How to start a home daycare
Start with your state's child care licensing office: it tells you whether you need a family child care license or registration, how many children you can care for, and which background checks, training and home inspection you need. Then set up your home, get insurance, write a contract and rate sheet, and set up simple paperwork for attendance, invoices and receipts.
Step by step
- Check your state's rules. Search for your state's child care licensing agency. Most states license or register "family child care homes" and set a maximum number of children, with smaller limits for infants. Some states exempt very small programs, but exempt providers can't usually take child care subsidies.
- Check local rules. Zoning, HOA rules and your lease can limit a home business. Ask before you invest.
- Training and checks. Expect background checks with fingerprints for you and adults living in the home, pediatric CPR and first aid, and health and safety training. Providers who take subsidies have federal training requirements on topics such as safe sleep.
- Prepare the home. Smoke and carbon monoxide detectors, fire extinguisher, outlet covers, locked medicines and chemicals, a safe outdoor area and an emergency plan. The licensing inspection checks these.
- Get insured. Homeowners and renters policies usually exclude a home daycare. See home daycare insurance.
- Set your rates and policies. Call nearby providers to learn local rates, then write a contract with hours, rates, late pickup fees, sick child rules, holidays and notice to leave.
- Get an EIN so you don't have to give parents your SSN. See Form W-10.
- Apply for the food program. The USDA Child and Adult Care Food Program (CACFP) reimburses licensed family child care homes for meals and snacks, through a sponsor organization.
- Set up your paperwork before the first child arrives.
Paperwork from day one
| Record | Why |
|---|---|
| Enrollment contract and emergency contacts | Licensing and your own protection |
| Daily sign-in / sign-out | Required by most states; proof of hours for billing and the food program |
| Invoices and receipts | Get paid on time; parents need them for FSA claims |
| Business expenses and hours | Your tax deductions, including the time-space percentage |
| Year-end statements | Parents' Form 2441 every January |
All of it on your phone. Daycare Binder has free templates for invoices, receipts, sign-in sheets, contracts and tax statements. Pro saves your families, logs check-in and check-out, sends weekly invoices in one click and tracks payments, for $12 a month.
Open the appHow many kids can I watch without a license?
It depends on the state, from none to a handful of unrelated children. Your state's licensing office has the exact number.
How long does licensing take?
Often one to three months, depending on training, background checks and the inspection schedule.
Do I need an LLC?
No. Most home providers start as sole proprietors. An LLC can separate business and personal liability, but insurance matters more for most risks.
General information, checked October 31, 2026. Licensing rules vary by state; follow your state agency's requirements.