations or corporations will support for-profit businesses with grants.

It would make little difference if you decided to set up a tax-exempt non-profit organization to operate your business. First, it would be extremely difficult to establish a tax-exempt organization when you serve so few children. Second, organizations that might have money are reluctant to deal with businesses that serve only a handful of children.

Loans

There are a few more opportunities to get a loan versus a grant. See my article "Where to Get a Loan."

What other sources of grants or loans do you know about?

Tom Copeland - www.tomcopelandblog.com

Image credit: usuchild.usu.edu

However, family child care is one of the few businesses for which you don’t need virtually invest money. Start by reviewing what the standards ask your state license. In Illinois you are asked to have a smoke alarm, a fire extinguisher A, B and C , and from January 2014 Radon test . You also need small beds where napping children - do not support lying on the floor mats! - , which costs around $ 28 each. Personally I'd recommend you purchase many building blocks Duplo Lego- type, because it is one of the few things that entertain children up to 30 minutes straight. The rest of the materials that you need them can get them little by little, when your business is in place. Many of them can make yourself, or buy them at garage sales and thrift stores.

Additional expenses are physicists to his aides, substitutes and all people living in the house, which can be covered by your insurance. The first physical including TB test, which can be done at the Health Department for $ 10 per person. Also need training CPR / FA, if you take it with us the cost is $ 60 dólaes , call you to Lucrecia Nieto at 847-625-4231 to sign up . You also need the training Kids Syndrome Shaken Baby and Sudden Death ", that can cost $ 7.00 in your CCR & R agency. Other mandatory training is "Forced Delator / Mandated Reporter", which can take free internet. (www.state.il.us/dcfs/child )

Save ALL your records of expenses from the moment you decided to start your business, including miles used. If you don’t have receipts, make a note: On 01/05/13, at 123 Martin Av. , $ 2.00 for a used puzzle. 5 miles on 1/31/13 to go to training "shaken infant syndrome”. Normally, with all your tax deductions , such as income or margage, billes, devaluation of the house by using the own home business, the first year losses are declared in the Income Tax, and may receive credit for low income. Use that money to finish assembling your business.

Offender watch. Lake County sheriff's office

 

Offender Watch. Lake County sheriff's office.

Welcome.

Our office is pleased to provide Offender Watch® for the citizens of Lake County . Offender Watch® is the nation’s leading registered sex offender management and community notification tool with hundreds of leading agencies in dozens of states utilizing it. Lake County ’s law enforcement utilizes Offender Watch® to manage and monitor the whereabouts, conduct and compliance status of the registered offenders in Lake County . Offender Watch®provides the most accurate and timely information available and now this information is available to you.

Offender Watch® is updated instantaneously throughout the day as offender addresses and other offender information is updated in our office.

You may enter any address in the county and see real-time information on the publishable offenders within the specified radius of the address you enter.

Offenders move frequently, so instead of having to check the maps on a weekly basis, the best way to stay informed is to take advantage of our free email alert system. You may confidentially register as many addresses in the county as you wish, and we will continuously monitor the addresses and send you an email alert if a new offender registers an address within one mile of any address your register. There is no cost for this service and no limit to the number of addresses you can register - the email address and physical addresses are all confidential. Tell your friends and neighbours and be sure to register your home, school, work, gym, day care, park, soccer field, parents or children’s homes- any address of interested to you.

The Lake County Il . Sheriff’s office maintains this Offender Watch® portal as a community service. Be sure to visit the Safety Tips page and review the information we have provided under the Community Awareness Fliers or the other links. You may print fliers for you use to distribute to your club, school, library or group.

If you have any questions about Offender Watch® or have any information about the compliance status of any offender in Lake County or have any questions about our community awareness program, please contact our office email administrator Jeff Burkin at Jburkin@lakecountyil.gov Thank you.

Expanding to A Group Home.

 

Should You Expand to a Group Home?

By Tom Copeland. Posted with permission.

The information concerning the specific case of Illinois, has been added by Angel Olmedo.

 

Expanding your family child care business may sound like a good idea: you will earn more money and be able to accommodate more families.

 

But, before you take this step you should take into consideration some additional consequences:

 

Each state has its own child care licensing rules that govern how many children you can be in your care. Check your state regulations to learn about possible additional requirements: more training classes, more indoor and outdoor equipment, more space that needs to meet licensing requirements, and additional staff.

