How to Start an Assisted Living Facility

Assisted living centers play a vital role in caring for the elderly and the disabled. These facilities house senior citizens and others in need of help due to mental or physical problems. Assisted living facilities provide a communal environment for patients to live in and enjoy. In many instances, such patients are unable to take care of themselves at home so they choose to live in an assisted living facility where they can obtain assistance from professional caregivers around the clock.

Learn how to start your own Assisted Living Facility and whether it is the right fit for you.

Start an assisted living facility 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 assisted living facility. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Check out our How to Start a Business page.

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 an assisted living facility?

The facility must be constructed. Though some facilities can be rented, the majority are either purchased or built by the entrepreneur. Additional costs include employee wages, utilities, internet, nurse call buttons, security cameras, computer hardware, food and drink for patients, bedding, and medical equipment. You might also decide it is prudent to purchase software designed to ameliorate the challenges of assisted living facility businesses.

What are the ongoing expenses for an assisted living facility?

Ongoing expenses include overhead costs like employee wages, utilities, high-speed Internet, insurance, medical supplies, and rent/payments toward debt owed on the property. A state licensed assisted living facility manager will likely command a salary between $35,000 and $75,000 or more. If you do not want to handle advertising efforts, a marketing director will be necessary. Expect to pay such a professional between $40,000 and $70,000 per year. Nursing staff will likely demand a salary in the range of $30,000 to $50,000. Administrative staff will cost between $10 and $15 per hour. Kitchen/food prep staff will cost between $10 and $12 per hour. The cost of food and beverages hinges on quality. Expect to spend several thousand dollars per month on sustenance for your residents. The cost of utilities depends on the size of the facility. In general, utilities cost a couple hundred dollars per month. Medical supplies and bedding must be replenished/replaced as time progresses. Plan to spend at least $500-$1,000 per month for these supplies and adjust your budget accordingly as you get a better gauge of your clientele's needs and demands.

Who is the target market?

Most assisted living facilities house as many in need as they can reasonably accommodate.  However, younger patients can be ideal, as younger patients are more likely to remain in the facility for years to come. The passing of a patient can be extremely difficult emotionally, and an extended stay in the facility is a consistent source of income.

How does an assisted living facility make money?

Assisted living facilities make money by charging residents a fee for staying in the facility. This cost is applied on a per-month or per-year basis.

How much can you charge customers?

In general, assisted living facilities can charge between $2,000 and $4,000 per resident per month. However, the exact cost depends on the location and the quality of the facility.

How much profit can an assisted living facility make?

Profit level depends on the size of the facility as well as its amenities. If you have a large facility with top-notch amenities and maintain full capacity, profits have the potential to reach the six figure mark or higher. If you build a true brand and open additional assisted living facilities at new locations, it is possible to make millions of dollars in profit.

How can you make your business more profitable?

You can boost profitability by offering auxiliary services on-site. It is possible to charge residents additional fees for optional niceties like cable TV packages, nuanced dining options, on-site entertainment events, specialized care, and so on. If your facility reaches full capacity, it might be possible to receive financial kick-backs for referring prospective residents to other facilities with available space.

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 Assisted Living Facility 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.

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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

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 assisted living facility 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 start an LLC yourself and pay only the minimal state LLC costs or hire a Business Formation Service 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!

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.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate an assisted living home. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

Certificate of Occupancy

An assisted living home is usually run out of a large, hotel-like space. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

  • If you plan to lease a space:
    • It is generally the landlord’s responsibility to obtain a CO.
    • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to an assisted living home.
    • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
  • If you plan to purchase or build a space:
    • You will be responsible for obtaining a valid CO from a local government authority.
    • Review all building codes and zoning requirements for you business’ location to ensure your assisted living home will be in compliance and able to obtain a CO.

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.

Recommended: Learn what business insurance for your Assisted Living Facility will cost.

Business Insurance for
Assisted Living Facility

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 an assisted living facility

The best way to build this business is to please current residents. They will spread the word to fellow seniors and disabled individuals. It also helps to market the assisted living facility in local newspapers, magazines, radio spots, and TV ads. Get the facility's name in the spotlight and customers will seek out more information. A strong web presence will also help. Though many seniors do not use the internet at a high frequency, their family members likely do. Bolster your website's search engine optimization (SEO) and it will be that much easier for prospective customers and their family members to find your business on the first page or two of search engine results.

How to keep customers coming back

One of the best ways to attract customers is to offer a competitive price for a room at the facility. Match or beat competitors' prices and you will enjoy a steady stream of customers. Please your customers and they will inevitably recommend your facility to fellow seniors and disabled individuals who are looking for an assisted living facility. Employ true medical professionals who would not dare abuse or neglect residents and your customer retention rate will be more than acceptable.

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 an Assisted Living Facility 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 ideal for those who are interested in medicine, caregiving, and generally improving the human condition. If you are especially compassionate toward the disabled and elderly, opening and operating an assisted living facility will prove to be quite rewarding.

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!

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What happens during a typical day at an assisted living facility?

Assisted living facility owners perform a wide range of duties each day. They do everything from ordering medical supplies to ensuring compliance standards are met, interviewing job candidates, and reviewing applications for residency.

What are some skills and experiences that will help you build a successful assisted living facility?

The entrepreneur should be able to assess the potential of a market. He should have a firm grasp on local demography as well as the medical industry. Furthermore, the entrepreneur should have excellent interpersonal skills. Owning an assisted living facility requires regular interaction with employees, residents, and medical equipment suppliers.

What is the growth potential for an assisted living facility?

The growth potential depends on the quality of the assisted living facility's condition and level of care. Another critically important factor in terms of growth potential is location. An assisted living facility located in an area with a large population of senior citizens will have considerable growth potential.

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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.

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 assisted living facility?

A thorough understanding of patient care will ameliorate the challenge of this business. The entrepreneur should key in on hiring savvy medical professionals who genuinely care about patients and their well-being. An assisted living facility with modern accommodations in an area with an abundance of senior citizens will likely succeed. Furthermore, do not delay applying with your state's health department for the permit required to operate an assisted living facility. It is possible the state will require that your facility be modified before approval is provided. It will also take some time to schedule and perform a safety inspection. A county or city business license will also be necessary. So don't assume a state license will suffice. The local government will likely require a permit in addition to the state license.

How and when to build a team

It is imperative that you build your team right away. Your assisted living facility will require an office manager, nurses, aides, kitchen staff and a cleaning staff. Each of these positions must be filled when the facility is launched. If you do not want to handle marketing and accounting duties, these roles must be filled by professionals.

Next Steps

Get more ideas with our Business Ideas Generator.

Check out our How to Start a Business page.

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