How to Start a Daycare Business at Home in 2026: Complete Guide

Starting a home daycare business combines passion for children with practical entrepreneurship, creating flexible, meaningful work that serves your community while generating sustainable income. With over 1.9 million home-based childcare providers in the United States and childcare costs averaging $10,000-$20,000+ annually per child, demand for quality, affordable home daycare has never been higher.

The appeal is clear: home daycare requires significantly less capital than commercial centers ($5,000-$25,000 vs. $50,000-$500,000+), offers schedule flexibility around your own family’s needs, and serves a critical need in neighborhoods where quality childcare is scarce. Whether you’re a stay-at-home parent seeking income, a teacher wanting to run your own program, or an entrepreneur entering the $54+ billion U.S. childcare industry, home daycare provides a proven path to business ownership.

This comprehensive guide walks through every step of starting your home daycare in 2026, from licensing requirements and insurance to setup costs and marketing strategies that fill enrollment quickly.

Understanding Home Daycare Business Models

Home-based childcare encompasses several distinct models, each with different regulations, capacity limits, and earning potential.

Family Child Care (Licensed Home Daycare)

Most common home daycare model where you care for children in your residence under state licensing.

Typical capacity: 4-12 children depending on state regulations and ages served Licensing: Required in all 50 states once exceeding certain thresholds (typically 3-4 unrelated children) Staff: Often just the provider, though some states allow assistants for higher capacity Revenue potential: $30,000-$75,000+ annually depending on rates and enrollment

Large/Group Family Child Care Home

Higher-capacity home daycare requiring additional staff and stricter regulations.

Typical capacity: 7-14 children Licensing: Enhanced licensing requirements beyond standard family childcare Staff: Requires at least one assistant caregiver Revenue potential: $50,000-$100,000+ annually

License-Exempt Care

Small-scale care that doesn’t require formal licensing in most states.

Typical capacity: 1-3 children (varies by state) Licensing: Not required but may need simple registration Limitations: Cannot accept subsidy payments, limited legal protections Revenue potential: $15,000-$30,000 annually

For our purposes, this guide focuses on licensed family child care, the sweet spot balancing capacity, regulations, and income for most home daycare providers.

Home Daycare Licensing Requirements by State

Licensing is mandatory for home daycares in all 50 states once you exceed capacity thresholds (typically 3-4 unrelated children). Requirements vary significantly by location.

Finding Your State’s Requirements

Primary resources:

• Child Care Aware of America (childcareaware.org): State-by-state licensing guides
• Your state’s Department of Children and Family Services (DCFS) or equivalent agency
• Local Child Care Resource & Referral Agency (CCR&R): Free consultation and application support

Key licensing components across most states:

Age and Education Requirements

Provider age: Typically 18-21 years minimum Education: Requirements vary widely:

• Some states: High school diploma or GED sufficient
• Others require: Child Development Associate (CDA) credential, ECE coursework, or associate’s degree
• Experience: 1-2 years childcare experience common requirement

Training and Certifications

Pre-licensing training (typically 20-40 hours):

• Child development fundamentals
• Health and safety protocols
• Nutrition and meal planning
• Emergency procedures
• Child abuse recognition and prevention

Required certifications:

• CPR and First Aid (pediatric-focused)
• Food handler’s permit (if serving meals)
• Medication administration (in many states)
• Annual continuing education (6-20 hours depending on state)

Background Checks

Required for:

• Primary provider
• All household members age 18+ (even if not working with children)
• Any assistants or employees

Checks include:

• State and federal criminal history
• Child abuse registry check
• Sex offender registry check
• FBI fingerprinting (in many states)

Cost: $25-$150 per person depending on state Processing time: 2-12 weeks typically

Home Safety Inspection

State licensing inspectors evaluate your home for:

Structural safety:

• Working smoke detectors on every floor
• Carbon monoxide detectors
• Fire extinguishers (accessible but child-safe)
• Covered electrical outlets
• Secure stairway gates
• Window guards/screens
• Safe water temperature (120°F maximum)

Environmental requirements:

• Adequate lighting and ventilation
• Lead-free paint (homes built pre-1978 require lead inspection/clearance)
• Radon testing (required in some states)
• Well water testing (if applicable)
• Clean, sanitary conditions throughout care areas

Space requirements:

• Minimum square footage per child (typically 35-50 sq ft indoors)
• Separate napping/rest areas
• Age-appropriate bathroom access
• Designated food preparation area (separate from diaper changing)
• Outdoor play space (minimum varies; fenced and safe)

Childproofing essentials:

• Locked cabinets for cleaning supplies, medications
• Safety latches on cabinets/drawers
• Secured heavy furniture (anti-tip straps)
• Pool fencing with self-closing gates (if applicable)
• Covered trash cans
• Secured cords (blinds, electronics)