 

Additional Staff

 

Often the biggest change when expanding your business is the hiring of an assistant. This may be required under your state's law or something you want to do on your own. As I've written about before, anyone who is helping you care for children should be considered your employee, not an independent contractor.

 

This means you will pay Social Security/Medicare taxes, federal and state unemployment taxes and perhaps have to purchase workers compensation insurance.

 

Let's look closely at these costs:

 

If you paid an employee the federal minimum wage ($7.25 an hour) for 40 hours a week this equals $290 a week. Your share of Social Security/Medicare taxes are 7.65% and federal unemployment is .06% for a total of 7.71%. State unemployment taxes vary a lot as does the cost of workers compensation insurance. We'll use an estimate of 3% state unemployment tax and $20 a week for workers compensation. Total weekly cost to you: $341 (7.71% + 3% + $20).

 

If you cared for two full-time additional children you would need to charge $171 a week to cover these costs. If you cared for three children you would need to charge each $114.

In addition, you are likely to have higher food costs and perhaps pay for some additional supplies or training for your employee.

 

Therefore - if you pay minimum wage for a full-time assistant you will probably need the income of between two and three additional full-time children to break even financially. Run these numbers for your own situation.

 

For Illinois the minimum salary is $ 8.25 per hour. If you need your assistant on the first turn, when children come to the school, and also when they return from school, you will have your assistant for 10 hours, that is, you will pay $ 85 per day, about $ 1,785 monthly. Most of the providers don't pay them as employees, which is what they really are, but as professionals hired, so you will not count the cost of social security, medicare, unemployment. Normally with extended license you care 4 kids over halftime, and you will be paid 1192 per month. That is, you lose money. In the summer months if you can put the children, the situation is different, you will receive $ 2,724 monthly for those children full time. That is, in the summer you are earning about $ 1,000 per month at the cost and risk of declare your employed as hired.
This is often the biggest surprise providers discover when hiring an assistant. A few providers have told me that their assistant makes more money per hour than they do! Some providers have dropped their assistant and no longer offer group care because of this and because of the inability to keep their enrollment up.

 

Non-Financial Issues

 

Deciding to expand your business to a group home is not all about money. There are the non-financial benefits of having another adult to be with you and the children all day. This can relieve some of the stress for you. Having another adult can also help increase the quality of your care, although this can be offset somewhat with the increased number of children. Your decision to expand your business should always be based on your plan to increase the quality of your care.

 

In addition, you should check with your local zoning laws and homeowners association bylaws to see if there are any restrictions to hiring an employee in your home.

 

It's up to you to decide whether to take the step to expand your business or not. You can make a smarter decision if you know what you are getting into.
Some providers need someone to drive your childrens to and from school, or take them to the school bus stop. Without that, you'll lose customers. Therefore, they hire this assitant although not earn more money. Another common case is a husband who can't work outside the home. In that case remains as an assistant in the house, and asks the license provider 12.

In Waukegan can not care more than 8 children, in Mundelein no more than 6 in all day.
For a group license -16 children fewer your own children under 12 - you will need another assistant, ie a total of two assistants. The calculation is similar. You can earn or lose money depending on the hours that  he works and what you pay him.

Write to aolmedo@childserv.org

 

What has your experience been in expanding to a group home?

 

Tom Copeland - www.tomcopelandblog.com

Image credit: www.mtdemocrat.com

For more information about the financial consequences of hiring employees, see my book Family Child Care Money Management and Retirement Guide.

 

Broking rules.

 

Your Licensor Says You've Broken a Rule. You Disagree. Now What?

By Tom Copeland. Published with permision.

 

How do you respond when your family child care licensor says that you have violated a licensing rule?

 

If it's clear to you that you were in violation of a rule, then you should recognize your mistake and take any actions required by your licensor to fix things.

 

But, what if it's not clear to you?

 

Here are two real cases.

 

Kelly is cited by her licensor for violating a rule that says that she must collect the name and contact information for each child's dentist. But a new family to her program says they don't have health insurance and don't have a dentist for their toddler. How can Kelly respond to her licensor?

What if the licensor's interpretation of a rule is different than yours?

Roberta's state licensing rule states that "dangerous and hazardous items must not be accessible to the children". Her licensor cites her for having scissors on the top of her refrigerator. Roberta doesn't believe she have violated the rule. Now what?

