Wisconsin Department
of Children and Families - Division
of Early Care and Education
Bureau of Child Care Subsidy Administration
Wisconsin Shares Handbook
Self-employment is an approved activity for Wisconsin Shares. However, self-employment as an unregulated child care provider is not allowable as an approved activity.
Parents who are self-employed must file taxes with the Internal Revenue Service (IRS) for the self-employment to be an approved activity.
After the annual renewal that follows the 24th month of new self-employment, the self-employment only qualifies as an approved activity if annual net business income equals $400 or more. An ongoing business that generates less than $400 annual net income is considered a hobby for Wisconsin Shares purposes and not an approved activity.
Identifying Self-Employment
Agency workers should review the questions/statements below to determine if a parent is self-employed or employed when it is unclear whether the activity is employment or self-employment. Not all questions are applicable to all self-employed parents, and the answers to some of these may resolve the question of self-employment or employment without needing to answer further questions. For example, receipt of an IRS Form 1099 is enough to show that it is not an employee-employer relationship.
Does the parent have or have they applied for a tax ID number? If the business has employees, an Employer Identification Number (EIN) is required by the IRS. Some businesses use the individual’s SSN to report their earnings.
Does the parent receive an IRS Form 1099 at year end? If so, they are self-employed. If they receive a W-2 Wage and Tax Statement, they are employed.
What is the nature of the business? If the parent states they are a farmer, do they have their own farm or work on someone else’s farm?
Who are their customers? The parent should be able to explain to whom they provide their product or service.
Do they have an online presence? Most businesses have a website, advertise online, and/or have a social media account.
Does the parent maintain a separate location to deliver their product or service? A self-employed hair stylist can rent a work space in a salon where they use their own equipment.
Does the parent set their own hours, provide materials, and use their own tools and equipment?
Does the parent incur the main expenses related to the services that they perform under contract? A self-employed truck driver owns their truck and pays for insurance, repairs, and maintenance.
Does the parent have a contract to provide goods or services? A construction business has a contract with the customer for building a new home.
Does the parent receive compensation for services performed under a contract on a commission or per-job basis and not on any other basis? If the parent is paid a salary, they typically are not self-employed but employed.
Does the parent use a business bank account related to the services they provide?
Does the parent use their privately owned vehicle to provide a service? An Uber driver uses their own vehicle for providing transportation to customers.
Does the parent have recurring expenses, such as liability insurance?
Does the parent have a license if a license is required for their business? If the parent reports they are a real estate agent, hair stylist, or plumber they must obtain a license to do business in Wisconsin.
Does the success or failure of the parent’s business depend on the relationship of business income to expenditures?
Does the parent work in and around the house under the direction of the person who owns the home? If so, they are a household employee, not self-employed.
After reviewing these statements, if it is still unclear if the parent has valid self-employment, the agency worker should contact the Child Care Help Desk at childcare@wisconsin.gov for assistance.
Example 1 (Employment): Sarah works for her neighbor, Betty. Betty pays Sarah in cash, with no taxes withheld. Sarah cleans Betty’s home, mows her lawn, does her laundry, and anything else that Betty asks of her. Because Sarah is working under the direction of Betty, this is employment, not self-employment. |
Example 2 (Self-employment): Rochelle decides that she is going to open her own cleaning business. She will drive to different homes, use her own cleaning supplies, and control her own work schedule. Rochelle is self-employed. |
Example 3 (Employment and self-employment): Steve works for Smith Farms during the week taking care of the animals on the farm, under the direction of Mr. Smith. Mr. Smith instructs Steve as to what jobs need to be done during the workday on the farm and pays him cash. Steve also has his own landscaping business. Mr. Smith is one (1) of Steve’s customers for whom he mows the lawn. Steve indicates to Mr. Smith what days and times he will be there to mow the lawn and provides his own lawn equipment. Steve is an employee of Smith Farms, but his landscaping business is self-employment. |
Example 4 (Employment): Chelsea goes to Sabrina’s home to care for her children for 40 hours every week. Sabrina controls Chelsea’s work and how the work is done. Chelsea is Sabrina’s household employee. |
Example 5 (Self-employment, unregulated child care provider): Judy runs a baby-sitting service in her own home. She only cares for one (1) child at a time. She is not certified or licensed according to Wisconsin child care provider regulations. Judy is self-employed. However, her self-employment is not an approved activity for Wisconsin Shares because she is an unregulated child care provider. |
Example 6 (Self-employment, regulated child care provider): Kelly is a licensed family child care provider. She has two (2) employees. If Kelly needs Wisconsin Shares for her children while she works, she will need to apply for a waiver for her children to attend a different provider (see 13.2). Kelly’s approved activity is self-employment. If her two (2) employees apply for Wisconsin Shares, their approved activity is employment. |
This section last updated 12/1/2022