Grading in homeschooling is done by the teacher-in-charge. In most of the cases, this means mom! In this situation, grading can get a bit tricky because it can be a little difficult to grade your own child. There is no benchmark against which you can evaluate your child's performance. In most cases, you also have no awareness of how well other children are doing. So, obviously the traditional method of grading is perhaps not the best method to follow.
When grading a child undergoing homeschooling, it is more important to assess whether the child has understood the subject that is being taught. Inherent in this is the fact that if the child has not understood something, you will go over it again. This will work in your child's favor in 2 ways. Firstly, the child knows that if he or she fails to catch on, the topic will be repeated till it is mastered. Secondly, the child also knows that once the topic has been mastered, he or she will get full credit for his hard work. Getting full reward for the hard work put in is a great motivational factor, especially for kids.
When assessing your child's abilities, do not allow emotions to overcrowd your rationale. Do not yield to the cries and tears of your child if he or she resists certain topics or subjects. If mastering these skills is necessary, then you as the teacher (and not as the parent alone) have to go over the topic over and over till it sinks in. When dealing with tougher concepts, the child may get restless and may even show frustration or belligerence. When the child is still young and unable to understand the importance of his lessons, it is your responsibility to see to it that the child develops the skill set necessary for future growth.
In case you belong to a state that requires yearly tests, this will help you to judge your child's ability vis-à-vis his peers. Even if it is not mandatory, you may want to test your child every year. These tests will reveal the variations in the child's learning pattern. It may show up unexpected areas of strength and hitherto unknown areas of weakness. This enables you to structure your teaching to cover the areas that are weak, and build upon the areas that are strong.
In case your state requires a homeschool report card, keep a record of the yearly development and scores of your child. Include pertinent areas like punctuality, discipline etc in the report. You may also need to keep a record of the number of working days and attendance schedules.
While grading your child, make sure that you use as many external tests as possible. There are several websites that deal with the various age groups, and allow free downloading of question papers. This is an excellent and cost-effective method to assess your child. Homeschooling, if done in the proper manner, will boost the child's confidence because he will be studying to satisfy his natural curiosity. The scores therefore will reflect his true intelligence.