 

How to Respond

 

1) Discuss the violation of the rule with your licensor.

 

Ask the licensor to cite the rule you were charged with violating. You want a discussion where you can ask questions of the licensor and explain your side of things. 

Kelly asked her licensor, "How can I collect the name of the parent's dentist if they don't have one?" Her licensor told Kelly to make up a name. Kelly refused. I do not recommend putting anything in writing for your licensor that is not true.

Roberta told her licensor, "The children can't reach up to take anyting off the top of my refrigerator, so why is this a violation? Since they can't reach the scissors, this seems to me that they are not 'accessible.'"

When a child care rule is not clear to you and your licensor is not able to show you any written clarification of the rule, then it could be that both of you are interpreting the rule. Roberta might ask her licensor if there are any other rulings that have interpreted what "accessible" means?

Always be polite and be as calm as possible when talking to your licensor. Their primary job is to protect the health and safety of children and you must respect that.

 

2) Don't sign a licensor's report if it's not clear to you.

 

It's hard to argue about a licensing violation unless the violation is clearly stated in writing. So, if Roberta's licensor writes, "Hazardous item was accessible to children," Roberta should ask her to change the language to, "Scissor was found on top of the refrigerator." If the licensor won't agree to make a change, Roberta should make a note of this conversation so it can be raised later.

 

3) If you can't reach an agreement, ask to speak with the licensor's supervisor.

The supervisor may or may not be able to help you resolve your dispute with your licensor. In the case of the doctor's name, the supervisor said that she was in violation of the rule, even if no doctor existed.

Supervisors are in a more powerful position to determine an interpretation of licensing rules. Perhaps the supervisor will agree with Roberta about what "accessible" means. Maybe Kelly or Roberta can ask for a variance of the rule as a solution to the problem.

 

4) Ask the supervisor to seek clarification of your dispute from the state child care licensing office.

 

Going up the chain of command may be necessary if the supervisor hasn't convinced you that you are wrong. Kelly and Roberta can ask their licensor to request a clarification from the state child care licensing office. If their licensor won't ask the state for clarification, Kelly and Roberta can contact them directly. I have seen this work in some situations. If the state agrees with Kelly or Roberta, the matter should be resolved.

 

5) Ask your county/state representative for help.

 

Sometimes you may be dealing with a licensor or supervisor who won't listen to reason. Or you believe they are acting unprofessionally. In another case, a provider was cited for not having the proper records on file. But while the provider was outside with the children the licensor opened the provider's file cabinet and started going through her records without her permission! This is unprofessional and possibly illegal.

If you believe you are not being treated fairly, you may want to talk with your county or state representative. If your licensor is a county employee, your county commissioner has the authority to intervene. If you take this step, prepare a short statement summarizing your situation and ask for specific action. You may want to be reassigned to another licensor or you may want an apology.

 

6) Appeal your licensing violation.

 

If the licensor and supervisor are not willing to reverse your rule violation you can appeal their decision to the state licensing agency (not all states follow the same appeal process). It costs nothing to appeal (unless you hire a lawyer), although it may take months before your case is decided. In Kelly's case she appealed her case and lost! The state said that unless she collected the name of the dentist she violated the rules. Thus, she was forced to either refuse to enroll the family or lie. (What a crazy ruling.)

 

7) Work to change the law.

 

If you have appealed your case and lost, it may be worth considering trying to change the law. Talk to your state family child care association (if there is one) or other state-wide child care organizations for help. If Roberta loses her case she might want a new law clarifying what "accessible" means.

 

Conclusion

Wherever possible try to prevent a disagreement with your licensor . You can ask him / her what think is the solution. Often that makes he give you a possible and easy solution.

In the case of nonexistent dentist, the licensor was unable to give a good answer. But you can be creative. You can tell the mother something like "Select a dentist that you would come if the child had insurance and needed it" and even suggest places where uninsured are attended cheaply, or community centers. In Illinois we don't have that problem, but we have like, for example, with the child's pediatrician; many families don't have a pediatrician. You canput that he goes to the Health Department. Also they asked for another person putting the child in care; may be that the mother does not have another. But now, we can put the grandmother or other relative. The biggest mistake is to leave the question blank. Always put something. If absolutely no one else to put, write "No other person placing the child", and NA in the remaining questions.

