How To Start A Daycare At Home

The working world has changed a lot over the last few years, and the number of families which have both parents working full or part-time has skyrocketed.

This, in turn, has resulted in a huge increased demand for childcare, and a growing number of fast-thinking entrepreneurs are seeing a lot of potential in the idea of starting their own daycare business – especially if they already enjoy working with kids.

How To Start A Daycare At Home

While owning your own daycare is without a doubt a rewarding and enriching experience, it also comes with an array of challenges, and getting your business up and running does involve a number of fees, licenses, and documents.

Whether you are ready to take that first step or simply testing the water to see what options are available to you, read on for everything you need to know to start your very own daycare business from the comfort of your own home.

Types Of Home Daycare Businesses

Home daycare businesses come in a range of different shapes and sizes, and a large part of your early planning will depend on the type of business you are planning to run. Some of the most popular types of daycare businesses include:


If children under the age of eight stay at the daycare facility for over two hours a day, you will likely be counted as a childminder.

After-school care

After-school set-ups cater for children of school age and will offer provision four up to four hours a day, Monday through to Friday.

Summer care

One of the most valuable daycare options for parents, summer care takes care of children during the school vacations.

Independent schools

Independent schools are a little more complex and offer alternative nursery provisions for children aged three and four. If you qualify as an independent school, you will be eligible for funding from the local government.

What Are The Benefits Of A Home Daycare Business?

Starting your own home daycare business offers a number of advantages, and these include:

Huge Market

Parents will always need childcare, and so an at-home daycare means that you will always have a captive, lucrative market. This can also be a lucrative business if you tick all the boxes/

Chance To Change Lives

Working with young children means that you have a chance to mold young minds, and really make a huge difference to the lives of hundreds of children – some of the most significant influences on children occur prior to the age of five, and so this is hugely important work.

Low Start-Up Costs

Compared to many other businesses, home daycares have lower start-up costs, allowing you to maximize your potential profit.

How To Start A Home Daycare Business

There are a few essentials that you will need to cover in order to start your own daycare business from home – most of these are legal requirements, so it is important to make sure that you take the time to ensure that you have everything you need.

Start With A Business Plan

As with any business your first step is to create a solid, detailed business plan which clearly outlines what your business is, the way in which it operates, what you will need, and an overview of the bigger picture.

While you are putting together your plan, the chances are also high that you will discover any potential problems that might occur or arise down the line – this also gives you a chance to address them. Creating your plan has a few main steps:

  • Determine what your goals are for the business – what do you want to achieve?
  • Consider any licenses or documentation that you will need to take care of – starting a daycare does come with a lot of red tape.
  • Decide how progress will be measured in your business
  • Work out any potential problems that you are likely to encounter, and come up with solutions.
  • Come up with a curriculum for your daycare.
  • Come up with a plan to market your new daycare.
  • Consider any overhead costs that you will need to cover, as well as any potential streams of revenue that may also make themselves available.

Don’t be afraid to take plenty of time over your business plan – it is important to have as much information as possible before you get started.

Decide On A Business Structure

Whenever you start a business, you will need to register with the IRS, and this involves choosing a business structure – this will be your tax and legal structure.

How To Start A Daycare At Home (1)

Most home-based small businesses in the childcare industry will be registered as one of two structures: limited liability companies (LLCs), or sole proprietorships. The latter are easier to set up and tend to be cheaper, but the former will offer both tax flexibility and liability protection.

Liability protection, in particular, is very important when you are working with children. Unfortunately, lawsuits are common in these types of businesses, and the last thing that you want is for an angry parent to have the option to legally pursue your personal assets.

Being part of an LLC also avoids the issue of being double taxed – corporations will typically pay tax whenever they turn a profit and then face another tax bill when those profits are distributed to shareholders and owners. Single-member LLCs, however, can avoid this double taxation.

LLCs can be filed online, but you will first need to acquire a general business license, as well as any family child care licenses that are required by your state – this will vary from state to state, and can take up to two weeks to process, so make sure that you plan and apply in advance.

