One of the most frequently asked questions I receive from parents considering home daycare is, “Will I be able to replace my current income with a family daycare business?”The following example should give you an idea of how easily you can replace your income and stay at home with your children by providing in home daycare. This scenario is based on a current annual gross income of $36,000, or a monthly gross income of $3,000.

Gross Monthly Income$3,000
Less Taxes900*
Less Daycare Expenses500**
Less Gas100
Less Dry Cleaning/ Lunch / Wardrobe / Etc.200
Spending more time with your childrenPriceless
Net Monthly Income$1,300

*Keep in mind that if you and your spouse both produce an income this also puts you in a higher tax bracket. This amount may actually be higher based on your combined earnings.

**This amount could be lower or higher based on the number of children you currently have in daycare and the amount you pay your provider.

To calculate how much income you would need to generate to replace your existing income by providing home daycare, Divide your net income by the amount you current pay per month for childcare.

For this example $500 per month in existing childcare expenses is being used.

$1300 divided by $500 =2.6 which means you would need to care for 2 full time children and 1 part time child to replace your existing income.

As a provider you can expect to pay for arts and craft supplies, toys, rest mats, etc., all of which are tax deductible if used exclusively for your home daycare. If you have children of your own, you may already have many of the items you need to get started.

Your Gross Taxable Income for providing Home Daycare is also drastically reduced by many items you already pay for: Depreciation on your home, Grocery Expenses (some of which can be recouped if you participate in the USDA Food Program), Utilities, such as power and cable. These are just a few examples of the tax benefits of providing daycare in your home.

Disclaimer: This example is to be used for illustration purposes only.
The author assumes no liability for risk or loss in relation to the use of this example.

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About the author: Kris K. Murray is a work-at-home mom, mother of Owen (age 6) & Maeve (age 3), and the owner of She helps other moms & dads become successful child care entrepreneurs. Kris has over 20 years of experience in small business growth & marketing, and she is a contributing member of the National Association of Family Child Care.

If you liked this article, you won’t want to miss my top-rated article entitled “How to Start a Daycare – Avoid the 7 Biggest, Costliest Mistakes Most New Daycare Owners Make”.

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