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Starting a Child Care Business

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Starting a Child Care Business

Published: July 23, 2010 Updated: August 28, 2015

The child care industry is a growing market. As the number of working parents climbs, more families require child care services. Child care businesses come in all sizes, from small child care homes to large commercial centers. If you are interested in starting a child care business, follow these steps to help you plan and manage your business.



Licensed and License-Exempt Child Care Providers

Child care services are typically short-term care arrangements provided by someone other than the chil;s parents - usually relatives, friends, nannies, or local professionals.


Child care providers may be licensed or license-exempt. Most child care centers and homes are licensed providers who must register with their state to operate legally. Informal care arrangements like friends, family, neighbors, and in-home nanny care are typically license-exempt.


Licensed Providers

  • Child Care Centers. In licensed child care centers, professionals take care of a number of children. The center can be a commercial space, a public school, or even a church. They can also be for-profit or non-profit.
  • Home-Based Child Care Centers. Home-based child care centers are child care centers located at the caregive-s home. You must register and license the home before you can run a child care home.

License-Exempt Providers

  • In-Home Care. An in-home care caregiver provides child care services in the famil-s household. These caregivers can work part-time or full-time, and may or may not live with the family. As an in-home caregiver, you typically do not need a business license. In-home care requires the family to employ the caregiver, and therefore, the family must comply with all federal and state employment and tax laws. Learn more about employment and labor laws at Business.gov.
  • Family, Friends, and Neighbor (FFN) Care. You do not need a license to look after your famil's, frien's, or neighbo's children. If you decide to start a business looking after other children, you should consider starting a child care center or home.


Starting a Child Care Center

If you plan to start a child care center inside or outside of your home, follow the steps below to register and legally operate your business. If you decide to be an in-home or FFN caregiver, you do not need to start a business.


  • Assess Your Community Needs. Before you start your business, assess the child care needs of your community. Does your community prefer large-scale commercial centers? Smaller child care centers or homes? Visit the Bureau of Labor Statistics for more data and statistics about the child care industry.
  • Write a Business Plan. After you research, start writing a business plan. Your business plan includes your busines's mission, goals, operations plan and projected financials. Some important factors to consider when developing your business plan are how much time, money, and responsibility you are willing and able to invest in your business.
  • Find a Location. Be sure to consider traffic, convenience for families, and budget when choosing. Locations in or near residential neighborhoods, schools, and shopping centers are good places to start looking. If you decide to operate from home, make sure you comply with your local zoning laws. Visit Business.gov for more help on choosing a business location.
  • Register Your Business. You must register your child care business like any other business. The registration process includes registering your business name, filing the appropriate taxes, and obtaining business and occupational licenses and permits.
    - Learn how to register your business on Business.gov.
    - Some cities and counties have additional licensing requirements, such as health regulations, safety codes, fire inspections and zoning laws. Violating these codes can result in a fine and/or suspension of your license. Use Business.go's License & Permit Search to find detailed information on your stat's child care licensing laws. Simply enter your zip code and select'child care service' from the drop down menu.
    - Learn more about your tax responsibilities in the IRS's Child Care Tax Center, including how deductions for food expenses and the business use of your home.
    • Create a Safe and Health Workplace. Develop a contingency plan for accidents and illnesses, and emergency procedures. Comply with the new EPA lead-based paint hazard regulations for businesses. Lastly, make sure you buy insurance coverage to protect your business and the children in your care. Learn more about business insurance at Business.gov.
    • Hire Staff. If you plan to hire staff to run your business, comply with your local staff-to-child ratio requirements. Contact your state's child care agency for regulation specifics. Remember to stay compliant with employment and labor laws as well.


    Financing Your Child Care Business

    There are a number of ways to finance your child care business. If you need more financial help, you can learn more about child care loans and grants in our blog.


    Federal and state agencies and national organizations also provide financial assistance to child care start-ups:



    Need more help?

    The SBA provides a guide on How to Start a Quality Child Care Business, which includes self-assessments, a sample business plan, marketing and budget templates, and other helpful resources.



    Related Resources

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    About the Author:


    None of these links work! Are there updated ones I can use?
    wonderful article. I am going to help my mom start one soon and I am glad that such great informational articles are out there for us to know more before we get started. Z www.ocitsolutions.com

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