How to start a daycare: licensing, costs, staffing and the steps in order

Everything downstream — money, staffing and which rulebook applies — depends on this choice.

States classify child care by setting and size, and each class carries its own license, thresholds and staffing rules.

Montana's rule, for example, defines family child care as 3-8 children, group child care as 9-15, and child care centers as 16 or more children in an out-of-home setting (ARM 37.96.102(2)).

The national picture is older but consistent in shape: a scan of state licensing rules by the National Center on Early Childhood Quality Assurance, an ACF-funded center, current as of December 31, 2020, counted 38 states including DC that license group child care homes — two or more adults caring for children in the provider's residence — and found most states set the group-home threshold at 7 or more children, with 23 of those 38 states capping group homes at 12 children.

Sizing under a threshold does not necessarily put you outside every rule.

Missouri statute exempts from licensing anyone caring for six or fewer children, including no more than three under age two, at the same address (RSMo 210.211) — and even a license-exempt provider who is paid with CCDF subsidy must still meet federal health, safety and background-check requirements, with a main exception for relatives that applies to the health and safety rules (45 CFR 98.42(c)).

Confirm before you commit: licensing categories, size thresholds and exemptions are set state by state, and they change.

Before you sign a lease or enroll a single child, confirm which category your program falls into with your state child care licensing agency.

Child care licensing is administered state by state, and the agency that issues your license is the authority for every deadline, fee and document in this step.

Identify your state's child care licensing agency first, and read its current application packet before you spend money on anything else.

The packet is more than a form.

A Maryland child care center application must include zoning and building code compliance, floor plans, a written plan of operation, workers' compensation insurance information, a fire evacuation plan, a personnel list and a staffing pattern (COMAR 13A.16.02.02) — documents you assemble before you open, not after, which is why licensing is step one.

How long licensure takes has no verified national figure — our research did not confirm one, and the clock is set by each state's own rules.

Idaho offers one worked example: state law requires Idaho to issue a basic daycare license within 60 days once requirements are met, and the license is then valid for two years (Idaho Code 39-1106).

Confirm before you apply: application requirements, fees and timelines are set by your state child care licensing agency, and its current packet governs.

Pull the packet and the fee schedule from the agency itself rather than from a blog post — including this one.

The business plan is where the format choice and the licensing packet turn into numbers: projected enrollment by age band, tuition per slot, and the staff each room needs under your state's ratios and group sizes.

Wages dominate the model: a September 2021 U.S. Treasury report, citing a Center for American Progress cost analysis, put wages at no less than 50-60 percent of child care expenses on U.S. averages, with labor's share larger for infant care.

The same report warns what the margins look like: most for-profit child care facilities, it said, operate on razor-thin profit margins usually below 1 percent.

Budget conservatively, and treat any projection that depends on full enrollment from day one as fiction — rooms fill as families enroll, not before.

On financing, structure matters before you borrow: SBA 7(a) loans go up to $5 million, and non-profit businesses are ineligible for SBA business loans — so the decision to run the program as a nonprofit changes which money is even available to you.

Licensing application fees belong in the budget too, and there is no verified national figure for them: they are set state by state, so pull the current fee schedule from your state child care licensing agency.

The site decides your capacity, your build-out bill and your timeline, and two of its biggest gatekeepers are local.

Zoning is usually decided locally, city by city and county by county; our research did not confirm a national list of states that preempt local zoning for family child care homes, so verify that a home daycare or a center is a permitted use at your site with your city or county zoning office before you sign anything.

Build-out cost is the same story: our research did not verify a per-square-foot build-out figure for child care centers from any primary source, so get contractor bids against your actual floor plan instead of trusting a national number.

Maryland's center application lists floor plans and zoning and building code compliance among its required documents (COMAR 13A.16.02.02), which tells you when those plans need to exist: before the application.

Plan the facility around emergencies from the start.

Federal CCDF rules require states to set emergency preparedness requirements for subsidy-receiving providers covering evacuation, relocation, shelter-in-place and lockdown, staff and volunteer training and drills, communication and reunification with families, continuity of operations, and accommodation of infants, toddlers and children with disabilities or chronic conditions (45 CFR 98.41).

Confirm before you sign a lease: permitted use, building code and facility requirements are set locally and by your state child care licensing agency.

Walk both checks in writing before you commit to a building.

