How to start a caregiver business: build a business that matters

Starting a caregiver business is a rewarding venture that blends a passion for helping others with smart business sense. The market is worth hundreds of billions of dollars, with steady demand for care services for seniors, individuals with disabilities, and those recovering from surgery.

This guide will take you through the practical steps of validating your business concept, obtaining the right licenses, and hiring your first caregivers to help you launch a successful caregiver business in the U.S.

Step 1: Plan your business and validate your idea

Analyze your market and competition

Start by researching your local market. Use U.S. Census Bureau data to find the number of residents over 65 in your target zip codes. Also, check reports from your local Area Agency on Aging for insights into specific community needs and service gaps.

Identify existing agencies through your state's licensing board website or the National Provider Identifier (NPI) registry. A frequent oversight is focusing only on large national brands; pay close attention to smaller, local agencies as they are your direct competition.

Estimate your startup costs

Mapping out your finances early prevents surprises. Initial costs typically range from $3,000 to $15,000. This accounts for licensing, insurance, and initial marketing efforts.

Let's break that down. Expect to spend $1,000 to $5,000 on legal and licensing fees. General and professional liability insurance can be $2,000 to $6,000 annually. Scheduling software adds another $50 to $300 per month.

Here are 3 immediate steps to take:

• Research the population over 65 in your target zip codes using U.S. Census data.
• List five local caregiver agencies and note their services and pricing.
• Draft a preliminary budget with estimated costs for licensing, insurance, and software.

Step 2: Set up your legal structure and get licensed

Choose your business structure

Most new agency owners form a Limited Liability Company (LLC). This structure protects your personal assets if the business faces a lawsuit. You can file for an LLC through your Secretary of State's website, with costs ranging from $50 to $500 depending on your location.

Navigate state and local licensing

Your state's Department of Health or Department of Social Services typically governs caregiver agencies. Check their website for a "home care license application." Processing can take 3 to 6 months and cost between $500 and $2,000. A frequent misstep is applying for a medical home health license when you only offer non-medical companion care. Confirm you have the correct application, as medical license requirements are much stricter.

You will also need an Employer Identification Number (EIN) from the IRS to hire staff and open a bank account. This is free and available instantly online. Finally, secure a local business permit from your city or county clerk, which usually costs under $100.

Here are 4 immediate steps to take:

• File for an LLC with your Secretary of State.
• Apply for a free EIN on the IRS website.
• Find your state's home care licensing application via its Department of Health website.
• Check your city or county's website for local business permit requirements.

Step 3: Secure insurance and manage risk

Your two primary policies are general and professional liability. General liability covers client injuries, like a slip and fall. Professional liability protects against claims of negligence in your care services. A standard policy offers $1 million per occurrence and a $2 million aggregate limit.

These combined policies typically have annual premiums between $2,000 and $6,000. Once you hire your first employee, you must also add workers' compensation insurance. This covers medical costs and lost wages if a caregiver gets injured on the job.

A common misstep is to use a general insurance agent. You should work with brokers who specialize in home care as they understand the industry's unique risks. Consider getting quotes from providers like CNA, Hiscox, or Philadelphia Insurance Companies who have experience with caregiver agencies.

Here are 3 immediate steps to take:

• Request quotes for a combined general and professional liability policy with $1M/$2M limits.
• Research your state's specific workers' compensation laws for employers.
• Contact an insurance provider that specializes in home care, such as CNA or Hiscox.

Step 4: Set up your office and get equipped

You can run a caregiver agency from a home office, which keeps initial costs down. Just confirm with your local municipality that your zoning permits this. If you prefer a separate space, a small office of 150-300 square feet is plenty for you and an administrative assistant.

Many new owners make the mistake of signing a long, expensive lease. You might want to consider a short-term lease of one to two years or even a membership at a local co-working space. This gives you flexibility as your agency grows.

With your space sorted, you will need some basic equipment. Plan for a reliable laptop ($500-$1,200), a dedicated business phone line from a service like RingCentral ($25-$50 per month), and a printer. You must also get a locking file cabinet ($200-$500) to securely store client and employee files per HIPAA rules.

