How to Start a Daycare: The Complete Guide

Before you do anything else, decide what kind of childcare program you want to run. The two main models are a home daycare (also called a family childcare home) and a center-based program. Your choice affects startup costs, licensing requirements, capacity limits, and how you operate day to day.

Most first-time providers start with a home daycare to test the model before scaling. If you already have a commercial space or want a larger program from the start, center-based makes sense. Either way, capacity is set by your state license — you cannot enroll more children than your license allows.

Childcare is regulated at the state level. There is no single national daycare license — every state has its own licensing agency, its own application process, and its own rules. The requirements in California look nothing like the requirements in Texas. Start here before you spend a dollar on anything else.

While requirements vary, these elements are consistent across all states:

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  Criminal background checks

  Required for the provider and all adults living or working in the home or facility. Fingerprinting is required in most states.

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  Pre-licensing training hours

  Ranges from 6 to 40+ hours before licensure, covering child development, health, safety, and emergency procedures.

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  CPR and First Aid certification

  Required for the primary provider and, in most states, for at least one staff member per group of children at all times.

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  Facility health and safety inspection

  A licensing inspector visits the home or facility to verify space requirements, smoke detectors, fire extinguishers, and childproofing.

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  Staff-to-child ratios

  Minimum ratios set by age group — younger children require more supervision. Ratios must be maintained throughout operating hours.

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  Written policies and parent handbook

  All licensed providers must have written policies on file — illness exclusion, discipline, emergency procedures, and more — provided to families at enrollment.

TotReady has detailed licensing data for these 15 states:

A daycare business plan does not need to be a hundred-page document. It needs to answer four questions: Who are my customers? What will I charge? How many children can I serve? And will the numbers work? Here is what to include.

Typical startup cost ranges

For a home daycare, your facility is your house — but it still needs to pass a licensing inspection before you can open. For a center-based program, site selection is one of the highest-stakes decisions you will make. Zoning approval, building inspection, fire clearance, and ADA compliance all have to line up before you can serve children.

Facility checklist — what inspectors look for:

• ✓Minimum square footage per child (varies by state, typically 35 sq ft indoor)
• ✓Secured, fenced outdoor play area
• ✓Working smoke detectors on every level
• ✓Carbon monoxide detectors where required
• ✓Fire extinguishers — inspected and current
• ✓Exit signs and clear emergency egress routes
• ✓Hot water temperature at 110°F or below at sinks children use
• ✓Locked storage for cleaning supplies and medications
• ✓Separate bathroom facilities (center-based programs)
• ✓Food preparation area meeting health code standards
• ✓First aid kit stocked and accessible
• ✓Age-appropriate furniture and equipment

Applying for your childcare license is a multi-stage process that runs in parallel with your facility prep. Do not wait until your space is finished to submit your application — start as early as possible because processing times vary widely.

For home daycares, you may be the only staff member — but you still need to understand staffing requirements if you plan to hire an assistant. For center-based programs, hiring qualified staff is one of the most operationally critical steps.

Every staff member must pass a background check before working with children. This is non-negotiable in all 50 states and typically includes fingerprinting, a national criminal check, and a child abuse registry check.

Every licensed childcare center is required to give families a written parent handbook at enrollment. Licensing inspectors check for it during routine visits. Centers that are missing a handbook — or that have one that is incomplete — routinely receive deficiency citations that can delay renewal.

A complete parent handbook must include at least these 13 sections:

1. 1Hours of operation and holiday schedule
2. 2Enrollment, fees, and late payment policy
3. 3Arrival and departure procedures
4. 4Illness exclusion and return-to-care policy
5. 5Medication administration policy
6. 6Nutrition and meals policy
7. 7Behavior guidance and discipline policy
8. 8Emergency procedures (fire, weather, medical)
9. 9Child abuse reporting obligations
10. 10Parent communication and conference schedule
11. 11Grievance and complaint procedure
12. 12Nondiscrimination policy
13. 13Health and safety standards

Writing a compliant parent handbook from scratch takes most providers 20–40 hours. Every section needs to match your state's specific licensing regulations — the language that satisfies California's requirements is different from Texas's.

Before you can accept your first child, you need an enrollment packet for families to complete. This is not just paperwork — it creates the legal and operational records your licensing agency requires you to keep on file for each enrolled child.

Most daycare providers fill their spots through word of mouth and local visibility — not paid advertising. Start with the basics and build from there.

The week before you open, work through this checklist. Opening day should not be when you discover something is missing.

Free tools to help you get started

Use these TotReady tools at any point during your startup process.

Frequently asked questions about starting a daycare

How much money do you need to start a daycare?

Starting a home daycare typically costs $2,000–$10,000, while a childcare center costs $10,000–$50,000. Major expenses include licensing fees, insurance ($1,000–$3,000/year), supplies, facility modifications, and initial staff training. Many providers start small with a home daycare to minimize upfront costs.

How profitable is a daycare business?

A well-run home daycare serving 6–8 children can generate $40,000–$80,000 in annual revenue with 20–30% profit margins. Centers with 50+ children can earn $200,000–$500,000+ annually. Profitability depends on location, capacity utilization, tuition rates, and operating costs.

What is the hardest age to start daycare?

Most early childhood experts suggest that children can start daycare as early as 6 weeks, though many parents wait until 3–6 months. The transition is typically hardest for children between 8–18 months due to separation anxiety, which is a normal developmental phase.

How much does it cost to start a daycare?

The average startup cost for a home daycare is $2,000–$10,000, while a childcare center typically costs $10,000–$50,000 or more before opening. Major categories are facility setup ($2,000–$20,000), liability insurance ($1,000–$3,000/year), furniture and supplies ($2,000–$5,000), licensing fees ($200–$1,000), and initial marketing ($500–$2,000). Home daycares are dramatically cheaper because the facility is already paid for.

How long does it take to get a daycare license?

Most providers receive their childcare license within 1–6 months of submitting a complete application. Home daycares in states with simpler processes can be licensed in 4–6 weeks. Center-based programs take longer because they require zoning approval, building inspection, and a fire marshal clearance in addition to the standard licensing review. Submit your application as early as possible — do not wait until your space is finished.

Do I need a license to run a home daycare?

In most states, you need a license or registration if you care for children from more than one unrelated family. Most states set the threshold at 3–6 children. Providers caring for one family's children only are typically exempt. Check your state licensing agency's website for the specific exemption limits — they vary significantly.

What is a parent handbook and do I legally need one?

A parent handbook is a written document covering your center's policies — hours, illness exclusion, discipline, emergency procedures, fees, and more. All 50 states require licensed providers to give families written policies at enrollment. A parent handbook is the standard way to meet this requirement, and licensing inspectors verify families received it in writing during routine visits.

What staff-to-child ratios are required for a daycare?

Ratios vary by state and by age group. Common requirements: infants 1:3–1:4, toddlers 1:4–1:6, preschoolers 1:8–1:12. Some states are stricter. Use TotReady's ratio calculator to see exact requirements for your state and age group mix.

Can I run a daycare out of my home?

Yes. Home-based daycares — called family childcare homes — are a legal, licensed childcare model in all 50 states. Most states allow 6–8 children with one provider, and up to 12 with an assistant. You'll need to pass a home inspection, complete background checks, and meet your state's training requirements. Some zoning rules restrict home-based businesses — verify your local zoning before applying.