Step 1 — Form your entity
Most home care agencies form as an LLC or S-corp for liability protection and pass-through taxation. Talk to a CPA about the tax election that fits your projected revenue and payroll structure.
Step 2 — Apply for state licensing
Every state has a distinct home care licensing process (DPH, DOH, AHCA, IDPH, HHSC, etc.). Most require proof of insurance before issuing your license — so bind coverage during the application phase to avoid delays.
Step 3 — Put insurance in place
At minimum you need general liability and (if you have any employees) workers' compensation on day one. Most agencies also need professional liability, non-owned auto, and a fidelity bond before their first client visit. See our home healthcare insurance page for the full stack.
Step 4 — Hire and credential caregivers
Decide W-2 vs 1099 (misclassification is a major exposure), run background checks, verify credentials (CNA, HHA, RN, LPN), and add caregivers to your workers' comp payroll estimate. Your insurance carrier will audit payroll at renewal.
Step 5 — Get Medicare/Medicaid certified (optional)
If you plan to bill Medicare, you'll need CMS-855 enrollment, accreditation from CHAP, ACHC, or Joint Commission, and higher liability limits. Most Medicare-certified agencies need at least $2M/$5M professional liability.
Common first-year mistakes
The most expensive first-year mistakes we see are: buying a generic BOP instead of a home healthcare program, under-estimating payroll for workers' comp (leading to a big audit bill), missing non-owned auto for driving caregivers, and skipping cyber liability until after a HIPAA incident.
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