Since the 1950s, the workforce has changed significantly. This means that both parents are often kept away from their children and out of the home.

The most recent U.S. research shows that 66.4% of mothers with children younger than six and 93.4% of fathers with children under 18 are employed. According to the U.S. Bureau of Labor Statistics, 66.4% of mothers with children under six years of age and 93.4% of fathers who had children less than 18 years of age were employed. Who watches the children if that is the case?

A daycare business is necessary in a world where parents are more stressed than ever. According to the U.S., childcare centers and other daycare businesses have the highest employment growth of any industry. Bureau of Labor Statistics.

It is also very easy to start a business. Although business owners don’t need to have a certain level of education to open daycares, there are some licensing requirements and fees. There are also legal issues. This is how you can start daycare from home.

The benefits of starting daycare at home

At-home daycare centers are more than just a way to shape young minds. It’s a hugely lucrative market that allows you to set your own hours. The United States has 54,000 commercial childcare centers with annual combined revenue of $27 billion. But that’s only direct revenue.

Like most home-based businesses, home-based daycares have low overhead costs because they don’t need extra rent. Many tax benefits will allow you to deduct some of your expenses, such as rent, mortgage interest, or utilities, from your business expenses. Federal Food Program can offset food costs, so you only pay for supplies and insurance.

Checklist on How to Start Daycare at Home

Daycare owners who open a home-based business must face legal hurdles before starting. This is one of those businesses you can start quickly, as you don’t have to wait to open a location or apply for permits.

The entire process can be completed in just a few weeks. If you move quickly, opening at-home child care in the same time frame as obtaining a license for family child care is possible.

It is as easy as this:

Check out this checklist to learn how to start a daycare at home:

  1. Make a business plan
  2. Select a Business Structure
  3. Calculate your business costs
  4. Name Your Business
  5. Register your business and open financial accounts
  6. Buy Equipment for Your Daycare Company
  7. Marketing Your Daycare Business

1. Make a business plan

A business plan is essential for any business, even a home-based business. This plan is the only way to determine what you need, how your business will operate, and whether you will likely succeed. You will also find guidelines for how to deal with any problems that may arise. It is your one-stop shop to answer any business questions you might have in the future.

It is important to:

  • Identify your goals
  • Take a look at the licensing requirements for an at-home daycare
  • How will you measure progress?
  • Plan to resolve any potential problems.
  • Create a daycare curriculum
  • Make a marketing plan
  • Estimate overhead costs and revenue streams

2. Select a Business Structure

All businesses must register with the IRS. However, owners of these businesses must choose a business model that serves as a tax and legal structure. At-home childcare centers can be registered as:

  • LLCs are limited-liability businesses that offer tax flexibility and liability protection.
  • Sole proprietorships are simpler and more affordable but don’t provide the same protection.

An LLC provides liability protection for parents who entrust you with their children’s lives. In the event of a legal proceeding, you don’t want anyone being able to take your personal assets. This avoids double taxation for corporations, which is why it’s so popular. Corporations are subject to double taxation. They pay twice for their profits and once again when they go to shareholders or owners. Single-member LLCs are also subject to the same tax as sole proprietorships. This is often considered to be the best of both.

You can apply for an LLC online. However, you will need to obtain a general business license and the state-required family child care license. If you choose an expedited file, it can take up to two weeks for your request to be processed. However, it will take as little as three to five days for you to file your rush application. Each state has its own processing time and charges different fees.

3. Calculate your business costs

You will need the cash to open a daycare from home. But how much? You can determine this by looking at the type of daycare you run and your business model. Are you hiring staff? Do you only have a few children? How much does your equipment cost? Calculate:

  • One-time expenses such as floor mats, toys, and first aid kits. Cleaning supplies are examples of these one-time costs.
  • Some ongoing expenses include payroll, accounting services, rent, and mortgage payments.
  • Fixed expenses include utilities, leases, insurance, and administrative costs.

You should ensure enough money to cover any unexpected expenses or emergencies. You should also check for tax breaks and grants from the local government that could save you money in the long term.

