How to Start a Daycare in 2026: Home Daycare or Childcare Center

Starting a daycare means starting two things at once: a licensed child care program that has to meet your state's health and safety rules every single day, and a small business that has to cover rent, payroll and insurance from tuition families can afford. In order, here is how to start a daycare: decide whether you will run a home daycare or a center, learn your state's licensing rules before you spend money, get your space approved for zoning and inspections, complete background checks and health and safety training for everyone who will work with children, insure the business, set tuition and decide whether to accept subsidies and join the Child and Adult Care Food Program (CACFP), and set up enrollment and billing before your first tour.

The sections below take those steps one at a time, then cover common mistakes and the software question. Every state and territory runs a child care licensing program, each with its own categories and exemptions, and the rules on ratios, group sizes, space, training and inspections differ from one state to the next. Treat this as a map of the work, not a substitute for your state's regulations. We use Texas as a worked example because its regulator publishes clear definitions, and you should confirm every point with your own state's child care licensing agency before you sign a lease or buy a single crib.

The first decision shapes everything after it. A home daycare, often licensed as a family child care home, runs in the provider's own residence. Startup costs are lower because you already have the building, the commute is zero, and a small group of mixed ages can feel like an extended family, which many parents want for infants. The trade-offs are a smaller capacity set by your state, your home becoming a regulated space with inspections, and long days where you are the teacher, cook, bookkeeper and janitor.

A childcare center runs in a commercial or dedicated building with a director, lead teachers and assistants, and usually separate rooms by age group. Capacity is higher, so revenue can be too, but so are the costs: a lease, a build-out that meets building, fire and health codes, an outdoor play area, and a payroll that has to cover every room from opening to close. Staffing is the biggest line in a center's budget, and infant rooms, with the tightest ratios, cost the most to run.

Many providers start at home, build a waitlist and a reputation, and open a center once demand is proven. Whichever path you choose, your state defines the license categories, so read how it draws the lines before you decide. Texas is a useful example of how specific those categories can be.

Child care licensing is how state and territory governments set the minimum health and safety requirements programs must meet to operate legally. The fastest way to find your rules is Childcare.gov: choose your state, open its Understanding and Finding Child Care Resources page, and you will find whether a program like yours must be licensed and how to contact the licensing agency. Then download the actual rules for your category and read them end to end. They cover ratios and group sizes by age, square footage per child, director and staff qualifications, training hours, required records, health practices, safe sleep, emergency drills and inspections.

The process itself is usually a sequence of gates. In Texas, for example, the state's Health and Human Services Commission lists these steps for home providers: attend an orientation class on the application process, submit an online application and fees, complete background checks before anyone provides direct care or has direct access to children, and pass an inspection before a permit is issued. Texas also lists minimum qualifications for the provider, liability insurance and a plan of operation among its requirements.

Two practical rules. First, call your licensing office before you commit to a space; licensing staff can tell you what will and will not pass, which is far cheaper than finding out after a build-out. Second, plan for the process to take months, and do not promise families a start date until you have a permit date.

For a home daycare, start with zoning. Cities and counties treat home child care differently: some allow it outright, some require a permit or a home occupation license, and some limit the number of children or set parking rules. If you rent, your lease must allow it, and if you live in a community with a homeowners association, read the covenants. Then walk your home the way an inspector will: exits, smoke and carbon monoxide detectors, fire extinguishers, outlet covers, gates on stairs, safe storage for medications and cleaning products, and a fenced outdoor play area if your rules require one.

For a center, zoning and building codes decide which spaces are even possible. You may need a change-of-use approval, and the build-out has to satisfy the building department, the fire marshal and the health department before licensing will sign off. Restrooms sized for children, diapering and handwashing stations, a kitchen that meets food-safety rules if you cook, and outdoor play space are common requirements. Ask for a lease contingency that lets you walk away if licensing or permits fall through.

One federal rule applies to both. Under Consumer Product Safety Commission rules, cribs that child care facilities and family child care homes provide must meet the current federal crib standards, which ended drop-side cribs. Buy new cribs from reputable sellers and keep the labels and paperwork that show compliance.

Everyone who works with the children needs to clear a background check before they have access to them. Federal rules tied to the child care subsidy program require states to run comprehensive background checks on child care staff members, and federal child care guidance lists five components: a national FBI criminal history check with fingerprints, a search of the National Sex Offender Registry, an in-state criminal history check with fingerprints, an in-state sex offender registry check, and an in-state child abuse and neglect registry check, plus registry checks in other states where the person lived during the previous five years. Checks are repeated at least every five years. Your state decides who counts as staff, which often includes household members in a home daycare, and how the process works.

Training is the second gate. The same federal program requires states to set health and safety training for providers serving subsidized children, covering topics such as pediatric first aid and CPR, prevention and control of infectious diseases including immunizations, safe sleep practices to reduce the risk of sudden infant death, prevention of shaken baby syndrome and abusive head trauma, recognizing and reporting child abuse and neglect, medication administration, food allergy emergencies, and emergency preparedness. Many states require similar training for every licensed provider, with orientation hours before you start and ongoing hours each year.

