Originally Posted by concerned42517:
A friend of mine is opening a summer daycare program that she will be operating out of her apartment, which she rents from her parents. She is doing this because the preschool she works for is renovating their facilities and, therefore, not offering a summer program. She will have 6 of her former students for about 8 weeks. My concern is that she will be doing this unlicensed and uninsured. The parents of the kids are aware of this and agreed to pay her under the table and also not to report the expense on their taxes.
My friend is extremely good with the kids and has a ton of experience. I have no concern for the safety of the children, but my worry is that she has possibly left herself open to some significant liability. What potential risk is she taking on in the event something serious happens? In the much more likely scenario that everything goes fine, what are the chances of her facing any repercussions for licensing/insurance issues or tax evasion?
This world is completely foreign to me so any input would be welcome. I am sure my friend knows a lot more than I do and has likely done her homework and weighed the risks, however, I care about her and would like to know what you all think. Thank you for the help!
What state are you in? The amount of kids she can have will vary state to state.
As for liability, she is putting herself in significant danger. And she is also breaking federal law by not reporting income, so legally, she is heading down the wrong path.
Many apartments will not let you operate a daycare, so she should check with them. If she doesnt and they find out (6 families in and out twice a day is pretty noticeable), they could evict her and keep any deposits.
The insurance/liability stuff is a big issue, but how that works with renting is not something i know much about. All i know is that if someone gets hurt in her care, she could be in a whole lot of financial/legal trouble.
The tax thing is illegal and she may think she can get away with it, but all it takes is one parent claiming their childcare on their taxes and she could be audited and fined significant amounts. Trust me, i just the last 4 YEARS working with the IRS on a family member's back tax situation...it is NOT fun and very expensive!
Anyway, your friend is taking significant risk by doing this, so if you are able to sit down with her, it may help open her eyes...or not
But at least you will be making her aware in case she is not.