How to Finance Startup Costs

Many people don’t have the capital required to start a small business. The good news? Most small business owners can start with as little as $10,000. You can reach this goal by starting a daycare center at your home. There are many ways to raise money, including:

  • Small business owners have access to various government resources, particularly in today’s difficult economic environment.
  • Credit cards: Daycare centers are relatively inexpensive to start. You have the option of financing your business with credit cards. Although this option is simple, it often has high-interest rates.
  • The Small Business Administration provides loans to entrepreneurs to start small businesses. However, it is not available to every business. Your bank can also offer a personal or business loan with different repayment terms.
  • Friends and family: Sometimes, asking family and friends to invest is the best way to start. Although this often has a lower repayment term, it can cause problems in personal relationships.

4. Name your business

A business name is just as important as its reputation. This is what people will remember and how they’ll evaluate your business. The name of your daycare should be simple to remember and easy enough to be recognized on social media and in advertisements.

Make sure you choose something unique when creating your company name. You don’t want anyone else to have the domain. can be confusing. To ensure your name is fresh, check with your local business registration agency and do extensive online searches.

5. Register your business and open financial accounts

Before you can open a daycare center at your home, there are a few legal and licensing requirements. These are:

  • Registering your business structure (i.e. LLC)
  • How to get an Employee Identification number. This number is required to complete tax forms. The IRS should provide it with your registration. It is also possible to order one online via their website.
  • You need a general liability policy if you work with children.
  • Daycare insurance
  • You can apply for a general business license through your local municipality.
  • How to obtain a family child-care license. Every state has its own laws and procedures. Check online for your specific requirements.
  • Open a bank account. In the event of an audit or lawsuit, you want to keep your business assets separate from personal assets.

6. Buy Equipment for Your Daycare Company

Most at-home daycare equipment can be bought through Amazon, OfficeMax, or Target. You might consider buying things like:

  • Toys
  • Mats
  • First-aid kits
  • Cleaning supplies
  • Binders and paper
  • Other art supplies, such as markers, crayons, and pencils
  • Software for computers
  • Food and beverages

7. Marketing Your Daycare Business

If no one knows anything about your daycare, you won’t be able to get students. Social media has made marketing easier than ever. You can create a social media strategy that works across Facebook, Instagram, YouTube, and Facebook. These platforms are generally affordable and effective at targeting local markets. Local Facebook groups can also be a good place to promote yourself.

Registering your business online directories such as Google, Yelp and LinkedIn is a good idea. Encourage parents to leave reviews as you recruit students. Word of mouth is a powerful tool. A small print campaign can also be done by placing ads in local newspapers or community bulletins.

It is important to make your website appealing to parents. Your marketing efforts will be successful, and parents will go there to learn more. Print your curriculum and implement an SEO strategy to help your business appear in local search engine results for daycares.

Example of Daycare at Home Businesses

There are many facets to early childhood education. Not every daycare center is created equal. The first step in creating a business plan is to decide what kind of childcare business you want. This includes everything from startup costs to licenses and tax breaks.

  • Childminding is an at-home care where children younger than 8 years old spend more than 2 hours daily.
  • Independent schools – These schools are not subject to the control of any local authority or government and can offer nursery education for children aged 3-4. These schools may also be eligible for funding to support nursery education from the local government.
  • After-school Care: This facility is designed for school-age children. It typically operates for four hours after school on Monday through Friday.
  • Summer Care: These facilities are available during school breaks and can greatly benefit working parents.

Bottom line

It’s not difficult to set up a daycare from home. This business has very simple legal requirements, minimal startup costs, and a large market.

author avatar
Brian Wilson Writer and Editor
Brian Wilson is the content manager and founder of LLC Radar. Brian grew up in North Texas, just outside of Dallas, and has a bachelor's degree in business from Southern Methodist University. Since graduating from SMU, Brian has gained over 10 years of experience in business writing for several online publications. Brian resides in Plano, Texas and he can be reached by email: Phone: 972-776-4050
  Information provided on this website is for general information and educational purposes only. It is not intended to offer legal advice specific to your business needs. If you need legal advice, you should consult with an attorney. Rankings and reviews are the personal opinions of the authors and/or editors. For questions, while starting a business, we recommend consulting with an attorney or accountant.