Many providers are uncomfortable arguing with their licensor. They fear that if they do so their licensor may look more closely to find additional licensing violations in the future. I believe that it's reasonable to raise questions about licensing rules that are not clear to you. Be polite, but firm as you ask for a clarification or explanation of your licensor's decision. By following the process outlined above you should be able to resolve most conflicts.

But if your licensor finally think that you are not serving a significant rule and he isn't going to renew or he wants cancel your license, will ask him how to appeal that decision. You have the right to a fair trial, and DCFS must prove a violation important to leave you without a license. DCFS is not easy to remove a license. They need a very strong reason, and tested. It's easier to not renew it if there are enough violations not arranged during the 3 year of your period of license.

How have you resolved disputes with your licensor?

 

Tom Copeland - www.tomcopelandblog.com

When you sell your home: the tax.

 Will You Owe Taxes When You Sell Your Home?

By Tom Copeland. Published with permission.

A family child care provider faces two potential taxes when she sells her home. One you can probably avoid and another you cannot.

Tax on the Profit

First the good news. You can avoid taxes on the profit on the sale of your home if the profit is less than $250,000 and you are single, or $500,000 if you are married. (Note: legally married same sex couples can now take advantage of this tax break.)

So, if you are single and bought your home for $150,000 and sell it for $400,100, you will owe taxes on $100 ($400,100 - $150,000 = $250,100) because the amount above the $250,000 exclusion is $100.

If you are married, you would owe no taxes on the profit because it's less than $500,000.

As you can see, most family child care providers will not owe any tax on the profit on the sale of their home.

Tax on the Depreciation

This second tax is not avoidable. You will owe taxes on the amount of depreciation you were entitled to claim on your home since May 1997.

This is true even if you didn't claim home depreciation on your tax return!

Let's look at an example. Rosalie Ryder purchased her home in 2000 for $200,000. Her Time-Space Percentage is 40% each year. She entitled to claim a depreciation deduction each year of about $2,500 ($200,000 x 40% = $80,000 divided by 39 year deprecation rule = $2,500).

Rosalie does child care in her home until she sells it on December 31, 2013. She used her home for her business for 13 years. She will owe taxes on the amount of depreciation she was entittle to claim for the past 13 years, or $32,500 (13 x $2,500 = $32,500).

What if Rosalie didn't claim house depreciation for some or all of these years?

She would still owe taxes on $32,500! The IRS rule says that if you are entitled to depreciate your home, you will owe taxes on this depreciation even if you didn't claim it. Therefore, always depreciate your home!

Don't let someone tell you, "Don't depreciate your home because you will have to pay more taxes when you sell your home." Since you will have to pay these taxes anyway, there is no reason to give up the tax benefit of claiming depreciation. You will always come out ahead financially when you depreciate your home because the taxes on the depreciation will be less than the tax benefit of claiming the depreciation.

You will owe this tax even if you stop doing child care for years before selling your home.

You will pay either a tax rate of 10%, 15% or 25% on the house depreciation. (The tax rate will be based on your tax bracket in the year you sell your home.)

So, Rosalie will either owe $3,250, $4,875 or $8,125 in taxes. Remember, she will owe these taxes even if she didn't depreciate her home.

Note: I've simplified the above example to exclude the value of land, home improvements, and expenses associated with the sale of the home. See my annual Family Child Care Tax Workbook and Organizer for the chapter "Selling Your Home."

Other Issues

If you show a loss for your business in one year, you won't be entitled to claim house depreciation for that year. Therefore, you won't owe tax on home depreciation for that year.

If you are single and live with someone else who owns the home, you aren't entitled to claim house depreciation and therefore won't owe any taxes on it when the home is sold. If you are married and your spouse (including legally married same sex couples) owns the home, you are still entitled to claim house depreciation and so would owe this tax.

If you haven't been claiming depreciation on your home, you can recapture all previously unclaimed depreciation by filing IRS Form 3115 Application for Change in Accounting Method. If Rosalie had not depreciated her home between 2000 and 2013, she can claim $32,500 of previously unclaimed depreciation using Form 3115 by filing it with her 2013 tax return.

See my article: "How to Claim Previously Unclaimed Depreciation."

Conclusion: if you are thinking about selling your home, talk with a tax professional who can advise you about the tax consequences of home depreciation.

I've written two other articles about home depreciation:
"Should You Depreciate Your Home?"

"How to Depreciate Your Home?"