Liability Insurance

Required coverage:

• General liability insurance ($300,000-$1,000,000 minimum depending on state)
• Professional liability coverage
• Property insurance (may require additional rider for business use)

Cost: $500-$1,500 annually for comprehensive coverage

Providers:

• Providers Choice (specialized childcare insurance)
• Wonderschool Insurance
• The Hartford (small business childcare)

Zoning and HOA Compliance

Residential zoning: Most residential zones permit home-based childcare, but verify with your municipality HOA restrictions: Check homeowner association rules, some prohibit or limit commercial activity Rental agreements: Landlord written permission required if renting

State-Specific Examples (2026)

California:

• License required for 4+ children
• Small family childcare license: up to 8 children (including provider’s own kids under 5)
• Large family childcare license: up to 14 children with assistant
• License fee: $35-$100
• CPR, First Aid, Preventive Health, and Infectious Disease training required

Texas:

• License required for 4+ children from two or more unrelated families
• Minimum 100 sq ft outdoor play space per child
• Water safety course required if pool on property
• Annual license fee: $35 (home), $600-$1,500 (larger centers)

New York:

• Family daycare registration: up to 6 children
• Group family daycare registration: 7-12 children (requires assistant)
• Registration fee: $225
• 30-hour health and safety training pre-licensing
• Annual training: 15 hours continuing education

Washington:

• License required for 3+ unrelated children
• Annual license fee: $30
• Background checks: $72 per adult household member
• Staff-to-child ratios: 1:6 maximum (only 3 under age 2)

Check your specific state through childcareaware.org before proceeding.

Startup Costs for Home Daycare Business

Home daycare requires significantly less capital than commercial centers but still demands thoughtful financial planning.

Initial Licensing and Registration ($500-$2,000)

• License application fees: $35-$500 (varies dramatically by state)
• Background checks: $25-$150 per adult household member
• CPR/First Aid certification: $50-$150
• Pre-licensing training: $0-$500 (often free through state agencies)
• Health/safety inspections: $0-$200 (some states charge)
• Business registration (LLC/DBA): $50-$500

Home Modifications and Childproofing ($500-$5,000)

Basic childproofing ($500-$1,500):

• Outlet covers, cabinet locks, safety gates: $200-$400
• Smoke/CO detectors, fire extinguisher: $100-$200
• First aid kit and safety supplies: $50-$100
• Cleaning and sanitizing supplies: $100-$200

Moderate modifications ($1,500-$3,000):

• Fenced outdoor play area: $500-$2,000
• Flooring updates (vinyl, easy-clean surfaces): $300-$800
• Additional lighting: $100-$300
• Water temperature adjustment/mixing valves: $50-$150

Extensive modifications ($3,000-$5,000+):

• Bathroom additions or ADA modifications: $1,000-$3,000
• Commercial-grade kitchen updates: $500-$1,500
• Fence installation: $1,000-$4,000
• Lead abatement (if required): $2,000-$10,000+

Equipment and Supplies ($2,000-$8,000)

Furniture ($1,000-$3,000):

• Child-sized tables and chairs: $200-$500
• Storage cubbies/shelves: $200-$600
• Cribs and/or cots/nap mats: $300-$1,000 (depending on number needed)
• Rocking chair for infants: $100-$300
• Changing table with safety straps: $100-$300

Toys and learning materials ($500-$2,000):

• Age-appropriate toys (variety by age group): $300-$1,000
• Books and literacy materials: $100-$300
• Art supplies (washable, non-toxic): $100-$300
• Outdoor play equipment: $200-$500

Kitchen and feeding ($300-$800):

• High chairs or booster seats: $100-$400
• Child-safe dishes, utensils, cups: $100-$200
• Refrigeration for meals (if needed): $0-$200
• Food storage containers: $50-$100

Health and safety ($200-$500):

• Thermometers, first aid supplies: $50-$100
• Hand sanitizer stations: $50-$100
• Diaper changing supplies: $50-$150
• Cleaning and sanitizing products: $50-$150

Insurance ($500-$1,500/year)

• General liability: $300-$800 annually
• Professional liability: $200-$500 annually
• Additional property insurance rider: $100-$300 annually

Marketing and Business Materials ($200-$800)

• Website or basic online presence: $0-$300
• Business cards and flyers: $50-$150
• Sign for property: $50-$200
• Parent handbook printing: $50-$100
• Enrollment forms and contracts: $50-$100

Total Startup Investment

Minimal launch (existing home, basic setup): $3,000-$8,000 Moderate launch (some modifications, good equipment): $8,000-$15,000 Professional launch (comprehensive setup, all age groups): $15,000-$25,000

Use our startup cost calculator to estimate your specific investment needs based on your state, capacity, and current home situation.

