How much does it cost to Start a Home Care Business?

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How much does it cost to Start a Home Care Business?

Business Planning is the most important part of starting a home care business and the number one factor is cost. Determining what factors define what a new business owner will face is often challenging with out a little help from a professional who has seen the inner workings of the process. Cost association comes into play when determining what is the best sustainable way to operate in a fashion that can later generate revenue rather than being in the red. Franchising is often used in these examples because they have a recognized name and branding all in one package for someone with the proper financial resources. Entrepreneurs however can start their own brand and avoid the higher investment and royalties. Starting a home care business from scratch with out the cost of franchising and the factors that needs to be considered is what we will be covering in this example.

1. Home Care Business Formation

Formation of the business is the first factor in cost association of which will vary from state to state depending on the fee schedule set by that specific state. Choosing taxations preferences such as LLC, INC, or nonprofit also come into play when determining the formation fees. This process is often referred to as Articles of Incorporation or Articles of Organization fees. Filing the Articles of Incorporation/Organization is a way of declaring who is starting the business, declaring the business intentions, affiliations, and management operations. The Secretary of State is the most common state governing body that grants the ability to file, maintain proper business reporting, accept the name, and ability to do business. The governing system that is unique to that state will determine the eligibility, paperwork needs, and fees.


California Fee Schedule

Massachusetts Fee Schedule

Pennsylvania Fee Schedule

2. Home Care Licensing

Licensing of the business is the second factor as this will also vary from state to state depending on the needs of the business. The regulatory state agency sets a fee schedule for all applications usually the state department of health is the deciding factor but there are always exceptions to this as sometimes the licenses can be through other state regulatory agencies. The state regulation will usually convey what the license fees are set too and are subject to change as regulations are often reviewed and regulated. There are usually two or more types of licenses that need to be taken in consideration as there will be a home care business license and possible business license fees as well. Business licensing fees are often associated with the local ordinance which would be managed by the town hall or the county office depending on the state.

Examples: License Fee Schedules (Perhaps a link to a page with all the links to all states)

California Home Care License Fee Schedule

Washington Home Care License Fee Schedule

3. Office Space

Selection of proper office space is the third factor whether a lease is needed or if there is a viable space already available that is compliant with the Americans with Disabilities Act Standards for Accessible Design.  Fire Safety codes and other building codes may be a factor which may require additional fees from the municipality that regulates the zoning and property uses. Having a proper emergency plan set up utilizing property site and plot plans is also very important as well depending on building these plans may have to be professional made which can also become a potential fee. Renovations and the needs for permits can also be a part of the office space cost which depends on if the office space is adequate for the agency’s requirements.


4. Supplies

Supplies are the fourth factor as the need for equipment, furniture, computers, printers, shredders, fax machines, and safety equipment would be needed in order to properly have the employees work. Proper office set up is a big part of the initial budget. Utilities are also factored in as well such as phone & fax lines, electric, electronic visit verification software, customer relations software, etc. These basics will usually be required when dealing with insurance companies for payment and possible surveys. Depending on what the budget is set to and needed will also largely affect the final cost of operations

5. Insurance

Insurance is the fifth factor as no one can be unprotected when it comes to home care and is mandatory in most states. General / Professional liability insurance rates are set by the regulations of the state the recommended and most common set up for start up agencies is 1 million per occurrence and 3 Million aggregate which means up to 1 million per occurrence and 3 million total coverage. Workman’s compensation insurance will be needed for the agencies employees to be covered in case of work-related accident and is required in most states. Surety Bond also known as a Infidelity Body is a form of extended coverage that will cover the agency in the event of theft or other incidents that are not normally covered by the other types of insurance and can be required by certain state regulatory agencies. The amount of the bond will vary depending on the requirement set in the regulations in most cases they are usually for around $10,000 to $25,000 in which the agency will have a plan to pay estimably about 3 percent of the total as portion of the insurance payment. The insurance proof and verification is a requirement for most state licensure agencies to grant a license meaning the insurance will have to be purchased and active before application. The estimated cost of insurance can be anywhere between $3,000 to $5,000 for the first year.

6. Staff and Payroll

Staffing requirements and payroll are the sixth and one of the most important aspects of costs associated with home care agencies because with out the required staff a home care agency simply cannot operate. States that require a registered nurse(s) to supervise home health aides can be a huge cost if the owner(s) of the agency and is not a registered nurse is an example where payroll will be a higher cost. The cost variable here depends upon the state regulations and what resources are already available to the proposed owner. Management of the agencies usually has a set regulation standard in which certain educational and background check requirements are mandatory and must be followed. Background check processes often carry a fee which will vary from state to state and in most states be a requirement to operate. Payroll if employing staff at an agency will have to be closely considered as a payroll company or payroll software will be needed to pay the employees.

Examples: Payroll Companies


Examples: Payroll Software

Quick books

7. Marketing

Marketing is the seventh factor as it’s the most important after the license is active. This will be the investment that will allow the business to make money and be profitable. Marketing materials and advertisements will share the companies mission plan and brand with potential clients. Development of a logo that will brand the agency and be used everywhere. Website development will have to include domain and hosting purchases and probably hire a developer to produce the website. Pamphlets / brochures, notepads, business cards, and other marketing materials will also need to be produced. Hiring Marketers or a marketing company can also help advertise the business as well. These costs can add up but it is well worth the investment.

8. Consulting

Consulting is an optional cost but can be the best decision a new home care business owner can make. Seasoned Experts can make navigating the start up process a breeze in comparison to navigating the processes without guidance. Depending on the level of purchase a consulting team can help you form your business, get licensed, make a logo, make a website, produce marketing materials, help with marketing training and much more. A good consulting team make it so you don’t have to walk the road alone. Call us today to set up a free consultation.

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