How to Start a 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.

Start a adult foster care business by following these 9 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. 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.

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 are the costs involved in opening a 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 a 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 a 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 a 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.

What will you name your business?

Choosing the right name is very important. If you don’t have a name in mind already, read our detailed guide on how to name a business or get some help brainstorming a name with our Adult Foster Care Business Name Generator.

Then, when registering a business name we recommend checking if the business name is available in your state, federally by doing a trademark search, searching the web, and making sure the name you choose is available as a web domain to secure it early so no one else can take it.

Find a Domain Now

Powered by

After registering a domain name, consider setting up a professional email account ( Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free

STEP 2: Form a legal entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your adult foster care business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

Check out the Top Business Formation Services from our friends at StartupSavant.

You should also consider using a registered agent service to help protect your privacy and stay compliant.

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!

A cube with LLC printed on its sides

You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.

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.

Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.

Open a business bank account

  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • It also makes accounting and tax filing easier.
A cube with LLC printed on its sides

Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.

Get a business credit card

  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.

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.

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.

Learn more about General Liability Insurance.

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.

How to promote & market a 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: Establish your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

Start A Adult Foster Care Business In Your State

A cube with LLC printed on its sides

Select your state below for an in-depth guide on completing each of these steps in your home state.

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.

A cube with LLC printed on its sides

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

Take our Entrepreneurship Quiz to find out!

Entrepreneurship Quiz

What happens during a typical day at a 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 a 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.

TRUiC's YouTube Channel

For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe below to view later.

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.

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 a 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.

Next Steps

Get more ideas with our Business Ideas Generator.

Check out our How to Start a Business page.

Sign up at the Business Center to access useful tools for your business.

Have a Question? Leave a Comment!