How to Start a Daycare Business in Minnesota
Licensed child care — a home-based family daycare or a center. Here's the Minnesota-specific path — structure, licensing for daycare work, taxes, insurance, and landing your first customers.
Licensing for daycare work in Minnesota
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. In Minnesota, check both your city/county and the relevant state board before you advertise.
What a daycare business needs to open
Licensed child care — a home-based family daycare or a center. The setup areas that usually matter: 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).
Pick a structure (sole proprietor or LLC)
Most Minnesota owners start as a sole proprietor (free, no filing) or form an LLC for liability protection. The LLC filing fee is about $155, and formation typically takes immediate online / same day in person. Confirm the current fee on the state site before you pay.
Name a registered agent
If you form an LLC or corporation, Minnesota needs a registered agent with a physical in-state address. You can be your own agent if you're available during business hours, or hire a service for about $100–$150/year.
Get your EIN from the IRS
An Employer Identification Number is free from the IRS and takes a few minutes online. You need it to open a business bank account and to hire.
Register for Minnesota taxes
Minnesota has a state sales/use tax and has a state income tax. Minnesota's annual renewal is free but mandatory — the state dissolves LLCs that skip it.
Confirm local licenses and permits
Minnesota rarely issues a single statewide "business license" — most licensing is by city or county, plus profession-specific licenses. Check your city and your trade.
Open a business bank account and get insurance
Keep business and personal money separate from day one. General liability insurance is the baseline; some contracts also require a bond.
Put the ongoing report on your calendar
Minnesota requires a annual report (about $0). free if on time; $25 to reinstate
Getting your first daycare customers in Minnesota
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.
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Build my planFrequently asked
How do I start a daycare business in Minnesota?
Confirm the licenses for daycare work in Minnesota, pick a structure (sole proprietor or LLC), get a free EIN, register for Minnesota taxes, open a business bank account, get insurance, then set up your Google Business Profile and line up your first jobs.
Do I need a license for a daycare business in Minnesota?
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 in Minnesota?
Plan for $2,000–$15,000 (home) to $50,000–$300,000 (center), plus about $155 if you form an LLC. An EIN is free and general liability insurance runs a few hundred dollars a year for most solo operators.
Where do the first daycare customers come from?
State child-care referral networks, Nextdoor and parent Facebook groups, and word of mouth.
How much does it cost to start an LLC in Minnesota?
The state filing fee is about $155. Beyond that, budget for a registered agent if you hire one (~$100–$150/year), and any local license fees. An EIN is free.
Do I need an LLC to start a business in Minnesota?
No. You can operate as a sole proprietor in Minnesota with no state filing. An LLC adds a layer of personal liability protection and can make you look more established to customers and lenders — it's a judgment call based on your risk and goals, not a legal requirement.
How long does it take to form an LLC in Minnesota?
Standard processing is immediate online / same day in person. Many states offer paid expedited options.
Does Minnesota have a sales tax?
Yes. If your product or service is taxable in Minnesota, you must register with the state tax agency before you collect tax. Many services are not taxable — confirm on the official site.
What ongoing filings does a Minnesota LLC have?
Minnesota requires a annual report (about $0). free if on time; $25 to reinstate
Official sources
- Minnesota — form your LLC or corporation
- Minnesota — business tax registration
- Minnesota — professional & occupational licensing (check daycare)
- IRS — apply for an EIN (free)
Fees and timelines are commonly-cited figures last reviewed 2025-06 and can change — always confirm on the official site. This is educational information, not legal or tax advice.