Your legal questions answered
If you’ve decided to set up as a childminder there are some legal ins and outs you need to know. We’ve answered some of the key questions.
Q: What kind of business structure should I have?
Most childminders are self-employed (or ‘sole traders’). Some childminding businesses – particularly those who are registered as childcare on domestic premises – can be set up as a partnership or a limited company.
- As a sole trader you are the sole owner and operator of your business. You need to let HM Revenue and Customs know that you are self-employed and if you are going to trade under a name that’s different from your personal name, you must include your own name on your business stationery.
- If your business is a partnership, there will be two or more of you doing the work.
- As a limited company your business will be run and managed by a board of directors. A limited company must be registered with Companies House.
Q: What name do I give my business?
Your business doesn't need to have a name at all, but the right name can certainly help you stand out amongst the competition. Choosing a short, simple and easily memorable name is a good idea. There are some things you will have to consider, as what you call yourself will depend on what kind of company you are setting up.
For instance, you may not choose an offensive company name, or a name that is the same as an existing trade mark. Neither can you suggest a connection with government, local authorities, or royalty, unless you get permission.
Read more about setting up and naming your company or limited liability partnership here. Information for sole traders is slightly different, so do read up on your situation.
Q: What if someone offers to help finance my childminding business?
If someone offers to invest in your business, even if it’s a family member, get an agreement in writing and have a solicitor check it. If someone helps you financially it may be you have entered into a partnership without realising it. Also, that person may be legally able to claim a share of your business profits.
Make sure you are clear about the terms of the investment – is it meant to be a gift, or a loan which you will need to repay – and if so, will interest need to be paid? Always take professional advice to avoid potential problems later.
Q: I’ve heard about data protection - how does that affect me as a childminder?
As a childminder, you will need to register with the Information Commissioner's Office (ICO) and be aware of all data protection laws for holding photos and information on the children in your care.
The ICO is the UK’s independent public body set up to promote access to official information and protect personal information. The ICO enforces and oversees the Data Protection Act.
As a registered provider you’re expected to keep detailed records about individual children’s development and, if you keep these on a computer you will need to be registered as a data controller with the ICO.
PACEY members can read our factsheet on registering with the ICO, which includes information about exceptions to registration.
If you are in any doubt about whether or not you need to register, or if you know of someone in need of further clarification, you can call the ICO on 0303 123 1113.
You will also need to ensure you comply with GDPR, the 'General Data Protection Regulation'. Further guidance can be found here.
Q: I’m employing staff - what do I need to know?
Anyone who employs staff must work within the laws on employment. You will need to make sure you respect your employees’ legal rights, and fulfil your tax, pension and other duties. There are some key things to think about:
- Be sure to check that all your new employees are legally entitled to work in the UK, or you could be heavily penalised.
- You should have a signed contract of employment ready from the day any employee starts work.
- As an employer you must make sure you treat your employees in a fair and consistent manner and will need to demonstrate that they will not be discriminated against or harassed on the grounds of age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion and belief, or sex.
- You must register under the Pay As You Earn (PAYE) scheme with HM Revenue & Customs to operate staff payroll.
- You will also need to think about pension arrangements for your employees.
- Consider your recruitment, induction, supervision and appraisal processes, policies and procedures.
Employed vs self-employed staff
You can check whether any staff you work with are exempt from PAYE using a gov.uk online tool.
As a general guide, someone is probably self-employed and shouldn’t be paid through PAYE if most of the following are true:
- they’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit
- they can decide what work they do and when, where or how to do it
- they can hire someone else to do the work
- they’re responsible for fixing any unsatisfactory work in their own time
- their employer agrees a fixed price for their work - it doesn’t depend on how long the job takes to finish
- they use their own money to buy business assets, cover running costs, and provide tools and equipment for their work
- they can work for more than one client
As a business owner, also remember that you have important legal obligations concerning health and safety.
More information on employing staff can be found in the Growing your childminding business section of Business Smart.
Q: What should I do about insurance?
If you employ people, whether it’s full-time or on a casual, part-time basis, by law you must have employer’s liability insurance in the UK. You will also need public liability insurance and professional indemnity insurance.
If you're not sure about the importance of having the right insurance, this blog helps explain why it's so important.
Q: How do I make sure I have the right agreements and contracts in place with parents and carers?
It is really important that you have the right contracts and agreements in place with your parents. PACEY contracts are designed to better protect you and reduce common areas of dispute such as deposits, holidays and payments. They are tried and tested in court, and reviewed by our legal team regularly.
PACEY members also get access to a 24/7 PACEY Legal Advice Line where qualified solicitors are on hand to offer you practical advice and benefit from up to £100,000 insurance to pay for legal and professional fees in respect of legal proceedings, which could assist you if you have a dispute with a parent or guardian about the terms of your contract.
Getting the right contracts and legal support in place will give you peace of mind and enable you to get on with running your childminding business safe in the knowledge that you have full legal protection in place
Do I need a music licence?
If you plan to play recorded music in your setting, including TV, radio, CDs, MP3s, etc.) you may need to apply for a special license. Whether or not you need to do so depends on how your childcare setting is arranged.
Childminders operating in their own homes will require a joint PPL and PRS for Music licence only if music is played in a room that has been set up specifically and exclusively for the purpose of childminding, for example, a playroom that is used only for childminding activities and not usually for family or domestic use.
Operators providing childcare on domestic premises (four or more people looking after children at any one time in someone's home) will typically require a joint PPL and PRS for Music licence.
Read more information about the joint PPL and PRS for Music licence.