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How to Start a Home Daycare Business

A home daycare can start with little equipment, but it is one of the most regulated small businesses: states set rules for how many children you can care for, safety standards for your home and background checks for adults in the house. Start with your state's child care licensing agency before anything else.

Reviewed November 5, 2026 · Sources linked inline

Startup costs

We haven't found a reliable published cost range for this business, so we don't show one. Costs vary widely by market, equipment and whether you buy new or used. Plug your own quotes into the worksheet:

Open a home daycare cost worksheet →

SBA 7(a) loans in this industry

Child Day Care Services (NAICS 624410): 2,562 loans approved in FY2024–FY2026. Median loan $400,000; middle half $100,025–$981,150.

Loan size is not startup cost — these loans also fund acquisitions, real estate and working capital. Full breakdown and caveats →

How much competition is there?

Census industry: Child Day Care Services (NAICS 624410)

Nationwide: 82,162 employer establishments (2023) and 537,849 businesses without employees (2024).

See counts for your county → Counts aren't a measure of saturation — see the caveats on the tool page.

Equipment and supplies

  • Safety-standard cribs or cots for each child who naps
  • Safety gates, outlet covers, cabinet locks and secured furniture
  • Working smoke and carbon monoxide alarms and a fire extinguisher
  • First-aid kit and posted emergency plan
  • Age-appropriate toys, books and art supplies
  • Fenced outdoor play area

Licenses and registration

  • States license child care. Whether your home program needs a license usually depends on how many children you care for and whether they are related to you — contact your state's child care licensing agency first.
  • Expect background checks for you and other adults living in the home, plus a home inspection, if a license is required.
  • Ask about training rules (CPR, first aid, safe sleep) and child-to-adult ratio limits.
  • Check zoning or HOA rules for running a business with daily drop-offs in your home.
  • If you want to serve families who pay with child care subsidies, ask your state how to become an approved provider.
  • Get a free Employer Identification Number (EIN) from the IRS if you will hire employees or form an LLC or corporation. Beware of sites that charge for this. [source]
  • Register an LLC or corporation with your state's business registration office (sole proprietors usually register a trade name/DBA instead). [source]

Insurance to consider

  • Child care liability insurance (homeowners policies often exclude business activity)
  • Business property coverage
  • Commercial auto if you transport children
  • Workers' compensation once you hire an assistant

Get quotes from several carriers or an independent agent; coverage needs depend on your contracts, state and staff.

Financing options

  • SBA 7(a) loans — the SBA's main guaranteed loan program, made through participating lenders. [source]
  • SBA Microloans — smaller loans delivered through nonprofit intermediary lenders. [source]
  • SBA Lender Match — a free tool that connects you with interested SBA lenders. [source]
  • Free counseling from your local SBDC or SCORE chapter can help you build the business plan lenders ask for. [source]

Estimate payments with the loan calculator, then check runway with the cash flow projection.

Ongoing operating expenses

  • Food and snacks
  • Supplies and replacement toys
  • Insurance
  • Training renewals
  • Higher utilities
  • Assistant wages
  • Enrollment software

Use the break-even calculator to see how many jobs or sales cover them.

Common mistakes

  • Enrolling children before confirming your state's rules
  • Relying on homeowners insurance
  • No written contract covering hours, late pickup, illness and payment
  • Underestimating hours — care time plus cleaning, planning and paperwork
  • Taking more children than your ratio allows

Finding customers

  • Your state's child care search listing (if licensed)
  • Local parent groups and neighborhood apps
  • Referrals from current families
  • Google Business Profile with clear hours and openings

Startup checklist

Ticks are saved on this device and appear on My plan.

Compare with other businesses

Sources