Skip to content

Start a Digital Home Care Agency in California: Costs & Compliance Guide

California is seeing a huge rise in demand for in-home care services.

The number of people over 65 is expected to nearly double in the next 20 years. As a result, more seniors will need help with daily living.

The Bureau of Labor Statistics predicts job growth of 36.9% for home health aides and 36.7% for personal care aides in California between 2019 and 2029.

For entrepreneurs, this is a great time to start a home care agency. It’s not just a business opportunity—it’s a chance to make a real difference in people’s lives.

By providing reliable and compassionate care, you can help meet this growing need while building a successful company.

But running a home care business comes with regulatory challenges. You need to follow strict licensing, compliance, and employment laws to operate legally in California.

That’s where technology can help. Digital solutions can:

  • Simplify scheduling and client management
  • Ensure accurate payroll and compliance with labor laws
  • Help meet regulations like the 21st Century Cures Act with electronic visit verification (EVV)

This guide will walk you through the key steps to start a home care agency in California. You’ll learn about state regulations, compliance requirements, and how technology can make your business more efficient and scalable.

Understanding the California Home Care Landscape

Starting a home care agency in California means understanding the different types of care and the rules that come with it. Let’s break it down.

Home Care vs. Home Health Care

Home care and home health care sound similar, but they are different.

  • Home care is non-medical. It includes help with daily activities like companionship, meal prep, medication reminders, light housekeeping, and personal care (bathing, dressing, etc.).
  • Home health care is medical. It involves nursing care, wound care, and injections, provided by licensed professionals.

This guide focuses on home care agencies that provide non-medical services. If you want to offer medical services, you’ll need to start a home health care business, which has a different licensing process.

Why Start a Home Care Agency in California?

There are many reasons to start a home care business in California.

  • Growing Senior Population – The number of people over 65 is expected to double in the next two decades. More seniors mean more demand for home care services.
  • Easier Licensing Process – California does not require a “certificate of need” for licensing. This makes it easier to get started compared to some other states.
  • Cost-Effective Operations – Healthcare costs in California are lower than in many other states, making it more affordable to run a home care business.
  • Service Coverage – Many home care services are covered by Medicare, Medicaid, and private insurance. For example, California’s In-Home Supportive Services (IHSS) Program helps cover non-medical home care for those who qualify.

Who Regulates Home Care in California?

The California Department of Social Services (CDSS) and its Home Care Services Bureau (HCSB) oversee home care agencies.

  • The HCSB handles licensing and registration for Home Care Organizations (HCOs).
  • They inspect agencies to make sure they follow state laws.
  • All home care aides must register with the Home Care Aide Registry.

If you want to run a legal home care agency in California, you must get a license from the CDSS HCSB.

By understanding these key points, you can navigate the process smoothly and build a successful, compliant home care agency in California.

10 Steps to Start a Home Care Agency in California

Starting a home care agency in California takes planning, paperwork, and a commitment to quality care. Here’s how to get started:

1. Get Your License

You need a Home Care Organization (HCO) license from the California Department of Social Services (CDSS). The application includes several forms, background checks, and a non-refundable fee. Be sure to check the CDSS website for the latest details.

2. Register Your Caregivers

All home care aides must register with the Home Care Aide Registry and pass a background check. This ensures they meet state standards for providing care.

3. Set Up Your Business

Choose a legal structure—LLC, S-Corp, or C-Corp—to protect your personal assets. Then, get an Employer Identification Number (EIN) from the IRS for tax purposes.

4. Plan Your Finances

Starting a home care agency can take 6-9 months before becoming profitable. Make sure you have enough funds to cover both personal and business expenses.

5. Create a Business Plan

Outline your services, target market, pricing, and marketing strategy. A strong plan helps guide your business and attract investors if needed.

6. Secure an Office

You’ll need an office space to manage scheduling, client records, and staff communication. Make sure it has the right equipment and a reliable internet connection.

7. Develop Policies & Training

Create a manual covering client care, staff hiring, and emergency protocols. Your home care aides must complete five hours of annual training to stay compliant.

8. Get Insurance & a Surety Bond

Liability insurance protects your agency, and workers’ compensation insurance covers employee injuries. A surety bond ensures you follow state regulations.

9. Hire & Train Caregivers

Recruit compassionate caregivers and provide ongoing training. Well-trained staff deliver better care and improve your agency’s reputation.

