How to Start a Home Care Business in California

Thinking about starting an LLC in California? We’ve got all the details you need.

Begin by selecting a unique business name, appointing a registered agent, and filing your Articles of Organization with the California State Corporation Commission, which includes a $100 processing fee.

You can do this independently, consult with a business attorney for specialized legal guidance, or join the other 75% of our readers and hire a specialized California LLC formation service (recommended).

Zenbusiness (Starting at $0 Plus State Fees)

Northwest ($39 + State Fees)

How Do I Become a Home Health Care Provider in California?

According to The California Department of Finance, the number of adults aged 65 or above is projected to grow to 8.7 million by 2030. This makes it clear that the demand for home care services is set to soar.

Below, we have explained in step-by-step detail how you can start your very own home care business in California.

Step 1: Write a Business Plan

Without a well-thought-out business plan, it’s challenging to establish clear objectives and strategies for your home care business in California. A good business plan should clearly outline your goals, identify your target market, have a thorough analysis of your competitors and the industry, and include financial projections.

Remember, a business plan isn’t something you can write in a day. It often requires weeks, if not months, of careful research, analysis, and refinement to ensure its accuracy and effectiveness.

You have to dedicate time and effort to gather data and understand the home care industry in California. Before you sit down to write your business plan, think about the needs of your potential customers. In addition, look at other established businesses and what you’re going to do that will set your home care services apart.

If you’ve never written a business plan before, then here’s a breakdown of what it typically includes:

1. Executive Summary: Summarize your business concept, mission, goals, and key highlights of the plan.
2. Description of Your Business: A clear and detailed description of the home care services you’ll be providing in California.
3. Organization: How your business will be structured and operated, including details about management, ownership, and the roles of key personnel.
4. Analysis of Your Target Market: An analysis of your potential customers, as well as any trends or opportunities within the industry.
5. Analysis of Your Competitors: An analysis of other businesses in the industry to understand how you can provide better services.
6. Revenue Projections: How much revenue you expect to make from your home care business in California.

Step 2: Choose the Right Business Entity

Once you have your business plan ready, it’s time to decide how you want your company to be structured. You can’t operate as a sole proprietor when starting a home care business because hiring employees to provide home care services is essential. Not operating as a sole proprietor introduces additional complexity to your business operations.

You’ll either have to be a limited liability company or a corporation. Here’s a detailed look at both types of business entities, so you can decide which one best suits your needs and goals for your home care business:

Limited Liability Company (LLC)

An LLC will protect your personal assets from business debts and liabilities. LLCs are similar to corporations, but they’re much simpler in how they’re formed and operated, which makes them great for small business owners. Plus, they have fewer regulatory requirements compared to corporations, making them easier to set up and maintain.

In an LLC, the business’s profits or losses are included in the owners’ personal tax returns. The owners pay taxes on these profits or can deduct losses based on their personal tax rates. This means the business itself doesn’t pay separate taxes. This sort of tax arraignment is called “pass-through taxation,” and it is a significant benefit of an LLC.

Corporation

Corporations also provide protection for personal assets against business debts and liabilities, but they’re more complex than LLCs and they have to follow more stringent regulations. They must have regular board meetings and adhere to various reporting requirements mandated by state and federal regulations.

Large businesses prefer corporations over LLCs because they offer easier access to capital through the issuance of stocks and have a clear and structured organizational hierarchy. Corporations often carry a greater sense of credibility and prestige in the business world.

The choice between forming an LLC or a corporation for a home care business in California depends on various factors. These might include your business goals, preferences, and specific circumstances.

For many small to mid-sized home care businesses, an LLC may be more suitable due to its simplicity in formation and operation, as well as its flexibility in taxation and management. LLCs offer limited liability protection for owners, which is crucial in the healthcare industry.

However, if you plan to expand your home care business significantly, seek outside investment, or have complex ownership structures, a corporation may be more appropriate.

We recommend consulting with legal and financial advisors. They can offer personalized advice to help you grasp the specific legal, tax, and financial aspects of selecting between an LLC or a corporation for your home care business in California.

Step 3: Register Your Business

This is where you start to set things in motion. The first thing you have to do is come up with a unique name for your home care business and get it registered with the California Secretary of State so no one else can use it.

In California, a business name can be reserved for 60 days, after which you have to file a new reservation if you haven’t completed the registration process within that time frame. It’s an online process and requires a one-time fee of $10.

After getting your name reserved, you have to file the articles of organization if you’ve chosen to structure your business as an LLC. This document officially establishes your LLC and outlines key details about your business, such as its name, address, and management structure.

If you’re a corporation, you’ll have to file the articles of incorporation. This document serves a similar purpose to the articles of organization but is specific to corporations, outlining details such as the corporation’s name, purpose, and shares of stock.