Tom Copeland - www.tomcopelandblog.com

Image credit:thebigorangepress.com

For more information about how to depreciate your home and the tax consequences of selling your home, see my annual Family Child Care Tax Workbook and Organizer.

Posted by Tom Copeland at 10:24 AM in Record Keeping & Taxes | Permalink

Ready for your retirement?

Retirement Quiz

By Tom Copeland. Posted with permission

Most family child care providers, like most taxpayers, are not saving enough for their retirement.

Many do not have a good understanding of how to plan for their retirement. 

 

Test your retirement knowledge by taking this short quiz.

 

1) Social Security payments will replace approximately what percentage of the current earnings of the average taxpayer?

a. 20% b. 40% c. 60% d. 70%

 

2) If a provider's only work was doing child care for fifteen years and she had a profit over $400 for nine of those fifteen years, would she qualify to receive Social Security benefits?

a. Yes b. No

 

3) You can start receiving Social Security retirement benefits at age 62. If you do so you will receive lower benefits than if you waited until your full retirement age of 65, 66, or 67 depending on when you were born. Under what circumstances might you take benefits starting at age 62?

a. Current bad health b. Immediate financial stress c. History of early death in your family d. All of the above

 

4) If you aren't saving enough now to be able to retire at age 66/67 what can you do?

a. Work beyond age 66/67 b. Save more now c. Live on less in retirement d. All of the above

 

5) If you save $35 a week and earn 8% a year in a tax deferred IRA, how much will you have in twenty years?

a. $10,232 b. $15,741 c. $25,655 d. $37,143

 

6) Can a single provider making a profit of $75,000 invest in both a SIMPLE IRS and a Roth IRA each year?

a. Yes b. No

 

7) If you invest in an index fund you are adopting what type of an investment strategy?

a. Passive b. Active

 

Answers:

 

1) 40%. Of course the answer for you may be different. To find out how much Social Security benefits you will receive when you retire, go to www.socialsecurity.gov and check out their benefits calculator. Because Social Security benefits will not replace all of the money you will need for retirement, you need to identify other sources of retirement income: income from your investments, earned income in retirement, other.

2) No. You must work at least ten years to qualify to reecive Social Security benefits.

3) D. For each year you take Social Security benefits before your full retirement age of 65, 66 or 67, you benefits will decrease. For example, if you start claiming benefits at age 62, they will be about 25% less than if you waited until you were age 63. Therefore, before deciding on when to start taking Social Security benefits you should consult with your local Social Security office or with a financial advisor who can advise you.

4) D. Most providers will not have saved enough to be able to maintain their current standard of living by relying on Social Security and the interest on their investments. Therefore, all of these options are viable. Other possibilities can include: move to a less expensive home, receive an inheritance or change your job to one that pays more.

5) C. $25,655 Even a small amount of money can quickly grow over time. This means it is never too late to start saving money now for your retirement.

6) A. All providers are eligible to set up and contribute to a SIMPLE IRA
 (regardless of your income). You can set aside up to $12,000 of your profit into this tax-deferred IRA (2013 limits). You can contribute an extra $2,500 if you are age 50 or older. The deadline for establishing a SIMPLE IRA is September 30th. Single providers are eligible to contribute to a Roth IRA if their profit is less than $112,000; married providers can contribute if their family's adjusted gross income is less than $173,000. You can contribute a maximum of $5,500 per person to a Roth IRA in 2013. If you are age 50 or older you can contribute an extra $1,000. You can set up and contribute to a Roth IRA before April 15.

7) A. Index investing means you are investing in a fund that identifies specific investments and then holds onto them indefinitely. For example, an S&P Index Fund invests and holds onto the 500 largest U.S. companies that comprise the S&P 500. Active investing is when the manager of a fund buys and sells various investments throughout the year. For example, the XYZ Fund might consist of investments in thirty different companies at the start of the year, but the manager could buy stock in ten other companies duriretirementng the year and sell the investments of seven other companies. A passive investing strategy will result in lower management fees because of lower transaction costs and taxes. Therefore, most index funds will beat the returns of active managed funds over time.

Score yourself!
0 correct - Time to start paying attention to your retirement planning!
1 - 3 correct - Good start!
4- 6 correct - Excellect!
7 correct - You are a master!
 

Image credit: www.ifa-fiv.org

For more information see my book Family Child Care Money Management and Retirement Guide

www.tomcopelandblog.com