Liability insurance minimums for child care are set by state law.

Texas requires every licensed or registered child care operation to carry liability insurance of $100,000 per occurrence covering injury to children on the premises or in its care, and to file proof of coverage with the commission annually (Tex.

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Code 42.049) — one state's floor, printed here as an example of what to look up, not a national number.

Pull your state's minimum from your state child care licensing agency and price the policy with a licensed commercial insurance agent.

Workers' compensation is a second state-by-state question: employee-count thresholds and coverage rules were not compiled nationally in our research, so confirm your state's requirements with your state labor agency.

Maryland asks for workers' compensation information as part of its child care center license application (COMAR 13A.16.02.02) — which is why insurance belongs before the application in your sequence, not after it.

The legal setup — entity choice, contracts, policies — is where an operator's decisions meet an attorney's.

Structure choices carry financing consequences (SBA business loans are closed to non-profits), and your enrollment documents, staff policies and liability coverage need to read as one system.

Get professional advice on the structure; a guide page will not draft it for you.

Staffing is where the plan becomes a payroll.

Work the math in this order: enrollment by age band, your state's ratio and group-size rules for each band, and the schedule from opening to closing.

The result is the number of teachers, assistants and floaters you must field at opening, at the qualification level your state sets for each title.

Get the current ratio and qualification rules from your state child care licensing agency before you write a single job description — they decide what each role must hold.

Background checks and training come from the same rulebook.

Federal CCDF rules set health, safety and background-check requirements that reach even providers a state does not license when subsidy money pays them, and your state's rules for the people you hire may add to that floor.

Build the checks and orientation into the start date — a hire is not a pair of hands until both are done.

Then recruit like an operator: write the posting around the level, the age band and the schedule; verify the credentials your state requires rather than trusting the résumé; interview with a working session in the classroom; and keep every question job-related.

Our hub for hiring for your childcare center walks the hiring process step by step — the roles to fill, ratio-driven staffing, pay benchmarks, where to post, and onboarding and retention — so use it as the companion to this step.

Confirm before anyone works alone: background-check components, training hours and first-solo-day rules are set by your state child care licensing agency under the federal CCDF floor.

Confirm the current rules with the agency before you schedule anyone unsupervised with children.

Enrollment is the revenue line, and states regulate how it works.

Texas is the worked example: its rule requires centers to keep written operational policies covering, among other topics, hours and days of operation, release of children, illness and exclusion criteria, medication, discipline and guidance, infant safe sleep, meals and immunizations (26 TAC 746.501); requires parents to sign a child-care enrollment agreement on or before admission (26 TAC 746.503); and sets the admission data you must collect before a child starts — name and birth date, home address and phone, parents' names and reachable numbers, an emergency contact, people authorized for pick-up, and transportation and field-trip permissions, among other items (26 TAC 746.605).

Those three documents — a policy handbook, an enrollment agreement and an admission record — are the paperwork core of enrollment in Texas, and your state's version of them is where your own checklist should start.

Confirm the current list with your state child care licensing agency, and do not copy Texas's list onto your program.

Then run enrollment as the business system it is: a waitlist, tuition and fee policies in writing, family communication rhythms, and a start-date workflow that ties each new child to the paperwork above.

Families are your customers, and these documents work from the operator's side — they protect the program as much as the parent.

There is no verified national figure for how long it takes to start a daycare, so treat any single number you see as either one state's rule or somebody's estimate.

What the state statutes show is a clock that starts late: Idaho's law, for example, obligates the state to issue a basic daycare license within 60 days once requirements are met (Idaho Code 39-1106) — counted from met requirements, not from the day you decided to open.

That is why the sequence above is the real answer to "how long": the steps you control — choosing the format, assembling the licensing packet, clearing zoning and building code, budgeting, hiring and training staff — are the work the licensing clock waits for.

A home daycare and a center do not share a timeline; a center's build-out and hiring alone put its clock on a different scale.

Set the timeline with your agency: ask your state child care licensing agency for the current application-to-license sequence in your state, and work backward from it when you set an opening date.

This page is employer information, not licensing or legal advice. Licensing routes, timelines, fees, insurance minimums, staffing rules and required documents are set and enforced by your state child care licensing agency (and your state labor agency for workers' compensation) — confirm the current rules there before you apply, hire or open.