How to Start a Daycare

Running a daycare demands patience, physical energy, and a genuine comfort level being responsible for other people's children all day. If the sound of 10 toddlers before 8 AM energizes you rather than drains you, you have the right temperament for this work.

You should be comfortable with tight regulations. Every state mandates staff-to-child ratios, facility safety standards, and ongoing training hours. Noncompliance does not result in a warning; it results in a shutdown.

The income timeline is honest but manageable. Most daycare owners do not see meaningful profit in the first 6 to 12 months while enrollment ramps up. Home-based providers who keep overhead low can start drawing a salary sooner.

Once enrollment stabilizes at 85 percent capacity or higher, the math improves significantly. Daycare owner salaries typically fall between $65,000 and $92,000 per year, with center operators at the higher end.

If you dislike paperwork, managing employees, or the daily unpredictability of caring for young children, this business will wear you down. Staffing turnover in childcare runs 26 to 40 percent annually, which means you will spend a meaningful portion of your time recruiting and training replacements.

Your first 10 enrolled families will most likely come from three sources: your personal network, local Facebook parenting groups, and your Google Business Profile. Start telling everyone you know about your daycare at least 90 days before opening.

Host an open house event and invite every parent you know, plus encourage them to bring friends. Prepare a sign-up sheet, a tuition rate card, and a simple one-page overview of your curriculum and daily schedule.

List your daycare on every free directory available: Care.com, Winnie.com, your state's childcare finder, and Google Maps. Actively searching parents use these platforms to compare options side by side.

After your first 5 families enroll, launch a referral program. Offer a $100 to $200 tuition credit for each referred family that enrolls. In childcare, a single happy parent can generate 2 to 3 referrals within the first year.

Track every lead and follow up within 24 hours of an inquiry. Parents often contact 3 to 5 daycares simultaneously, and the first to respond with a personal message and a tour invitation wins the enrollment.

Your most powerful marketing channel is a fully optimized Google Business Profile with photos of your facility, posted hours, and parent reviews. Over 80 percent of parents start their daycare search on Google, and your profile appears in local map results for free.

Facebook is the second most important channel. Join every local parenting group in your area and participate genuinely before promoting your daycare. Targeted Facebook ads to parents within a 5-mile radius of your facility can generate enrollment inquiries for $5 to $15 per lead.

List your program on Care.com, Winnie.com, and your state's childcare search tool. These platforms are where actively searching parents compare options. Keep your profiles updated with current availability, pricing, and photos.

Referral incentives work exceptionally well in childcare. Offer enrolled families a $100 to $200 tuition credit for each new family they refer who enrolls. Word-of-mouth from a trusted parent carries more weight than any advertisement.

An open house event 2 to 3 weeks before launch lets parents tour, meet staff, and see your curriculum. This single event can fill 30 to 50 percent of your remaining spots. Follow up with every attendee within 48 hours.

The path from solo home-based provider to a multi-room center follows a predictable pattern. Most operators start by filling their licensed home capacity (6 to 12 children), then either expand to a larger home license or transition to a commercial space.

Your first hire is typically a part-time assistant to help you meet ratio requirements as enrollment grows. Budget $14 to $18 per hour for a qualified childcare assistant. This hire usually pays for itself by allowing you to enroll 3 to 4 additional children.

A center-based facility serving 30 to 50 children requires a director, 3 to 8 teachers, and 1 to 2 support staff. Payroll at this scale runs $10,000 to $40,000 per month. Revenue at full enrollment with 50 children at $1,000 average tuition generates $50,000 per month before expenses.

Consider pursuing NAEYC accreditation once your program is stable. Accreditation takes 12 to 24 months but signals quality to parents and justifies premium tuition rates.

You will owe 15.3 percent in self-employment tax on net earnings (12.4 percent for Social Security and 2.9 percent for Medicare). This is on top of your regular income tax. Quarterly estimated payments are due in January, April, June, and September.

Home-based daycare operators qualify for the business use of home deduction. You can deduct the percentage of your home used regularly for childcare (often 30 to 40 percent) from your mortgage or rent, utilities, property taxes, and home insurance. This deduction alone can save you $3,000 to $8,000 per year.

Other deductible expenses include staff wages, equipment purchases, food and supplies, insurance premiums, training costs, and professional development. Keep receipts for everything and track mileage for any business-related driving.

If you formed an LLC and your net profit exceeds $50,000 per year, consider electing S-Corp tax treatment to reduce self-employment tax. Consult a CPA who understands childcare businesses. Track all of this using accounting software from your first month of operation.

General liability insurance is the baseline requirement and covers bodily injury, property damage, and accident claims. Expect to pay $500 to $2,000 per year for a home-based program and $1,100 to $4,000+ for a center. Most state licensing boards require proof of coverage before issuing your permit.

Abuse and molestation coverage is critical for daycare operations. Many general liability policies include it as a rider, but confirm your coverage explicitly. A separate limit of $1 million per occurrence is the industry standard. See our best business insurance guide for provider comparisons.

Workers compensation insurance is required in most states once you hire even one employee. Rates run $1 to $2 per $100 of payroll for childcare businesses. If you provide transportation for field trips or pickups, you also need commercial auto insurance at $1,000 to $4,000 per year.

Childcare licensing requirements vary dramatically by state. Some states like Idaho have relaxed staffing ratio mandates, while coastal states enforce stricter ratios, training hours, and facility standards. Always check your specific state's requirements through the ACF Licensing Regulations Database.

Tuition rates also vary by region. Monthly costs range from roughly $521 in Mississippi to $1,893 in Washington, D.C. for a 4-year-old. Your pricing must reflect local market conditions, not national averages. Urban areas support higher tuition but come with higher rent and competition.

Grant availability differs by state. Some states like Massachusetts have allocated hundreds of millions in childcare subsidies, while others provide minimal support. Search your state's economic development department and local Child Care Resource and Referral agency for startup grants before taking on debt. Explore options in our small business grants guide.