10. Market Your Agency

Build a strong online presence, network with local healthcare providers, and highlight what makes your agency special. Word-of-mouth and social media can be powerful tools.

By following these steps, you’ll set a solid foundation for your home care agency, ensuring compliance and quality service for your clients.

How Technology Can Make Your Home Care Agency Smarter

Running a home care agency in California is no small task. Between scheduling, compliance, and client care, things can get overwhelming. That’s where technology comes in! The right tools can streamline operations, reduce errors, and help you stay compliant. Here’s how:

1. Automate Daily Operations

Scheduling, payroll, and communication can eat up time. With home care software, these tasks become effortless. No more manual scheduling headaches or payroll miscalculations!

2. Stay on Top of Compliance

California has strict home care regulations. Electronic Visit Verification (EVV) is a must for Medicaid services, and labor laws require accurate tracking of overtime. The right software ensures compliance with these rules, so you don’t have to worry about penalties.

3. Protect Client Data

Patient information is sensitive. Using HIPAA-compliant software with encryption and secure access keeps data safe. This builds trust with clients and protects your agency from legal trouble.

4. Improve Care Quality

Tech isn’t just for paperwork—it enhances client care too. Remote patient monitoring, telehealth features, and caregiver apps make care more accessible and efficient.

5. Use All-in-One Home Care Software

A good home care platform brings everything under one roof. Features like:

  • Scheduling tools to prevent conflicts.
  • Billing automation for faster payments.
  • Caregiver apps for real-time updates.
  • Custom forms tailored to your agency’s needs.

With the right technology, your home care agency can run smoother, stay compliant, and provide better care. It’s an investment that pays off!

How Much Does It Cost to Start a Home Care Agency in California?

Starting a home care agency in California isn’t cheap, but knowing what to expect can help you plan better. Costs depend on whether you’re opening a non-medical or medical agency, your location, and the services you offer.

1. Licensing & Legal Fees

You’ll need to get a Home Care Organization (HCO) license, register your caregivers, and apply for local business permits. The HCO license fee can be over $5,000, so check the latest rates on the California Department of Social Services (CDSS) website. You’ll also need an EIN (Employer Identification Number) for tax purposes.

2. Insurance & Compliance

California requires liability insurance, workers’ compensation, and a surety bond. Legal consultation is also a good idea to ensure compliance with state regulations.

3. Office & Technology Costs

You might need an office, plus computers, phones, and filing cabinets. Home care agencies also rely on care management software for scheduling, client records, and payroll. A HIPAA-compliant system is a must to protect patient data.

4. Payroll & Staffing Costs

California’s minimum wage for healthcare workers is rising to $25 per hour by 2028. Employees also qualify for overtime pay after 8 hours per day or 40 hours per week. Factor in these labor costs when planning your budget.

5. Marketing & Advertising

A website, online ads, and brochures are key to attracting clients. Plan for marketing costs upfront to grow your agency.

6. Training Requirements

New caregivers need 5 hours of initial training and an additional 5 hours every year. Your agency will need a plan for training and compliance.

7. Estimated Costs

  • Non-medical home care agency: $80,000 – $120,000
  • Non-Medicare medical agency: $120,000 – $200,000
  • Medicare-certified agency: $240,000 – $450,000

Starting a home care agency takes careful planning, but with the right approach, you can build a successful and sustainable business in California’s growing healthcare market.

Ready to Start Your Home Care Agency in California?

Starting a home care business is a huge opportunity, and you don’t have to go it alone.

With over 10 years of experience in healthcare IT projects, SyS Creations is here to help you build a strong foundation for success. Our team of compliance experts and skilled technology professionals is dedicated to ensuring your agency operates smoothly and efficiently.

What We Offer:

  • Custom Healthcare Software Solutions: From caregiver management to patient care, we tailor solutions to your needs.
  • HIPAA-Compliant Platforms: Ensure your agency meets regulatory requirements with secure, compliant systems.
  • Streamlined Scheduling and Compliance: Let us help you stay on top of regulations, tracking, and scheduling with ease.
  • White-Label Solutions: A customizable solution that fits your agency’s unique needs.

With our deep expertise in healthcare workflows and compliance regulations, we guide you through every step of building a successful home care agency in California.

Want a live demo of your healthcare solution? Get in touch with our tech experts.