How to Start an Adult Foster Care Business

An adult foster care business is a cross between independent living and a nursing home. Those who need minor to moderate assistance will move into a residential facility staffed with one or several caregivers. Caregivers are not medically trained but can provide support and emergency assistance to residents on a 24-hour basis.

Learn how to start your own Adult Foster Care Business and whether it is the right fit for you.

Ready to form your LLC? Check out the Top LLC Formation Services.

Start an adult foster care business by following these 10 steps:

  1. Plan your Adult Foster Care Business
  2. Form your Adult Foster Care Business into a Legal Entity
  3. Register your Adult Foster Care Business for Taxes
  4. Open a Business Bank Account & Credit Card
  5. Set up Accounting for your Adult Foster Care Business
  6. Get the Necessary Permits & Licenses for your Adult Foster Care Business
  7. Get Adult Foster Care Business Insurance
  8. Define your Adult Foster Care Business Brand
  9. Create your Adult Foster Care Business Website
  10. Set up your Business Phone System

We have put together this simple guide to starting your adult foster care business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Adult Foster Care Business Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

  • Your state's business records
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability.

It's very important to secure your domain name before someone else does.

Want some help naming your adult foster care business?

Business Name Generator

What are the costs involved in opening an adult foster care business?

Preparing the space will likely be the most expensive part of the adult foster care business. If the home doesn’t have the necessary safety features (e.g., shower bars, higher toilets, etc.), you may need to retrofit these features. You’ll also need to account for registration fees for the business and the salaries for caregivers. Adult foster care facilities may offer pre-planned activities, transportation, and meals, so you’ll need to budget for gas, car insurance, home insurance, commercial insurance, and food.

What are the ongoing expenses for an adult foster care business?

An adult foster care business will need to budget for the cost of home upkeep, supplies, marketing, salaries, and insurance. Owners also need to budget for vehicle maintenance if they offer transportation and food prep.

Who is the target market?

Adult foster care is the ideal solution for people who don’t have severe enough needs for a nursing home, but who need someone to watch over them and help with daily tasks. The target demographic is stereotypically older people in relatively good health. However, owners can also consider opening up residential facilities for people of any age who have minor physical or mental disabilities.

How does an adult foster care business make money?

Adult foster care businesses typically have anywhere from one to five people in a residential setting. Owners charge rent and utilities plus an extra premium for the caregivers' assistance.

How much can you charge customers?

The range for adult foster care can range from $1,500 to $3,500 a month, depending on the location and level of services. Check prices in your area for similar facilities before setting your own rents.

How much profit can an adult foster care business make?

Some adult foster care facilities are set up as non-profit facilities. You’ll need to check on your state Medicaid program to learn more about what is covered and what isn’t. However. adult foster care businesses typically set a healthy margin between the cost of expenses and the rent charged to cover the cost of trained workers (whether they're for-profit or not).

How can you make your business more profitable?

Consider offering optional activities (e.g., painting classes, language lessons, etc.) for residents who choose to take advantage of them. You can also open and manage multiple facilities.

Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your adult foster care business is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

You can acquire your EIN through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

  • Separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

  • Separate personal and business expenses by putting your business' expenses all in one place.
  • Build your company's credit history, which can be useful to raise money later on.

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.

Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market an adult foster care business

An adult foster care business can be marketed much like a nursing home. Billboards, online advertising, and television or radio ads can all help expand your reach. Or you can consider putting up flyers at medical facilities that might attract the eyes of those who need your services. Because you’ll be trying to attract relatively healthy people, you’ll likely want to market directly to them. However, you may also want to gear at least a few ads toward adult children who are making difficult decisions about their parents’ long-term care. In any case, you'll want to stress that the home is made for active people who still want to better themselves.

How to keep customers coming back

Providing the best possible care is the best way to retain customers. Nursing homes are notorious for charging a lot of money for relatively mediocre services. Clients should feel at home when they are under your roof and should inherently trust the staff who work with them.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

  • All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
  • Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
  • Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.

Recommended Business Phone Service: is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

Is this Business Right For You?

This business is perfect for those who want to help senior citizens or those with special needs, but who don't have the medical background to open a full-fledged nursing home.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

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What happens during a typical day at an adult foster care business?

Caregivers will follow a routine based on the needs of the people in their care. They may dispense medicine, help with basic daily hygiene, cook meals, and take charge of any planned activities or outings. Owners will also need to schedule time to manage the home's finances, pay staff, and market their business.

What are some skills and experiences that will help you build a successful adult foster care business?

Owners should have some experience in caregiving. They should also have a strong enough business background to execute a larger vision, whether you choose to train your own staff or not. Marketing skills will also come in handy if you're not planning to hire an outside team to design the website or create advertising.

What is the growth potential for an adult foster care business?

As the population ages, the growth potential for this business grows. More and more people want additional full-time care options that don't involve moving into a nursing home. Because it’s not a medical facility, your adult foster care business can also be run for fewer expenses than a nursing home. Residents can share a room or pay a premium for a single.

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Take the Next Step

Find a business mentor

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

  • Funding
  • Events
  • Guides
  • Support

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

What are some insider tips for jump starting an adult foster care business?

The levels of assisted living are largely determined by state, so owners need to first find out how much assistance they want to offer their clients, so they can label their foster home correctly. Some states may cover adult foster care through their Medicaid program, so you'll need to understand the parameters that qualify for this perk. This will also help you figure out who to market your business too. Your marketing will look different if you're trying to attract an affluent senior than one who needs financial assistance.

Some people may try to cut down on their start-up expenses by using their own property. Owners may move into a smaller apartment to accommodate the needs of their clients. Owners should start with one property before expanding out to different locations. As they learn more about the challenges of running a facility, owners can determine if it makes sense to open another adult foster care.

The best tips for an adult foster care business is to make the home a place where people will want to live. From group card games to movie nights, caregivers can use different ideas to encourage communal living. Look for other ways that can help your business stand out too. For example, maybe the home relies on green energy or perhaps your staff encourages all-natural solutions for health problems in addition to traditional Western medicine.

How and when to build a team

You’ll need to build a team immediately as you're providing 24-hour care. You’ll need several alternate staff members who can fill in on off-days or emergency call-offs. Look for people who are personable and natural caregivers. They don’t need to have medical training, but they should be able to read a prescription schedule and learn how to physically handle patients without causing accidents or injuries. Your overnight staff won't need to be as personable, but they should have a relationship with clients and be able to stay calm during major emergencies.

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