How to start a daycare business step by step

Starting a daycare is not a to-do list you can shuffle. It’s a chain where each link gates the next: you can’t get licensed without a compliant space, you can’t pass final inspection without staff and policies in place, and you can’t legally take a single child until the license is in your hand. The order is forced by the regulators, and the one step that decides your timeline is the license, because it’s the slowest by months. Start it first, run everything else in parallel, and you open on schedule with families already enrolled. Do it out of order and you’ll sit on a signed lease paying rent with no license and no income.

Step 1: Pick home-based or center, because it sets every deadline

Before anything else, decide the format, because it changes the license, the timeline, and the money. A licensed family (home-based) daycare runs out of your house, serves roughly 6 to 12 children depending on your state, and can be licensed in as little as 6 to 10 weeks for a few hundred dollars. A center is a commercial space, serves 20 to 100-plus, requires commercial zoning and a build-out, and takes 4 to 9 months and tens of thousands of dollars to open. Most first-timers should start home-based to learn the business at low risk, then graduate to a center once demand is proven.

This choice cascades into every later step, so make it now, not after you’ve fallen for a storefront. If you’re weighing it seriously, best way to start and get into daycare business walks the trade-offs in depth.

Step 2: Start the license application first, and treat it as the long pole

This is the step that runs longest, so it starts first and everything else fills the wait. Call your state’s child care licensing agency (search “[your state] child care licensing”) and request the packet. Expect to complete: fingerprint-based background checks for you and every staff member (state and FBI, often through a vendor like IdentoGO), a set of required training hours (many states mandate CPR/first aid plus 15 to 40 hours of pre-service or health-and-safety training), a written set of policies, and a facility that will pass health and fire inspection.

The clock does not start until your file is complete, and it stalls every time a document is missing, so front-load the slow pieces: schedule fingerprinting this week and enroll in the training now. For the full regulatory walkthrough, see how do i set up and register a daycare business.

Step 3: Secure the space and pass inspection, in that order

Now the format decision pays off. Home-based: prepare the rooms children will use, safe sleep space, gated areas, covered outlets, locked chemicals, a fenced outdoor area, and clear egress. Center: sign a lease only on a space that’s already zoned for child care (verify with the city before you sign, because rezoning can take months and may fail), then build to code, sinks, diapering stations, fire exits, minimum square footage per child (often 35 sq ft indoor, 75 outdoor).

Then book the inspections. Fire marshal and health/environmental inspectors will visit; many states also require a licensing specialist walk-through. This is the second-longest step and it can’t begin until the space is ready, which is why you never sign a commercial lease before the license process is underway. Kit the rooms out from buying equipment and supplies for daycare business so nothing fails inspection for a missing cot or an uncovered outlet.

Step 4: Form the entity, open the accounts, and insure it for a daycare

Run this alongside the space work; it’s fast but it gates your contracts and your inspection sign-off. Form an LLC with your secretary of state ($50 to $500) to keep a child’s injury from reaching your personal assets, get a free EIN from irs.gov, and open a business bank account so tuition and payroll never touch your personal money. Then buy child-care-specific insurance, not a generic business policy: general liability ($1M/$2M), professional liability (abuse and molestation coverage is essential and often required by licensing), and workers’ comp once you hire. Expect roughly $1,500 to $4,000 a year for a small center, billed in installments.

The abuse/molestation endorsement is the line new owners skip and must not; it’s frequently mandated for your license and it’s the single claim type that can end an uninsured daycare overnight.

Step 5: Hire and train to ratio, and write the policies inspectors ask for

You can’t pass final inspection or legally open above ratio, so staffing and policies come together before opening, not after. Hire lead teachers who meet your state’s qualifications (often a CDA credential, an early-childhood associate’s degree, or documented experience), run the same background checks required for you, and verify CPR/first aid is current. Write the policy handbook licensing will review: sick-child policy, medication administration, emergency and evacuation plans, discipline policy, safe-sleep procedures, and a parent handbook.

Get the hiring right the first time, because turnover mid-year wrecks ratios and parent trust; when and how to hire and train staff for daycare business covers the qualifications and the training that keeps them.

Step 6: Enroll during licensing so you open full, then keep marketing

The biggest mistake in the sequence is treating marketing as the last step. It runs the whole time. The month you start licensing, start building a waitlist, tell every parent you know, post in local mom groups, put up a simple landing page with a “join the waitlist” form, and get on your state’s subsidy provider list (CCDF) so you can accept assisted families. An opening day with six families already enrolled is the difference between profit in month one and burning savings for a quarter waiting for the phone to ring.

Two free, high-value moves while you wait: claim your Google Business Profile the day you have an address (it takes weeks to verify, so start early), and collect a waitlist of committed families with deposits. To turn that into steady enrollment, how to get clients and customers for a daycare business is the playbook. The high-stakes piece is the website that turns a searching parent into a booked tour, fast, trust-building, license shown; building that is what we do. For the site handled instead of guessed at, get a free video walkthrough; for ads and local SEO, see our services; and if you have the idea but not the full plan and budget, start at expntl.com.