There will also be fees for these, so make sure that you factor this into your budget.

Work Out Your Costs

Costs are one of the most important aspects of running a successful business, and you will need to have your budget worked out before you kick things off. There are three main categories of expenses:

Don’t forget to also as a “cushion” to your budget – emergencies can and will happen, and unexpected costs will arise, so make sure that you have the cash to account for this.

As we have mentioned, you will need to make sure that you have funds in place to start your business in the first place, and these can come from a variety of sources. Small businesses have access to a range of funding options, including:

  • One-time expenses: these are costs that you will only have to meet once, such as the start-up equipment, toys, mats, and first aid kits.
  • Ongoing expenses: these are things that you will need to budget for regularly, including payroll, staff fees, rent or mortgage payments, and any accounting fees or services that you are planning to pay for.
  • Fixed expenses: these are any ongoing expenses that remain fixed in price, such as insurance, administrative costs, leases, and the cost of utilities.
  • Government assistance – there are many government resources to help small businesses, and it is important to search for assistance in your state.
  • Loans – there are specialist loans available for small businesses, or you may be able to access a personal loan from the bank.
  • Credit cards – unlike some businesses, home daycares have relatively low startup costs, and this means that you may be able to use a credit card to help get you off the ground.

It may also be possible to ask close friends or family members to invest in your business, but be wary, as this can impact close relationships with those you love. Make sure that everything is set out in writing, and that official, legal contracts are in place.

Give Your Business A Name

Once the funding is in place, you will need to give your business a name – this needs to be recognizable and catchy, and sum up what you do in a simple word or phrase.

You should also consider your marketing when choosing a name – pick something that you can replicate across social media platforms, websites, logos and adverts.

Double-check that you don’t accidentally select a copyrighted name – not only will this get you into actual legal trouble, but it will also block you from purchasing a website.

A little research should be able to tell you everything that you need to know.

Get Registered

The nature of a daycare means that you will need to meet several legal requirements before you can open, and you will also need to make sure that you have all the licenses that you need.

Once you have registered your chosen business structure (ideally an LLC), you need to obtain an Employee Identification Number – this will help you to fill out any relevant tax forms. The IRS will usually provide this, though they are also available online on the IRS site.

Choose and purchase a general liability insurance policy – a non-negotiable when working with children – and obtain the relevant licenses. This includes the correct daycare license for your state, a family child care license, and a general business license.

The final stage is to open a business bank account – this is important, as you want to keep your assets separate from those of the business, in order to protect yourself in the event of a lawsuit, and to make tax audits and filing easier and less painful.

Purchase Your Equipment

Another perk of a daycare is that relatively little equipment is needed, and this can cut your costs. The main priorities you will need will be toys and floor mats, as well as art supplies such as crayons and markers.

Safety items are also important, and these include essentials such as cleaning supplies and first aid kits. You should also make sure that you invest in plenty of paper and binders to store paperwork, any computer software.

Food and beverages are another priority – for both your staff and the children!

Get Marketing!

It doesn’t matter how great your business is if nobody knows about it, so your next priority is to get busy with your marketing campaign.

Make the most of social media platforms such as Facebook, Instagram, and Twitter, as well as video platforms such as YouTube to highlight your attributes.

Local Facebook groups are a great way to get the word out, and you can make the most of local business directories such as LinkedIn, Yelp, and Google My Business.

Investing in a quality website should also be a priority – ensure that this has all of the information that parents need, including your personal contact details, information about your curriculum, and health and safety considerations.

Offline techniques can also be useful, including flyers and posters – try to advertise in places that parents will frequent, such as libraries, soft play centers, and toddler groups.

Final Thoughts

Starting your own at-home daycare doesn’t have to be a huge challenge; there are clearly laid out legal requirements and licenses, the startup costs are minimal, and you are almost guaranteed to always have a captive, willing market waiting to make the most of your offering.

What are you waiting for? Take the first steps towards your dream business today!

Neil Johnson
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