FirstBearing

How to Start a Daycare Business

What it takes to legally start a daycare business in the US — licensing, structure, EIN, taxes, insurance, and your first customers. The steps are the same everywhere; the forms and fees depend on your state, so pick yours below for the exact links.

Typical startup cost
$2,000–$15,000 (home) to $50,000–$300,000 (center)
Licensing
state + local — varies
Best structure
LLC for most
First customers
referrals + local search

  1. Check the licensing for daycare work

    Child care is one of the most heavily licensed small businesses — state licensing covers staff-to-child ratios, background checks, square footage, safety, training hours, and regular inspections. Requirements differ sharply between a home daycare and a center. This is the part that varies most by state — some require a state license or registration before you can advertise, others leave it to the city or county. Confirm both your state board and your local government before you take a job.

  2. Decide what the business needs to open

    Licensed child care — a home-based family daycare or a center. The setup areas that usually matter for a daycare business: State child care license (home or center), Background checks + ratios + training, Facility safety and inspections, Enrollment contracts and tuition, Food program. Typical cost to get operational: $2,000–$15,000 (home) to $50,000–$300,000 (center).

  3. Pick a structure — sole proprietor or LLC

    You can start as a sole proprietor with no filing, or form an LLC (usually $50–$300 depending on your state) for liability protection. For hands-on trade work where something can go wrong on a customer's property, most owners choose the LLC.

    LLC filing fee and steps by state ↗

  4. Get a free EIN from the IRS

    An Employer Identification Number is free and takes a few minutes online. You need it to open a business bank account and to hire.

    IRS — Apply for an EIN ↗

  5. Register for state taxes and get insurance

    Register with your state's tax agency if you'll collect sales tax, then line up general liability insurance — most contracts and license boards require proof of coverage.

  6. Get your first daycare customers

    State child-care referral networks, Nextdoor and parent Facebook groups, and word of mouth. Waitlists are normal once you're established and reviewed. Reputation among parents is everything; regulatory compliance is non-negotiable.

    Getting customers for a daycare business ↗

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Frequently asked

How do I start a daycare business?

Check the licenses for daycare work in your state, pick a structure (sole proprietor or LLC), get a free EIN from the IRS, register for state taxes, open a business bank account, get general liability insurance, then set up a Google Business Profile and line up your first jobs. The order and the exact forms depend on your state.

Do I need a license to start a daycare business?

Child care is one of the most heavily licensed small businesses — state licensing covers staff-to-child ratios, background checks, square footage, safety, training hours, and regular inspections. Requirements differ sharply between a home daycare and a center.

How much does it cost to start a daycare business?

Plan for $2,000–$15,000 (home) to $50,000–$300,000 (center) to get operational, plus $50–$300 if you form an LLC (varies by state). An EIN is free, and general liability insurance runs a few hundred dollars a year for most solo operators.

How much do daycare businesses make?

It depends on your rates, your utilization, and your area. See the income and pricing breakdown for a daycare business for typical owner take-home and what to charge.

Where do the first daycare customers come from?

State child-care referral networks, Nextdoor and parent Facebook groups, and word of mouth.

Official sources

Fees and timelines are commonly-cited figures last reviewed September 2026 and can change — always confirm on the official site. This is educational information, not legal or tax advice.

Related

AI-generated guidance is for educational purposes only and is not legal, tax, or investment advice. Disclosures · Trust center