Here are 3 immediate steps to take:

• Check your local zoning ordinances for home-based business regulations.
• Price out a laptop, a business phone service, and a HIPAA-compliant locking file cabinet.
• Research co-working spaces or short-term commercial leases in your area.

Step 5: Set up your payment system

Establish your payment terms

Most agencies invoice clients weekly or bi-weekly after services are rendered. You should be prepared to accept multiple payment methods, including ACH bank transfers and checks. For consistency, outline these terms clearly in your client service agreement from the start.

Choose a payment solution

When you select a payment processor, pay close attention to transaction fees. Many providers charge 2.5% to 3.5% plus monthly fees, which can add up. For caregiver businesses that need to accept payments on-site, JIM offers a streamlined solution.

With JIM, you can accept debit, credit, and digital wallets directly through your smartphone. At just 1.99% per transaction with no hidden costs or extra hardware, it's useful when a family member wants to pay for a block of hours on the spot. Getting started is straightforward:

• Get Started: Download the JIM app for iOS.
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
• Access Funds: Your money is available on your JIM card as soon as the sale is done.

Here are 3 immediate steps to take:

• Decide on your billing cycle (weekly or bi-weekly) and list accepted payment methods.
• Research payment processors and compare their transaction and monthly fees.
• Download the JIM app to explore its features for in-person payments.

Step 6: Fund your business and manage finances

Secure your startup funding

Many new agencies use SBA 7(a) loans. Lenders typically want to see a credit score over 680 and a strong business plan. For a startup, loan amounts often range from $50,000 to $150,000, with interest rates tied to the prime rate.

You might also find grants through your local Area Agency on Aging or community foundations. These are competitive but worth exploring if your agency serves a specific, underserved population. They focus on impact rather than profit.

Plan your working capital

You will need enough cash to operate for the first six months. A safe estimate is $20,000 to $50,000. This covers payroll for your first few caregivers, insurance premiums, software subscriptions, and initial marketing campaigns before client revenue becomes consistent.

A frequent miscalculation is underestimating payroll expenses. Since you pay staff before clients pay you, plan to have at least four to six weeks of payroll cash on hand from the start. This prevents a cash flow crunch right as you launch.

Here are 4 immediate steps to take:

• Research SBA 7(a) loan requirements on the SBA website.
• Contact your local Area Agency on Aging about potential grants.
• Calculate your working capital needs for the first six months.
• Open a separate business bank account to keep finances clean.

Step 7: Hire your team and set up operations

Hire your first caregivers

Your first hires will be caregivers. They handle non-medical tasks like companionship, meal prep, and light housekeeping. Expect to pay between $15 and $25 per hour, depending on your location and the caregiver's experience level.

While not always mandatory for companion care, certifications like Certified Nursing Assistant (CNA) or Home Health Aide (HHA) make a candidate stand out. At a minimum, require all staff to have current CPR and First Aid certifications.

A mistake many new owners make is skipping a thorough background check. You must run a state and national criminal background check, plus a driving record check, on every potential hire before they meet a client.

Choose your management software

Once you have staff, you need a system to manage schedules and client information. Agency management software is built for this. Look into platforms like AxisCare or WellSky. They help you match caregivers to clients and handle billing.

These systems typically cost between $100 and $400 per month. The price depends on the number of clients and caregivers you have. This investment saves you dozens of hours in administrative work each week.

Plan your payroll and staffing ratios

Payroll will be your biggest ongoing expense. As a rule of thumb in home care, aim to keep your direct caregiver wages at 50-60% of your total revenue. This ratio helps you set profitable service rates from day one.

It can be tempting to classify caregivers as independent contractors to save money, but this is a serious misstep. The IRS has strict rules, and home care workers are almost always considered W-2 employees. Misclassification can lead to major tax penalties.

