Before you set foot in a client’s home, it helps to be clear about what you’re selling. It isn’t rides or groceries. It’s trust. If an older adult, or their adult children, don’t trust you to come into the house, you’ll never get the chance to do anything else.
Everything about how you set up the business either builds that trust or wears it down: your state registration, your insurance, your agreements, even the email address on your card.
This is general information, not legal, tax, or insurance advice. Check each step with your state and with an attorney and accountant who know home care.
Check your state’s licensing rules first
Do this before you spend money on a website or insurance. Some states license non-medical home care agencies, some require only registration, and some draw the line between non-medical and medical care in very different places. A service that needs no license in one state may need one in the next.
Start with your state’s department of health, or whichever agency oversees home care, and find out:
- Whether your services need a license, a registration, or neither (this can depend on whether you offer hands-on personal care)
- Training hours or topics required for caregivers
- Background check requirements for owners and caregivers
- Required written policies, client rights notices, or contract language
- Inspections, and how long approval takes
Also check your city and county for general business licenses. If anything is unclear, ask the state agency directly and keep a written record of the answer.
Set up the basics
- Business structure. Form an LLC or corporation with your state. An attorney and accountant can help you weigh liability protection and taxes.
- EIN and bank account. Get a federal Employer Identification Number and open a business bank account so business and personal money never mix.
- Payroll taxes. Register for your state’s payroll taxes when you hire your first employee. (Part 5 covers payroll.)
Don’t skimp on insurance
Talk to an insurance agent who works with home care, and tell them every service you plan to offer.
My rule: never buy the minimum. I know owners who started with bare-minimum coverage to save money. In this work, one bad incident, like a fall, a car accident with a client in the passenger seat, or an accusation of theft, could sink the business. When I priced it out, the difference between minimum and maximum limits was a few hundred dollars a year. That’s worth paying to sleep at night.
Coverage to ask about:
- General liability, for injuries or property damage connected to your business
- Professional liability (errors and omissions), for claims that a service was done wrong
- Bonding or crime coverage, which protects clients if someone steals from them. Families and referral partners often ask about it.
- Auto coverage for driving clients and running errands, including non-owned auto coverage once employees drive their own cars for work
- Workers’ compensation once you have employees. Ask for a pay-as-you-go policy that connects to your payroll provider. Your premium is figured from actual payroll each pay period, and you avoid a tedious year-end audit form.
Ask how each policy defines covered services, so there’s no gap between what you do and what you’re insured for.
Put your agreements in writing
I’ll be honest: when I started, I worked on handshake trust and didn’t have a formal client service agreement. I’ve since adapted one from another business, including a non-solicitation clause so clients can’t hire my staff away privately. I haven’t had problems, partly because I work so closely with my clients, but an agreement from day one is the safer way to start.
A client service agreement should cover services, hourly rates, minimum visit length, holiday rates, billing and payment terms, non-solicitation of staff, and how either side can change or cancel service. Have an attorney review it; your state may require specific language or notices.
Alongside it, write down a care plan caregivers can follow, and policies for emergencies, incidents, complaints, client privacy, and caregiver conduct.
Start each client with a short consultation
For clients who’ll have regular visits, I offer a 30-minute consultation first. This is a relationship business, and the client and caregiver have to get along. We sit down, make sure the fit is right, and talk through what they need. I bring my laptop to the table and enter their information and preferences into Nodal Care while we talk, so the intake and the care plan are done before the first visit.
Be flexible about cancellations, both ways
Sometimes an earlier client runs long and I need the next client to be flexible with me. So when a client gives reasonable notice to cancel or move a visit, I don’t charge them. And if I make a scheduling mistake and an employee is already driving to a client, I pay the employee for that time myself.
Look like a real business
You don’t need an office, but you can’t look like a hobby.
- Your own email domain. Don’t hand a senior living director or an elder law attorney a card with a free email address. I use Google Workspace with my own domain. It’s inexpensive, it grows with you, and it signals that you’re an established business.
- A simple website. In my experience, a website rarely brings in clients on its own. But when someone hands your card to a client’s daughter, she’ll look you up within minutes. The website’s job is to reassure her that you’re legitimate. Today’s AI website builders can produce a professional site quickly and cheaply.
- Accounting from day one. I use Xero. It’s easy for a non-accountant and handles monthly invoicing well. I connected Stripe for online payments, though most of my older clients still prefer to pay by check.
- Automatic mileage tracking. You’ll drive a lot. I use the TripLog app with a small Bluetooth beacon plugged into my car’s USB port. It starts tracking when I drive, I mark trips as business or personal later, and once a month I record business miles in Xero.
Part 3 gets into pricing, and the systems that keep the schedule and billing straight.