Then, you have to get your Employer Identification Number (EIN) from the Internal Revenue Service (IRS). You can think of it as a Social Security number that businesses need for tax purposes, hiring employees, and opening business bank accounts.

Finally, hire a registered agent to represent your business for legal and official matters. While it’s possible to appoint yourself as the registered agent, many businesses prefer to use a professional registered agent service. This option ensures that all legal documents are handled promptly and accurately, freeing up time for you to focus on running your business smoothly.

Step 4: Choose a Registered Agent in California

If you’ve opted to organize your business as an LLC or corporation in California, your next important step is to appoint a registered agent. This is a key requirement when drafting your Articles of Organization, the document required to officially register your LLC or corporation with the California Secretary of State.

So, what is a registered agent? A registered agent is a person or business entity assigned to receive essential documents on behalf of your business, such as tax forms, legal notices, lawsuits, and official government correspondence. Essentially, your registered agent acts as the main point of contact between your business and the state.

Who can be a registered agent? The registered agent must be a California resident or a corporation authorized to conduct business in the state, such as a registered agent service. If you want to serve as your own registered agent, you must appoint an individual within your company, as California law does not allow business entities to serve as their own registered agents.

For more detailed information on registered agent requirements in California, consult the California Corporations Code.

Don’t forget that to run a business, you need to: register a business entity (LLC is the most suitable option, more details here), obtain an EIN (you can apply online here), open a business bank account (more details here), understand accounting and taxes (more details here), and register a domain and create a website (this is optional, you can do it here).

Alternatively, you can delegate all of this to a registered agent starting from $0 + State Fees and get everything done in 1 day. This can save you time and ensure everything is done correctly, leaving you to focus on growing your business.

Apply Online

Step 5: Get the Necessary Licenses and Permits

As a home care business in California, it’s crucial to obtain the permits and licenses you need to operate legally and serve your clients.

Every business in California requires a general business license, also known as a business tax registration certificate. Then, you need to get licensed by the Home Care Services Branch (HCSB) of the California Department of Social Services (CDSS).

How to Get a Home Care License in California

You’ll have to fill out an application form (which you can find on the HCSB’s site) and provide details about your business. These details include employees/home care aides you plan to hire, and required documentation, such as proof of insurance, background checks for employees, and any relevant training certifications.

The application has a fee of $5,603. Here are some of the things you’ll have to provide while filling it out:

1. Name of the person who is legally responsible for the company.
2. Your address.
3. The name of your home care business.
4. Address of the company.
5. Name and title of a person who has been authorized by you to act in your absence.
6. The total number of home care aides you plan to hire.
7. Days and hours your home care business is open to the public.

Note that a home care license will only give you permission to provide non-medical services. To provide medical services, you’ll need to set up a “home healthcare business,” which is different from a home care business. It requires different licensing, certifications, and compliance with healthcare regulations.

Make sure you research and understand the specific requirements for establishing a home healthcare business in your area if you want to provide medical services.

There may be additional licenses that you’ll need based on the services you plan to offer and the location of your business. For example, if you’re selling tangible products, you’ll need a seller’s permit and if you’re going to be running your business from a home office, then you’ll require a home occupation permit.

We recommend consulting CalGold to see a list of all the licenses and permits you’ll need.

Do Caregivers Need to Be Licensed in California?

No, caregivers aren’t required to be licensed in California, but there are certain requirements they have to meet. First, they have to be registered with the California Department of Social Services (CDSS). This requires them to pass a criminal background check. You have the option to fill out their application for them when they apply to your company for a job.

As part of the application process, they have to submit their fingerprints with a Live Scan vendor and pay a one-time fee of $35.

All home care aides must have a valid driver’s license and undergo a tuberculosis (TB) test. They also have to be trained once they have been hired. We have explained this in more detail in step 6.

Step 6: Set up an Administrative Office

The next step is to set up an administrative center for your home care business. This is where you will conduct meetings with your staff and coordinate administrative tasks such as scheduling and billing. The administrative center serves as the hub of operations, providing a centralized location for managing the various aspects of your home care business.

You have to make sure that the location is easily accessible so your employees can commute to work without any hassle. You’ll have to equip your office with the necessary equipment and supplies. This includes computers, phones, internet connection, printers, office furniture, and anything else you think will support your team in their daily tasks at the administrative office.

Since you’re just starting out and haven’t established a client base yet, it may be possible for you to skip this step. However, as your business grows and you hire more employees, investing in office space will become increasingly important for streamlining operations and ensuring efficiency.

Step 7: Hire Employees

Now all you have to do is hire caregivers and care aides who will provide essential non-medical services to your clients. These employees won’t require medical training, but as part of the home care licensing application, they will need to undergo comprehensive background checks.