Here are 4 immediate steps to take:

• Draft a job description for a caregiver, including pay range and required certifications.
• Research your state's specific background check requirements for home care employees.
• Schedule demos with two agency management software providers, such as AxisCare or WellSky.
• Consult an accountant to correctly set up payroll for W-2 employees.

Step 8: Market your business and get clients

Your first clients will likely come from professional referrals. Build relationships with hospital discharge planners, social workers in rehab centers, and geriatric care managers. Drop off brochures and business cards, and follow up with a brief, personal email. These professionals are a direct line to families in need.

With that foundation, turn to your online presence. A simple website showing your services and service area is non-negotiable. You should also claim your free Google Business Profile. This ensures you appear when someone searches for "caregivers near me."

Many new owners overspend on ads with poor returns. Instead of broad campaigns, focus your efforts. A small ad in a senior center newsletter often works better. Your client acquisition cost (CAC) will likely be $300-$700, so make every dollar count.

You can also run a referral program for existing clients and staff. Offer a small bonus, like a $100 gift card, for every new client they refer who signs up for services. Word-of-mouth is powerful and has one of the highest conversion rates.

Here are 4 immediate steps to take:

• List three local hospitals or rehab centers to contact for referrals.
• Set up and complete your Google Business Profile.
• Design a simple brochure outlining your non-medical services.
• Draft a client and employee referral program with a clear incentive.

Step 9: Price your services for profitability

Your pricing must cover caregiver wages, overhead, and profit. A good rule of thumb is to keep caregiver wages at 50-60% of your client rate. If you pay a caregiver $18 per hour, your client rate should be $30 to $36 per hour to maintain a healthy margin.

With that number in mind, research your local market. Call at least three competing agencies and ask for their private pay rates for companion care. Many new owners make the mistake of setting their prices too low to attract clients, which is not a sustainable strategy.

Set your rate structure

Most agencies use a simple hourly rate. You might also offer tiered pricing. For example, charge a base rate for companion care and a higher rate for services that require more skill, like personal care assistance. This allows you to match price to the value you provide.

You can also create packages, such as a 20-hour weekly block of services at a slightly reduced hourly rate. This helps secure predictable revenue. Just ensure your discounted rate still covers your costs and target profit margin of 15-20%.

Here are 3 immediate steps to take:

• Calculate your break-even hourly rate based on your overhead and target caregiver wages.
• Call three local competitors to get their current private pay rates.
• Draft a simple rate sheet with your standard hourly price and a weekly package option.

Step 10: Maintain quality and scale your agency

Measure your service quality

To keep service quality high, track a few key numbers. Aim for a client retention rate above 90%. You can also use a simple Net Promoter Score (NPS) survey sent quarterly to gauge client satisfaction. A score of 50 or higher is a strong signal.

Your caregiver turnover rate is another important metric. An annual rate below 25% is a healthy target. High turnover often points to issues with pay, scheduling, or support. Address these before they affect client care and your reputation.

Know when to grow

Once you reach 15-20 active clients, you should hire an office assistant or care coordinator. Many owners wait too long, and service quality suffers because they are stretched too thin. This hire frees you to focus on sales and managing referral relationships.

As you grow, your software needs will evolve. Your agency management platform is still central. You might also add a Customer Relationship Management (CRM) system like HubSpot's free version to track your network of hospital discharge planners and social workers.

Here are 4 immediate steps to take:

• Set a client retention goal of 90% or higher for your first year.
• Create a simple client satisfaction survey to send out quarterly.
• Define the client number (e.g., 15 clients) that will trigger your first administrative hire.
• Explore a free CRM like HubSpot to organize your professional contacts.

You now have a roadmap to launch your caregiver agency. Remember, this business is built on trust, not just tasks. Your ability to provide reliable, compassionate care is your greatest asset. With careful planning, you are ready to build a business that truly matters.

And when it comes to payments, keep things simple. JIM turns your smartphone into a card reader, letting you accept payments on the spot for a flat 1.99% fee without extra hardware. Download JIM and get ready for your first client.