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Dec 5, 2022 | 8 min read

How to start a local home care business

Opening a local home care business is a noble ambition, one that requires you to devote time, energy, and resources to the care of others in your community. This guide will walk you through the basics of how to start a home health care business, from drafting a business plan to registering with your state to booking your first clients. 

8 steps to starting a home care business 

Like most small businesses, starting a home health care agency requires preparation, planning, and paperwork. Begin deciding on what kind of home care services you want to provide.

There are two basic types of home care:

  • Medical home care – This kind of home care is administered by medical professionals, such as doctors or nurses. Services can be short-term, like when a patient is recovering from an operation or hospital stay, or long-term, like caring for senior citizens. Medical home care aids provide wound care, administer medications, and monitor vital signs and mental health.
  • Non-medical home care – This service is more for an individual who needs assistance with day-to-day matters, such as bathing, dressing, cooking, and eating. It’s often provided by licensed professional caregivers instead of medical professionals.

You can also decide to provide both types of home care. That’s what Ryan Searight did when he founded Visiting Angels Georgetown, a Texas care company that provides service to seniors living at home or in assisted living facilities. 

While Visiting Angels Georgetown’s caretakers can administer medicine and provide 24-hour care for those recovering from surgery or an ailment, they also stop by senior homes simply to read a book or provide a home-cooked meal. 

Once you’ve decided on the home care services you want to provide and the caregiver duties included, the following steps will take you to the next stage of starting your home care business.

Step #1: Create a business entity 

Step one for launching a home care business is choosing and registering a business entity. Choose between three different legal structures based on how your business operates, how much you’ll pay in taxes, and what your legal responsibilities and liabilities entail. Here’s a breakdown of each: 

  • Sole proprietorship - A sole proprietorship is for those planning on opening and operating their home health care business on their own. As the business’ sole proprietor, you’re entitled to all of its profits and personally responsible for all of the business’ legal liabilities and debts.
  • Partnership - If you and one or more other individuals will run the business together, you might choose a partnership. You’ll each take a share of the profits, and have a stake in any losses and liabilities.
  • Limited liability company -  Registering your business as a limited liability company or LLC protects you from personal liability for business debts and legal consequences. An LLC can have multiple members or just one. For tax purposes, LLC members are considered self-employed and responsible for paying their own taxes. 

Consider hiring experts to work with you, like a lawyer and an accountant, especially if they have advised other local businesses in your area.

Step #2: Obtain an Employer Identification Number

Any business that operates in the United States must obtain an Employer Identification Number, or EIN, from the Internal Revenue Service. This is a number unique to your business. You’ll need it to perform vital business functions, such as:

  • Filing and paying taxes
  • Opening a business bank account
  • Hiring employees

Step #3: Register your business with your state 

Registering with the state where you plan to operate is necessary if your home care business plans on accepting Medicare and Medicaid patients. Requirements will vary from state to state, so check your secretary of state’s website to determine what applies to you. 

Generally speaking, the steps you’ll need to complete include:

  • Filling out the necessary paperwork
  • Verifying the uniqueness of your business name
  • Obtaining necessary licenses

Licensing requirements for home care businesses may vary in your county or city, so look up the specifics for where you live to complete and submit all application documents on time.

Step #4: Draft a business plan 

A thoughtful, actionable business plan is the backbone of many successful companies. This plan will serve as a guide for how your business will operate. It should include:

  • An executive summary – This will provide an overview of your business. It should explain the basics of your company, including your mission, your experience, and a summary of the services you plan to offer.
  • Company description – This is your opportunity to clarify your business goals. Rather than a general description, think of this as your mission statement. What do you want your company to achieve and stand for? What do you want its role to be in your community
  • Description of services – Include a comprehensive breakdown of all the services you plan to offer. If you want to specialize in senior care, then your services should be catered to senior citizens, and so on. Also include a pricing guide so potential investors, collaborators, and partners can see your revenue plan.
  • Marketing plan - With a platform like Nextdoor, you can easily connect with your most valuable clients, and neighbors. Set up your free Nextdoor business page to unlock an instant following, build awareness in your community, and keep them up to date on your services, and any new offerings.
  • Management and organization – In your business plan, include an overview of how your home care business is structured, detailing owners, management team, and roles and responsibilities.
  • Operational plan – The operational aspects of your business include the physical location, supplies, and equipment you’ll need, as well as the staff you’ll need to employ.
  • Financial plan – The financial section of your business plan should include a break-even analysis, cash flow projections, and balance sheet snapshots. 

Step #5: Tend to financial matters 

In addition to making sure you’re set up to pay your required taxes, you’ll also need to:

    • Open a business bank account – You can use your EIN to open a business bank account, which you’ll need for processing payments, paying bills, and running payroll. 
    • Secure operational funding -  It can cost anywhere from $40,000 to more than $300,000 to get a home care business up and running. That means you’ll want to have a good amount of capital and an airtight financial plan.
    • Obtain necessary insurance -To protect yourself and your business from legal issues, like malpractice lawsuits, explore your different insurance options, including professional liability insurance

Step #6: Develop policies and procedures 

Having a clear set of policies and procedures before hiring employees and finding clients can ensure that your business runs smoothly and efficiently. 

Write out policies and procedures in a formal document that covers the following topics:

  • Admissions procedures
  • Care planning
  • Employee certification requirements
  • Employee scheduling practices
  • Employee onboarding and training
  • Client billing and privacy protocols 

Step #7: Hire staff

Hiring qualified, caring employees is one of the most important steps for starting a home care business. As the face of your company, your caregivers and other staff aren’t only responsible for your clients, they’re partly responsible for your reputation. When hiring, be diligent about finding the best talent available. 

Allen Serfas, co-founder and president of Assistance Home Care in Chicago, is an expert in the home care industry. Based on his experience opening his own home care business, he notes, “it is imperative that home care agencies actually increase their expectations for whom they will allow to join their team and avoid the temptation to lower one’s standards just to ‘fill the shifts.’”

Depending on your business plan, you may need to hire:  

  • Caregivers
  • Care coordinator
  • Office personnel
  • Case managers 

With your free business account, you can post or advertise a job listing on Nextdoor to tap local talent right in your community.

Step #8: Find clients

As Candyce Slusher of Slusher Consulting shares, the best way to attract new clients to your home care business is by advocating for yourself. When it comes to your business vision and values, Slusher says, “There’s nobody better than you to relay that out into the community.” 

As a business owner herself, Slusher recommends coming up with five competitive advantages to help you stand out in the market. She suggests leveraging qualities and attributes like:

  • The experience level of your caregivers
  • The specialty programs you offer
  • Your business’ special certifications

Introducing your business and its unique attributes to your community on a platform like Nextdoor can boost your company image, build your reputation, and attract new clients in your area. 

Nextdoor: Connecting your home care business with your local community 

Discover the power of Nextdoor to bring your home care business to the community that needs it. Signing up for a business account is quick and it's easy to update and edit your page from there. Make sure to include your mission, contact information, and services so neighbors can easily get in touch. 1 in 3 households in the US is on Nextdoor, and 71% of neighbors have shared business recommendations there, so you’ll have a platform to jumpstart word-of-mouth marketing and hyperlocal advertising on any budget. 

Creating a business account is free, so get started today. Start finding your first clients and growing a successful home care business with Nextdoor.

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Author image Nextdoor Editorial Team At Nextdoor, we love local. The Nextdoor Editorial Team is dedicated to telling stories of local businesses, providing product education, and sharing marketing best practices to help businesses grow.