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How To Limit The Liability In Your Childcare Business

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There is always risk and opportunity for liability in a childcare business, but there are a number of ways you can limit your liability and manage risk in your childcare business. Here are eleven things you may want to consider. (** Always talk with the proper professionals before taking action.)

1.  The Heart Stopper:  Make sure you never lose track of a child.  This terrifying event is most likely to happen when moving back and forth to the playground or when children are transported via busses or vans.  Sometimes it is not enough to count the number of children.  Make sure you perform a sweep after “all” of the children have left an area.  This is especially important for busses and vans as children are easily overlooked when they are in the back of a bus or van.

2.  Observe Good Business Practices:  This act is incredibly important.  While it doesn’t guarantee that you will be safe in your business environment, it certainly reduces the risk of getting sued.

3.  Business Component Incorporation:  Incorporate your business to limit your personal liability.

4.  Real Estate:  If you own real estate for your early education company, own it in a corporation or LLC that is different than the corporation that owns your business component.  By holding your real estate in a different entity, it can be protected from litigation against the childcare business.  Remember, you don’t have to be wrong to be sued.  Over the years, we have seen childcare company owners sued frivolously for little more than a parent that just needed a source of income.

5.  Transportation:  While some companies don’t go this far, owning your company vehicles in a separate transportation company helps to limit liability in the event of a traffic accident.  The people of the U.S. make up approximately 4.5% of world population.  Meanwhile, the U.S. also has 90% of the world’s lawyers.  That’s not an accident.

6.  Insurance:  Make sure you have the proper insurance coverage, including but not limited to, liability, property, flood and business interruption coverages.

7.  Teachers:  Train your teachers so they instinctively guard against any threat to the children, themselves or your center(s).

8.  Playgrounds:  Sectionalize playgrounds to make sure older children don’t accidently collide with the little ones when playing outside.

9.  Security:  Install proper security doors and surveillance cameras so unwanted visitors don’t gain access to your center or the people in it.

10.  Licensing Compliance:  While licensing is always part of the daily childcare business, keep in mind that the regulations are there with good purpose.  Sometimes it is the smallest act of prevention that stops a catastrophe.

11.  Professionals:  Make sure you have at least one good attorney and one good CPA on your team.  Having the right professional to show you the correct path is much easier than learning things the hard way.

By following a few practical and common sense rules, you can limit both your risk and your liability in your business.

Please tell us if you found this article helpful….or tell us what other topics you would like for us to discuss.

Click Here to view additional blog posts on managing your childcare company, Montessori, preschool, special needs school, or preschool more effectively.

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(Legal Disclaimer:  Always consult the proper professionals before taking action.  By and before the use of the information provided herein, reader agrees that BFS® is not responsible for viewer’s actions related to said information.)

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