Here at Yoopies, we understand the importance of your childminding business, particularly the time, effort, and financial investment to acquire your registration and kick-start your business.
Whilst the childcare element is at the core of your business- and perhaps the more exciting part- planning your income and expenses is equally as important.
Perhaps you adore numbers and can’t wait to get stuck in, or maybe, the idea of calculating your finances brings back dreaded memories of maths lessons during school. Not to worry though. Whether you’re comfortable with calculating finances or a total novice, we’re here to guide you through all your queries to ensure your business thrives.
Funding your childminding business when starting:
It is no doubt challenging to get your business off the ground without an injection of cash flow at the beginning. Unfortunately, the Government currently has no grant scheme in place to help childminders start their business.
So, first things first, you’ll need to decide whether you have adequate savings to get started, or if you need to borrow money to get going. Trusted family members are one option, however, it is worth keeping in mind that informally borrowing money may risk putting pressure on relationships. A second option is looking at professional organisations that provide start-up loans, such as Start-Up Loans.
As a Government-backed branch of the British Business Bank, Start-Up Loans allows you to:
- Borrow up to £25,000
- Fixed interest rate of 6% per annum
- 1-5 year repayment term
- 12 months of free mentoring
There are certain criteria to be considered eligible for the loan, these include:
- Being over 18 years of age
- Having a UK residency
- Starting a new business or have been trading for up to 2 years
- Being unable to secure finance from other sources
- Having a UK based business
- Having the right to work in the UK
- Your business type and loan purpose is eligible under terms of the scheme
- You pass credit checks and can afford to repay the loan
Childminder Advice:
We asked childminders their no.1 tip for childminders just starting out:
“Go with the flow and don’t plan too much. Get to know your children’s interests rather than planning for things they might not be interested in” (Keeli)
“Set your stall out straight away, and have a payment upfront ‘No pay, No play ‘ policy. Be totally transparent with parents, if you cant do it, don’t” (Fiona)
“Be patient at the start, it takes time to get going so don’t lose hope if things don’t take off as quickly as you’d like!” (Emma)
“Be clear from the beginning, some parents may try to bend the rules” (Claire)
Ensuring your business is profitable:
Developing good financial management skills to maintain and grow your business is an essential part of your childminding business. Creating a financial plan for your business is an excellent place to start- don’t worry it is less complicated than it sounds!
Asking yourself the following questions will help get your business up and running successfully:
1) Start-up costs.
How much were my start-up costs: registration, training, and qualifications.
2) Pricing
What do you plan to charge per hour? Will your price change depending on the age of the child? What is the going rate in your area? Will you charge extras for nappies, milk, food, etc? Will you charge extra for outings?
3) Funding
Will you offer 15/hr and 30/hr Free Childcare schemes? Will you focus more on offering Government benefit childcare places?
4) Holidays
Will you charge during your time off? Will you charge if your client goes on holiday? Will you charge a retainer fee to hold a child’s place?
5) Invoicing
Will you charge your clients on a weekly basis or a monthly basis?
6) Home costs
What annual fees will I need to pay, such as rent or mortgage? How much are household bills per week/per month? Is there any equipment that needs replacing this year? Tax and National insurance contributions?
7) My childcare services
Will I need to renew a First Aid Certificate, Insurance or DBS check this year? Do I want to pay for extra training during the year? Will I be paying a member of staff (another childminder or assistant)? Will I be paying to market my childminding business?
It’s important to be realistic when it comes to the first few months of your new business and keep in mind that a childminding business takes time to grow. Be patient and kind to yourself, finding clients is not a one day job. It could take at least a year (or more) to really get your feet off the ground. PACEY provides an excellent online calculator to help you track your initial costs.
Working out your taxable profit:
Taxable profit is defined as the income you must pay tax on, after deducting costs and expenses. The following formula is as follows:
All income – Costs & Expenses = Taxable Income
Childminders are able to calculate their expenses using the National Childminding Association (now PACEY) and HMRC agreement. When calculating taxable profiles, HMRC allows deductions from childminding expenses that are directly linked to childcare services. PACEY provides a cash book and attendance register that you can use to track these expenses.
The percent a childminder can deduct on expenses is calculated by the number of hours you work, ranging from 10-40 hours. For more information, check out the expenses you can claim here.
Top tips to keep on top of your finances:
At the end of each working week, it is a good idea to map out your income and expenses for the week, this will make it much easier to manage your finances- particularly when it comes to declaring your taxes to HMRC.
Using online tools such as Babysdays or Quickbooks is useful to help you manage your business. Some childminders opt to pay for an accountant to help manage finances.
At Yoopies, we know your childminding business is important to you. That’s why we are here every step of the way of your registration to ensure you are able to get your business up and running with ease. Once you have your business up and running, you are able to use the Yoopies for free to find your first clients simply and quickly. With our handy postcode tool, you’ll be able to easily get in touch with families in need of a childminder near you.