It’s important that you hire people who are compassionate and genuinely committed to helping others. They must be just as empathetic as you are.

You’ll have to conduct thorough interviews and assessments to make sure that you can build a team that can deliver the highest level of support and assistance to your clients. If you’re not sure how to do this yourself, then we recommend hiring a skilled HR professional.

Once you have hired your team of caregivers and care aides, you’ll have to provide them with comprehensive training and ongoing support to ensure they can effectively meet the needs of your clients.

According to The California Home Care Services Consumer Protection Act, home care aides are required to complete 5 hours of entry-level training before they can start providing care to clients.

This entry-level training includes two hours of “orientation training regarding [their] role as caregiver and the applicable terms of employment.” They’ll also need three hours of “safety training, including basic safety precautions, emergency procedures, and infection control.”

In addition, your home care aides must also undergo 5 hours of annual training. Here’s what it covers:

1. The rights and safety of your clients.
2. How to meet and respond to a client’s everyday living needs.
3. How to recognize, prevent, and report abuse and neglect.
4. How to support clients with personal hygiene and other essential home care services.
5. How to safely transport clients if your business provides transportation services.

Annual training ensures that home care aides stay updated on best practices and regulations, enabling them to provide high-quality care while maintaining the safety and well-being of clients.

By engaging in continuous learning and professional development, caregivers can cultivate empathy, resilience, and adaptability. These are essential qualities for providing compassionate and effective support to clients.

This commitment to ongoing education not only enhances the skills and competencies of home care aides but also fosters a culture of continuous improvement within the home care business. Ultimately, this benefits both clients and caregivers alike.

Is Home Care Business Profitable in California?

Like any other business, the profitability of a home care business depends on several factors like market demand, competition, operational efficiency, and pricing strategies.

Generally speaking, though, California has a large number of people who are 65 or above. As individuals age, they often require assistance with daily activities and healthcare needs, creating a growing demand for home care services.

It’s common for home care businesses to charge a premium price for their services. Clients are willing to pay higher rates for the convenience, comfort, and quality of care delivered in the familiar surroundings of their own homes.  It’s also much easier to scale than many other types of businesses.

This combination of premium pricing and inherent scalability makes home care businesses an attractive and lucrative venture for entrepreneurs in California.

Starting your home care business may cost some money, but there are options to offset the expense. Investors and grants to start a home health care business can make the venture more feasible.

How Much Does Private Home Care Cost per Hour in California?

The cost of private home care depends on factors like location, the level of care needed, and the specific services provided. According to a survey conducted by Genworth, the average cost of private home care in California in 2023 is $37 per hour. The exact cost will vary depending on the city or region where the services are provided.

For example, the average cost of private home care in San Francisco is $45 per hour, but in Sacramento, it’s $35 per hour.

How Much Are Caregivers Paid in California?

According to Talent and Indeed, caregivers in California typically earn an average yearly salary ranging from $35,000 to $45,000. Entry-level workers in California can expect to make around $31,000 per year, while experienced caregivers may earn as much as $45,000 annually.

Plus, employers may offer additional benefits such as health insurance, paid time off, retirement plans, and professional development opportunities. All of these factors can impact overall compensation packages.

Caregivers who work night shifts, weekends, or holidays may be eligible for shift differentials, which provide additional compensation for working during non-traditional hours. Overtime pay may also apply for hours worked beyond the standard full-time schedule.

Caregivers who specialize in certain areas such as dementia care, hospice care, or medical care may earn higher wages. These specialized roles often require additional training and qualifications, which can lead to increased earning potential. The hourly rates for specialized caregivers can vary widely depending on the level of expertise and demand for their services.

Salaries for caregivers can also be influenced by the cost of living in different regions of California. For example, caregivers working in metropolitan areas like Los Angeles, San Francisco, or San Diego may earn higher wages compared to those working in rural areas or smaller towns.

Empower Your Community With Your Home Care Business

Starting a home care business isn’t just financially rewarding, it’s also emotionally fulfilling and socially impactful. The first thing you have to do is write a detailed business plan that includes information about your target market, services you plan to offer, marketing strategies, operational plan, and financial projections.

Then, you need to figure out how you want to structure your business and register your company with the Secretary of State. Most home care businesses choose to operate as an LLC because it’s easier to set up than a corporation and provides several tax benefits.

As a home care provider, it’s your job to get a general business license and make sure all your employees have the right licenses and training to provide home care services. You also need a “home care license,” which costs $5,603.

Set up an administrative office for your business where you and your employees can manage paperwork, hold meetings, and handle day-to-day operations effectively. All you need to do after that is hire home care aides and provide them with thorough training.

By following these steps, you’ll be well on your way to establishing a successful and impactful home care business.