A Near-Comprehensive Guide to Starting A Non-Medical Home Care Agency
Starting a home care agency isn't for the faint of heart, but it can be a great way to set yourself and your family up for long-term financial security while making a real difference in your community at the same time.
My name's Connor—my team and I at Careswitch have educated and worked with hundreds of home care agencies over the last ten years. We've also gotten the chance to rub shoulders with many of the very best and brightest in the home care industry. I've tried to condense the most relevant knowledge about starting a non-medical home care agency into one guide for you here.
Let's break down the steps to starting a home care agency.
I strongly encourage you to bookmark this guide and come back to it often as you go through the process of starting your home care agency. If you're using Chrome, just hit Control+D on a PC or Command+D on a Mac.
Note that this applies primarily to starting a non-medical home care agency relying on private-pay clients in the United States. If you're trying to start an agency providing actual medical care, or want to use Medicaid waivers to expand your available clientele, know that there are likely additional steps we aren't covering here.
In each section we'll include additional reading, resources, and other videos.
Start planning the details for your home care agency now.
Before you get to the technical logistics, it's good to do some self-examination regarding your own skills and motivations. If you're getting into this business, make sure you've got a mix of business skills and desire to help people. It sounds basic ,but too many agency founders are either businesspeople in it solely for money or kindhearted care professionals without business sense. Either of those fail nearly every time.
Some of the biggest challenges you should plan ahead for: (we'll cover each of these)
- Getting licensed, if you’re in a state that requires licensure.
- Where to get clients
- Where to get caregivers
- Where your startup capital will come from
- Where your office will be situated
- How you’ll stand out from the competition—both to potential clients and potential caregivers
Note: States often have small business development centers that provide free assistance to entrepreneurs. Take advantage of this resource.
A great resource to help you think through these questions:
- The 6 biggest challenges new home care agencies face, and how to deal with them (podcast episode with Julio Briones, one of the leading home care operations consultants in the country)
Do all the un-sexy administrative stuff.
This is a major step, and licensure requirements vary by state. This process is usually much easier if you are planning to offer exclusively non-medical care to private pay clients as opposed to home healthcare or Medicaid waivers. (You can expand into those over time but they add significant complexity up front.)
Depending on the state you may decide to hire a consultant to help you through this process. We recommend Certified Home Care Consulting or Slusher Consulting (Slusher operates in Texas only).
Decide on a business tax structure.
Consult with your tax professional, but generally speaking you should start as an LLC and change to an S-Corp once you’re pulling in enough net profit to pay yourself a managerial salary of at least $70k. Here’s an explanation why from a tax consultant who specializes in home care agencies.
Understand your state board of nursing standards and procedures.
The board maintains standards for homemaker-home health aide education and training programs. The board also maintains a registry of all individuals who have successfully completed homemaker-home health aide training and competency evaluation program.
Decide if you want to use a third-party registered agent for your business.
A registered agent is business or individual designated to receive service of process when a business entity is a party in a legal action such as a lawsuit or summons. They can also assist with some of the basic legal steps in setting up your business—they can file formations, amendments, and other filings you may be required to file with your state. If you choose to use an online service to register the business, they usually do this for you.
Obtain an Employer Identification Number from the IRS.
This is 9-digit unique identifier for your business, much like a Social Security Number (SSN) is a unique number assigned to an individual. This is an essential legal step in every state. You can file online, fax, or mail; learn more and apply for one on the IRS website here.
Here's a video directly from the IRS it.
Form your business by filing a certificate of formation with your state Division of Revenue.
You don’t need to use the “LLC” in your marketing, brand, etc. but remember to use it in important legal docs like contracts, invoices, etc. There's usually a fee of around $100.
Open a bank account.
Never combine business and personal finances. You’ll want to make sure to run your business transactions through your business bank account so they can be written off for taxes. Save your receipts and/or use an expense tracking software (will save you and CPA time/headaches down the road)
Register with your state division of consumer affairs (if required).
Generally speaking, all healthcare service-related firms generally need to be registered here. Often you may need to also get accreditation from a third party accreditor, such as:
- Accreditation for Commission of Health Care
- Commission On Accreditation For Home Care
- Community Health Accreditation Program
- National Association For Home Care & Hospice
- The Joint Commission
Identify a Director of Nursing (if different from yourself) and have a copy of their nursing license.
Specific requirements for this will vary by state; typically, a Director of Nursing performs client assessments and creates plans of care for your caregivers to follow.
Register for state taxes and unemployment insurance.
This is often the same department and website, but sometimes can be split up (register business with secretary of state and taxes with department of taxation). You can usually do this online; you’ll need your tax account number and UI number to sign up for payroll services with a third party firm.
Obtain Workers Comp either through a human or online broker .
Usually any stockholder (owner) of a corporation that works in the business, even if compensation is deferred, must also be covered by Workers Comp (sometimes does not apply to LLCs).
Become familiar with your states Wage and Hour Compliance requirements for wages, working hours, earned sick leave and other regulations that employers must follow.
Among other things, this includes:
- Wages and overtime
- Leave and benefits
- Registration and records
- Worker classification (we'll save you some time; your employees MUST be W-2s instead of 1099s unless you operate as a registry, which is a significantly different business model in which you have significantly less control over things like schedules and pay)
- Employee discrimination
Many (if not most) home care agencies are out of compliance in various ways when it comes to payroll, and the Department of Labor has been ramping up litigation against home care agencies. Here's a useful guide to some of the most common ways agencies risk litigation and how you can avoid them.
Get an office.
You may choose to start from a home office or rent a place right out of the gates. Either way, there are legal, administrative, and strategic considerations.