Staffing follows the ratios. Map every room from opening to close against your state's ratio and group size for each age, then add coverage for breaks, lunches, sick days and vacations. Hiring exactly the minimum is how centers end up out of ratio on the first day someone calls in sick.

Set up the business before the first family arrives. Choose a structure, often a sole proprietorship for a small home daycare or an LLC once you have employees or a lease, and talk to an accountant about taxes. Get a free Employer Identification Number from the IRS, open a separate business bank account, and keep business and household spending apart from day one, which matters even more when the business runs in your home.

Insurance protects the business and is often a licensing requirement. Common coverages include general liability, professional liability, coverage for abuse and molestation claims (sometimes an endorsement rather than a separate policy), property coverage for equipment, workers' compensation once you have employees under your state's rules, and commercial auto if you transport children. If you run a home daycare, ask your homeowners insurer in writing how it treats a home business, because a standard homeowners policy may not cover child care claims. Get quotes before you finalize your budget.

Then build two budgets. The startup budget covers licensing fees, safety improvements, furniture, cribs, cots, toys, curriculum materials, a first aid kit, a deposit on a lease and several months of operating cash. The operating budget is dominated by payroll, followed by rent or mortgage share, food, supplies, insurance, utilities and software. Run it for your expected enrollment and for 70% of it, because a new program rarely opens full.

Price from your costs, then check the market. The core number is teacher cost per child: take a teacher's hourly wage times the hours they work each week, then divide by the number of children your state allows per teacher in that room. A teacher paid $17 an hour for 50 hours costs $850 a week before payroll taxes, so if your state allowed four infants per teacher, that room would carry roughly $212.50 per infant per week in teacher wages alone, before rent, food or supplies. Run the same math for toddlers and preschoolers and the reason infant care costs more becomes obvious. Then compare with local programs, and ask your local child care resource and referral agency what families typically pay.

Write your tuition policies before you enroll anyone: weekly or monthly billing, autopay, registration and supply fees, late payment and late pickup fees, whether tuition is owed for holidays, closures and vacations, and how much notice a family must give to leave. Put it all in a parent handbook families sign.

Subsidies can fill seats. States run child care assistance programs under the federal Child Care and Development Fund, paying part of the bill for eligible families while the family pays a copay. Ask your state's subsidy agency how to become an approved provider, what it pays, when and how it pays, and what paperwork it requires, because the rules are set by each state and have changed in recent years. Food costs can be offset too. The USDA's CACFP reimburses participating centers and day care homes for nutritious meals and snacks served to eligible children; homes must be licensed or approved and participate through a sponsoring organization, and home reimbursement comes in two tiers. Contact the state agency that runs CACFP to apply.

Decide how you will run the paperwork before your first tour, because every licensed program keeps records. Classroom operations usually belong in a childcare management platform: time-stamped sign-in and sign-out, authorized pickup lists, ratio visibility by room, daily reports and photos for parents, immunization and incident records, and billing that tracks subsidy payments apart from family copays. Our daycare software roundup compares the main options, and preschool-focused programs can also look at our preschool software roundup. Some small home providers keep sign-in sheets and daily notes on paper where their licensing rules allow it.

The business around the classroom is a separate job, and that is where Deelo fits. Deelo puts tour booking on your website, tracks every inquiry from first call to enrolled in a pipeline, sends enrollment applications with file uploads and two-parent e-signatures, and bills weekly or monthly tuition through a Stripe subscription you can pause, resume or cancel, though late tuition is followed up by hand because Deelo adds no late fees or payment reminders. It also keeps staff records such as CPR and first aid card copies, builds shift schedules, calculates payroll and pay stubs and sends marketing emails. Deelo does not do child check-in, ratio tracking, daily reports or subsidy billing, so a licensed center would pair it with a childcare platform for those jobs. Whatever you choose, set it up and test it with a pretend family before your first real enrollment.

Start building interest while your license is in process, and check whether your state limits advertising or deposits before a permit is issued. Create a Google Business Profile, a simple website with your hours, ages served, tuition range and a tour booking link, and a waitlist form. Tell your local child care resource and referral agency when you open, because families call them for referrals, and once you are licensed your program typically appears in your state's online search for licensed child care.

Tours convert families, so treat them like the sales meeting they are. Book tours at times when the space looks its best, walk parents through a typical day, hand them the handbook and tuition sheet, and follow up within a day. Families looking for infant care often start months before they need it, so keep an infant waitlist with due dates and check in as dates approach.

Word of mouth carries a daycare. Ask your first families for reviews once they are settled, offer a referral credit if your budget allows, and connect with nearby employers, pediatricians and places of worship. A full program with a waitlist protects you through the months when a few families leave for kindergarten.