Net profit - is it worth it? Do you make a living

[atigercametotea]

Hi,
I'm looking for advice as i've recently undergone the SCMA training to become a childminder, and am sat at home filling in application form. All fine so far.

Now to the nitty gritty - have a list of all expenditure and predicted income and it really does look like I won't make any money!

I have 2 children of my own just now under 5, so really would only be allowed 1 more under 5 and have space for three over 5.

Even charging, £3.50 for a pre-school full time place and £4.00 for part time under 5 and after schoolers will make me a loss!
And I predict working 8-6 Mon, Fri - a 50 hour week!

My expenditure includes - (per week)
Food
Toiletries (wipes etc)
Travel
Equipment
Outings (playgroups etc)
Tax & NI
Training courses
Annual fee to Care Commission
Marketing/Advertising
Heat & Light
Council Tax
6 weeks holiday
Cleaning
Earnings
Public liability/Home insurance

There's probably more that I've forgotten here too!

Tell me the truth - am I working it out all wrong, or just give up now as it doesn't seem to be a viable business?

Thank you!

You will make a profit, trust me. Otherwise, why would we do it?!

At lot of the expenses you have listed you would have anyway. You can't really expect to have your council tax funded by your business.

I only have 1 under 5 and 2 after schoolers and i made a fair bit last year. Only due £40 in tax too

Agree with Scienceteacher RE council tax,and cleaning?? I have to do mine in the evening and at weekends. Are you thinking about getting cleaners in?

Most of us dont take 6 weeks holiday either, and as most of your expenses can be ofset against your tax, you do not end up paying much tax, if at all.

OK I make little or no profit but I live out of my business
These expenses you would be paying for anyway:
Food
Travel
Heat & Light
Council Tax
Home insurance
These expenses are extra:
Toiletries (wipes etc)
Equipment
Outings (playgroups etc)
Tax & NI
Training courses
Annual fee to Care Commission
Marketing/Advertising
6 weeks holiday
Cleaning
Earnings
Public liability

If you are doing a cost analyis you also need to add in the cost of your children's childcare (ie you won't have to pay it) to see if you are better off as a childminder or as an employee.

But most childminders don't go into it for the money - I run a highly successful business despite making no profit & I take a fair amount of 'expenses' out of the business and straight into my pocket iyswim

Hi tiger, yes you are right childminders work very long hours especially when you add in all of the paperwork and training courses which are usually on weekends (full days / half days) and evenings. You can allow 10% straight of the top of your earnings (gross) for wear and tear which helps a little.

what I tend to find is that most of the expenses you can claim for working from home you would have to take from your wage if you had an employed job so really these things are your net profit as well in a way IFYSWIM.

I started minding to suppliment our income nearly 4yrs ago now, and because my dd wasn't well. I filled up very quickly and in the end my DH works with me as an assistant (I'm one of those people who find it hard to say no when it comes to vacancies) anyway I turnover in the region of £45K but I am finding that having more mindees doesn't necessarily mean that you make more profit, for example I have a space at the moment but if I filled it just about all of that income would go to pay tax, I'm not a tax specialist but I reckon most traders have a cut off point like this.

It's sad in a way that business needs to be limited as most kinds of business could expand and take on more staff etc but with all of the rules and regulations that have to be adheared to I think minders are finding it quite tough to make a reasonable profit, especially as T/over bears no relation whatsoever to whats left at the end of the year But good luck and I hope it goes well for you.

Oh and Tiger I have two weeks holiday, one in May a few days over x'mas and the rest is booked for day courses that only run during the week, would love six weeks, but most minders round here take 2 - 3 max. There are a few that do term time only though.

Like others have said, six weeks hol sounds a lot. My cm has four. As parents, we supply wipes etc and also pay for any activities like playgroups, music sessions etc. that cost money, though there are plenty of free playgroups too, so I wouldn't expect you to be out of pocket on that score. Also it doesn't sound like your kids will be under-5 for long, so as soon as you can take more little ones, your profits will go up. Most start-up businesses don't turn a profit for 5 years, so I would've thought childminding was relatively good, as long as you could fill your spaces.

The advisor from Customs and Excise told us on our pre-reg course that most childminders around here (Southeast) make a loss in their first year and sometimes second before some of the startup costs work through. She also said as a rule of thumb you can expect two thirds of your income after that to be taken up by expenses (though as others have said, you would have some of those expenses if you weren't childminding). I also agree that you will obviously lose a lot of potential income if you take six weeks leave, maybe even lose potential customers altogether - unless you can make it a positive selling point e.g by offering term time only contracts.

We don't work with children to make profit. We work with children to have a different lifestyle.
I'm far less stressed working with children, than I was working in an office

You do need enough to pay the bills though... so it is good that you are looking at the likely costs involved.

BTW how is holiday an expense - you can't offset it against tax

Holiday's just cost you money... you get no income during that time and yet you spend lots of money out. It's like a double negative!

6 weeks!!!! I take just 2 and dont expect parents to pay me during that time but I get paid for theirs.
Initial start up costs for me were high as my youngest child was 9 so i didnt have even the basic equipment. I started in January and am full and am now expecting to make a profit.
Agree with Nannynick, remember you will save on your own childcare costs by working from home, keep ALL of your receipts and claim for everything to do with your business, bit like our esteemed MPs.
good luck

Hmm i like what i do (am a CM) but i def wouldn't be doing it if i didn't need the money!!

My DH only works to make money and so do i,doesn't everyone??

Hi all and thanks for the replies.
I still really want to do it and yes obviously the money makes a difference, so just wanted to be thorough in all the prep work.

All those costs above were not tax deductable ones, just ones to help me realistically set an hourly rate iyswim.

My weekly expenditure list above was given to us at the SCMA training.
Just to clarify, I don't expect my council tax to be funded by the business! I wish, but i was under the impression (may be wrtong) that it may go up percentage wise if the home was used as a business (this is in Scotland)

The cleaning aspect was if we needed to clean a carpet because of sick/vomit etc (SCMA person recommended this) - I don't think I would necessarily do this (mainly because I have wooden floors!) but wanted to include it as a possible. I definetely don't mean a cleaner for my whole house!

Again 6 weeks hols were recommended at the training. If it's not the done thing, I am happy to be corrected. We were also advised to incorporate our pay for the holidays into our cost so when we take a holiday, those weeks are covered. I don't ask the parents to pay for holidays (because they already have in the hourly rate iyswim?)

I don't understand KatyMac's point that I would be paying for some of my things anyway - surely I would need to spend more on food if I had mindees? So that would be an expense? You need to let your home insurance know that you are using your home as a childminding business so that means your premium would go up (an expense I would not necessarily have). Travel would be more for me as I don't drive and would need to pay to take the children places and I know it is very little but the amount of time I would be spending in the house (more than now) would mean light and heat costs would increase...
If this is not right can someone let me know?

On a plus point I have my first parent asking for a part time place today! Woooo!

Thank you again for advice.

P.s I live in Scotland if it makes any difference with regards to this post.

Well my council tax is the same as next doors so it hasn't gone up

Although my heat & lighting have gone up they have not gone up by 1/3rd which is the amount I claim

I put through a standard amount for each meal (depending upon the age of the child) this allows enough money each week to pay for all the food bought iyswim (I use a school dinner amount as a basis for comparison)

& my household & buildings is less with the NCMA insurers than it was with NU

My mileage charge also covers my entire petrol costs (because it allows for wear & Tear)

If you add those to my wear & tear (10%) I have a reasonable (not great) income