How to Start a Daycare

To start a daycare, you first decide between a home-based program and a larger center, then apply for a child care license through your state's licensing agency. That license is the hard requirement, and the rules are strict and state-specific, covering background checks, staff-to-child ratios, health and safety standards, and facility inspections. Once you are licensed, you handle the standard business setup (structure, registration, EIN, insurance) and begin enrolling families. Learning how to start a daycare is really about learning your state's licensing playbook before anything else.

This is one of the most heavily regulated small businesses a first-time owner can open, and for good reason: you are caring for other people's children. The good news is that the path is well-defined once you know the order of operations. Below is that order.

Should you start a home-based daycare or a center?

Your first real decision shapes everything that follows. A home-based (family) daycare operates out of your residence, usually serves a small number of children, and has a lower startup cost. It is the most common way first-time owners enter the field. A child care center operates from a commercial space, serves more children, and comes with heavier licensing, staffing, and facility requirements.

States often set different license types and child count limits for each. Many states distinguish between a "small family" home (a handful of kids) and a "large family" or "group" home (more children, sometimes requiring an assistant). Centers are a separate category entirely. Choose based on your budget, the space you have, how many children you want to serve, and how much regulation you are prepared to manage on day one.

How do you get a child care license?

This is the center of the whole process, so treat it as the main event rather than a box to check. Every state has a child care licensing agency, often housed within the Department of Human Services, Department of Children and Families, or a similar body. Start there, because everything else on your list depends on what they require.

A typical licensing process includes an application, an orientation or pre-licensing training, a home or facility inspection, and proof that you have met health, safety, and staffing standards. Expect to submit floor plans, emergency procedures, and detailed policies. Timelines vary widely, from a couple of months to the better part of a year, so apply early.

Tip: Before you spend a dollar on renovations or supplies, call your state licensing office and ask for the packet for the exact license type you want. Building to the actual rules is far cheaper than retrofitting to pass an inspection later.

Background checks

Everyone who will be around the children, including you, your staff, and often adult household members in a home-based program, must clear background checks. These typically include fingerprinting, state and FBI criminal history checks, and child abuse and neglect registry screening. Certain past offenses are disqualifying. Build time for these into your plan, because results can take weeks.

Staff-to-child ratios

Ratios are one of the strictest and most closely watched parts of licensing. States set a maximum number of children one caregiver may supervise, and the number gets smaller for younger children. Infants require far more staff per child than school-age kids. There are also group size limits. These ratios directly drive your staffing costs and how many children you can enroll, so know them before you build your budget.

What health and safety requirements apply?

Health and safety standards are detailed and enforced through inspections. While specifics vary by state, most programs must address:

• Facility safety: childproofing, safe surfaces under play equipment, secure storage of chemicals and medications, fencing for outdoor areas.
• Fire and building code: smoke detectors, fire extinguishers, marked exits, and a fire marshal inspection.
• Health practices: handwashing and sanitation routines, safe diapering and food handling, and immunization records for enrolled children.
• Training: CPR and first aid certification, and often training in safe sleep, medication administration, and recognizing abuse.
• Emergency planning: written plans and regular drills for fire, severe weather, and lockdowns.

Some states also require nutrition standards for meals and snacks. Ask whether your program qualifies for the federal Child and Adult Care Food Program (CACFP), which can reimburse you for meals served.

How do you handle the legal and business setup?

Once licensing is underway, set up the business itself. The steps here are the same ones any new owner follows, and our general startup checklist walks through them in order.

• Choose a structure. Many daycare owners form an LLC to separate personal and business liability, which matters a great deal in a childcare setting. Some consult an accountant about an S-corp election as they grow.
• Register the business. File your formation paperwork with the state and handle any local requirements. Here is how to register your business.
• Get an EIN. This free federal tax ID from the IRS is used for payroll, banking, and taxes.
• Confirm licenses and permits. Beyond your child care license, you may need local business licenses, zoning approval, and a certificate of occupancy. See our guide to licenses and permits.

Zoning is worth flagging early. Some residential areas restrict home-based daycares or cap the number of children, so confirm your address is allowed before you commit.

What insurance does a daycare need?

Insurance is not optional in this field, and many states require proof of it to be licensed. Common coverages include general liability, professional liability (also called abuse and molestation coverage in this context), commercial property, and, if you hire, workers' compensation. Home-based owners should not assume a homeowners policy covers a business; it usually does not. Talk to an agent who specifically writes childcare policies.

How much does it cost to start a daycare?

Costs vary enormously between a home program and a center. A home-based daycare might launch for a few thousand dollars, mostly for safety equipment, supplies, licensing fees, and insurance. A center can require tens of thousands or more once you factor in lease or renovation, commercial-grade equipment, and staff payroll before you are fully enrolled.

Plan for these categories: licensing and inspection fees, facility setup and childproofing, furniture and learning materials, insurance, initial staff wages, and background check costs. Keep several months of operating expenses in reserve, because enrollment usually ramps up gradually.

How should you set tuition?

Price by researching what comparable programs in your area charge, then adjusting for your costs and capacity. Most daycares charge weekly or monthly, with higher rates for infants because of the tighter ratios. Be clear in writing about your rates, late-pickup fees, deposits, holiday closures, and payment schedule. Underpricing to fill spots fast is tempting, but ratios cap your revenue, so your price per child has to actually cover your costs and pay you.

How do you enroll your first families?

Trust is your product, so your marketing should build it. Start with the people nearby: neighbors, local parenting groups, pediatric offices, churches, and community boards. A simple website with your license status, philosophy, hours, and rates helps parents take you seriously. Word of mouth is powerful in childcare, so an excellent experience for your first few families becomes your best advertising. Our guide on how to enroll your first families covers outreach in more depth.

Have your enrollment paperwork ready before you open: a parent handbook, enrollment and emergency forms, immunization records, and a written contract. Offering tours and being transparent about safety and licensing turns interested parents into committed ones.

Frequently asked questions

Do I need a license to run a daycare from my home?

In almost all cases, yes, once you care for children from more than one family or exceed a small threshold set by your state. A few states exempt very small arrangements, but the safest step is to contact your state licensing agency and confirm the rules for your exact situation.

How long does it take to open a daycare?

Plan for several months. Background checks, required training, facility inspections, and license approval each take time, and they often run in sequence rather than all at once. Applying early and building to the licensing standards from the start is the best way to avoid delays.

Can I hire staff before I am licensed?

You generally cannot operate before licensing, but you will need qualified staff lined up to meet ratio and staffing requirements at inspection. Every staff member must clear background checks and meet training standards, so start recruiting and screening well ahead of your target opening date.

This article is general information, not legal advice. Child care licensing varies significantly by state, and requirements change. Always confirm the current rules with your state's child care licensing agency and consult qualified professionals before opening.

Keeping licensing, legal setup, insurance, and enrollment straight is a lot for one person. Scafflow gives first-time owners a personalized, ordered checklist across Legal, Finance, Brand, Website, Marketing, Customers, and Operations, so nothing important slips while you focus on the kids.

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