Generally, child care providers establish their own billing details, such as their billing rate, deposit amount, late fee amount, and tax inclusion.
Billing rate
You can charge either a flat fee (a payment made in full at a certain time) or an hourly rate (a payment that the caregiver earns as they work and that the client pays periodically). Factors that may affect your billing rate include:
- The length of the contract (whether it be temporary or ongoing)
- The skills required for the job (if the client requires educational tutoring or if the child has special needs)
- The scope of child care (if it includes supervision, transportation, meal preparation, etc.)
Deposit amount
Child care providers may require clients to make a deposit, usually between 10% and 50% of the total contract amount, before they begin supplying care. Factors that affect the deposit amount may include:
- The stability of the client’s financial situation
- The degree of trust between the client and the child care provider
- The presence of a rival business that may offer competitive prices
Late fees
You may set a reasonable time period for the client to pay an invoice (often within 15 to 30 days of receipt). If payments aren’t made within this time frame, child care providers may charge late fees in addition to the outstanding invoice amount. Typically, late fees are no more than 10% per year on any overdue amounts. Caregivers may choose to impose late fees to:
- Encourage clients to pay on time
- Maintain a positive cash flow
- Avoid carrying clients’ debt
Sales tax
If you’re an independent contractor (i.e., you work for yourself or own a small business), you’ll need to pay taxes differently than an employee. For example, unless you are a small supplier, you’re required to charge, collect, and transfer sales taxes for your services and any supplies you use to do your job. Be sure to research how to charge GST/HST in your province or territory.
Although supplies and materials aren’t taxable if the client pays for them, child care providers can claim tax relief on any expenses that are for their business. For instance, you can expense any groceries, diapers, toys, or art supplies you buy to take care of a client’s children. If you provide child care in your own home, you may be able to deduct expenses such as electricity, insurance, or rent from the taxes you pay.