If operating from your home you will need to have checked with your municipality to determine what, if any, permits are required for you to operate a business in your home and have secured any required permits. Depending on how you use the office, you'll often need to maintain a separate entrance/exit for the public to access your office that does not allow visitors to walk through your home’s private residential space.
If you are operating your business at a “shared” services office facility, the Investigator will need to inspect your file cabinets for securing all client and employee documents and your rental agreement or lease for “shared” office space.
Choosing an office location is also a highly strategic decision that will impact your difficulty in hiring and engaging caregivers. Here's a podcast episode where we go in-depth about this decision (and several related start-up decisions).
Start creating your brand and marketing assets.
Where should you start?
Come up with a name.
Your name, mission, brand, and differentiator should tie together. For instance, too many home care agencies choose names that draw from the same set of words and imagery—hands, touch, angels, hearts, helpers, home, etc.
While you shouldn’t automatically reject any names that use these words, you’ll have a hard time standing out if you use them because so many agencies already make use of them.
Consider a phrase that has personal meaning to you and connects with a mission or purpose that you can communicate to people. Some real-life examples include:
- Light Bearers Home Care
- Abundant Living Home Care
- Covenant Care
- Grandkids On Call
Create your website.
While you can create your own, it's usually more efficient to have a marketing agency do it for you (as well as maintain it). Some reputable agencies focused on home care agencies include Grow Home Care Marketing, Home Care Marketing Pros, Revivify, corecubed, and ChoiceLocal.
Here's a great guide to getting your home care agency's website right.
This is a beautiful example of a home care agency with a unique brand that speaks compellingly to the value they add. I love the fact that they articulate their value while putting the focus on the client.
Create a Google Business Profile and other online directory profiles.
These are critical for two reasons: first, many of them are direct ways for consumers to find you (Google will typically end up being one of the key ways clients find you). Additionally, listings in online directories help your website's search engine optimization (SEO) score, essentially helping ensure that your overall online presence is stronger and more credible.
Here’s a great guide to getting your Google Business profile top-notch.
Get the right software tools.
Many agency owners try to do it all on paper at first or run the business out of Excel. Doing so will waste your valuable time and contribute to burnout.
There are many great scheduling software platforms built for this. Careswitch can help you with running these basic business functions and we operate on a freemium pricing model so you can use it for free.
We can help you run almost every part of your business from place, including:
- An app for your caregivers to keep track of schedules and pay
- Processing your payroll (this is one of the few features that requires you to pay)
- Creating care plans
- Electronic visit verification
- Documenting visits
- HIPAA-compliant chat with your caregivers
While Careswitch is generally regarded as the most technology-forward option (and the only home care-specific software that you can use for free), we encourage you to shop around and see what works best for you. Some other options include ClearCare (now called Wellsky Personal Care, eRSP (Kaleida Systems), and MatrixCare.
Your life will be a LOT easier if you skip the phase of trying to build schedules out of Excel and get a software system made for home care agency management.
Start building relationships with community referral sources.
While many clients will come to you via sources like your Google profile, building relationships with other professionals in your community will help you establish pipelines of client referrals. In many cases these become the backbone of an agency's revenue.
Some common commmunity referral partners include:
- Home health agencies
- Assisted living facilities
- Continuing care retirement communities
- Hospital discharge planners
- Doctors offices
- Skilled nursing facilities
- Independent living facilities
- House call physicians
- Rehab centers (outpatient)
- Rehab facilities (inpatient)
- Other home care agencies
- Diagnosis-specific support groups
- Social service agencies
- Workers compensation providers/case managers
- Bank trust officers
- Real estate agencies
- VA programs
- Financial planners
- Geriatric care managers
- Adult day care centers
- Occupational therapists
- Funeral directors
- Elder law attorneys
- Estate planners
- Country clubs
- House cleaning services
- Senior communities
- Social workers
- Care management agents
- Placement agencies
- Independent living
- Hair salons
As you get going, don't forget clients and their loved ones.
Some other important resources to help you with marketing:
- Planning your marketing strategy
- How to choose referral sources
- Which talking points to use with different referral sources
- What the first three visits to a new referral source should look like
Plan your home care agency's recruitment strategy.
After you get over the initial hill of getting your first five clients, you'll probably find it harder to attract caregiver than clients because demand for home care is so high and there's such a shortage of home care workers.
In fact, hiring good caregivers on a consistent basis will probably end up being one of the biggest challenges your home care agency faces.
There's no silver bullet to hiring, but we've compiled a list of great resources for you:
- How to build your recruitment strategy
- How to win on sites like Indeed
- A very in-depth guide on home care recruitment
Get the right ongoing education.
Ultimately, you won't succeed unless you're constantly learning. Here's what we suggest:
For starters, find a mentor, ideally another home care owner or former home care owner, who you can talk to regularly and ask questions.
Join Home Care U. Home Care U is a free community Careswitch put together to help home care agency owners/administrators and aspiring owners. It includes a Facebook community, a podcast, and a weekly virtual class. All 100% free.
Home Care U: a free community to help you start and run a home care agency. Because nobody learned how to run a home care agency in school.
Check out the Frequently Asked Questions of Home Care. The Frequently Asked Questions of home care is another free resource the Careswitch team put together, in which we and experts from across the industry offer quick, bite-sized answers to the questions every home care agency owner asks at some point.
Bookmark this guide! If you're starting a non-medical home care agency, you'll likely find yourself returning to it quite a few times.
And now, if this was useful to you, a couple quick asks:
- Share this guide (and any of the other resources we linked to) with anyone else who might find it useful.
- Check out Careswitch. You'll need a software system to run your agency with, and we dare you to find one better-suited than Careswitch.
Here's to your success.