Creating Your Home Daycare Business Plan

A focused business plan clarifies your vision and provides roadmap for sustainable growth.

Mission and Program Philosophy

Define what makes your home daycare unique:

Educational approach: Montessori-inspired? Play-based learning? Academic prep focus? Values: What principles guide your care (nature-based, inclusive, multilingual)? Target families: Working parents? Single parents? Specific neighborhoods?

Services and Age Groups

Decide which ages you’ll serve:

Infants (0-18 months):

• Highest rates ($1,200-$2,000/month)
• Most demanding (feeding, diapering, constant supervision)
• Strict ratios (typically 1:3 or 1:4)
• Specialized equipment (cribs, bottles, high chairs)

Toddlers (18 months-3 years):

• Moderate rates ($1,000-$1,600/month)
• High energy, potty training support
• Ratios: 1:4 to 1:6
• Safe exploration space needed

Preschool (3-5 years):

• Good rates ($800-$1,400/month)
• Kindergarten readiness focus
• Ratios: 1:8 to 1:10
• Structured curriculum and activities

School-age (5+ years, before/after school and summers):

• Lower rates but fills gaps ($400-$800/month)
• Flexible enrollment patterns
• Ratios: 1:10 to 1:15
• Homework help, transportation considerations

Mixed-age groups: Most home daycares serve multiple age groups, which provides:

• Flexible enrollment (fill spots as available)
• Family feel (siblings together)
• Peer learning opportunities
• Complex logistics (meeting diverse developmental needs)

Pricing Strategy

Research local market rates (check competitors, state averages) then price competitively.

Typical weekly/monthly rates by age (2026 national averages):

• Infants: $300-$450/week ($1,300-$1,900/month)
• Toddlers: $250-$375/week ($1,100-$1,600/month)
• Preschool: $200-$325/week ($850-$1,400/month)
• School-age: $100-$200/week ($400-$850/month)

Rate structures:

Full-time (5 days/40+ hours weekly): Standard rate Part-time (2-4 days weekly): Often 60-75% of full-time rate Drop-in/hourly: $8-$15/hour (higher rate to cover unpredictability)

Additional fees:

• Registration/enrollment fee: $25-$150 (one-time)
• Supply fee: $10-$25/month
• Late pickup: $1-$5 per minute after closing
• Meals/snacks: Included or $5-$10/day additional

Payment policies:

• Due date: Weekly or monthly in advance (Monday or 1st of month)
• Late fees: $25-$50 plus daily accumulation
• Deposit: One week to one month tuition (refundable or applied to final month)
• Vacation policy: Whether you charge during your vacation weeks

Revenue Projections

Sample revenue calculation (mid-sized home daycare):

Assumptions:

• Licensed for 8 children maximum
• Average enrollment: 6.5 children (81% capacity, realistic accounting for part-time, vacations, transitions)
• Average rate: $1,200/month
• Operating 48 weeks/year (4 weeks vacation/holidays)

Annual revenue: 6.5 children × $1,200/month × 12 months = $93,600

Monthly expenses:

• Food (breakfast, lunch, 2 snacks): $400-$600
• Supplies (paper goods, art materials, cleaning): $150-$250
• Utilities increase: $100-$200
• Insurance: $100-$125 (annual divided monthly)
• Marketing and professional development: $50-$100
• Equipment replacement/maintenance: $100-$150
• Licensing and continuing education: $50-$100 Total monthly expenses: $950-$1,525

Monthly profit: $7,800 gross revenue – $1,200 expenses = $6,600 Annual profit: ~$79,200

Reality check: Most home daycares take 6-18 months to reach full enrollment. Budget accordingly with savings cushion or part-time income during ramp-up.

Track actual performance against projections using our business budget calculator and cash flow calculator.

Step-by-Step Launch Process

Step 1: Research and Planning (Weeks 1-2)

• Research state licensing requirements thoroughly
• Assess your home’s suitability (space, layout, outdoor area)
• Calculate startup costs realistically
• Research local competition and market rates
• Decide on ages served and capacity
• Determine if home daycare aligns with family’s needs/schedule

Step 2: Complete Training and Certification (Weeks 3-8)

• Register for CPR/First Aid certification course
• Complete pre-licensing training (if required)
• Take any additional certifications (food handler, etc.)
• Begin studying for licensing exam (if applicable)

Step 3: Home Preparation (Weeks 4-12)

• Create designated childcare spaces (play areas, napping, eating)
• Complete safety modifications and childproofing
• Install required safety equipment
• Address any code violations or safety concerns
• Set up outdoor play area with fencing and age-appropriate equipment

Pro tip: Start modifications early, some projects (fencing, lead abatement) take weeks and delay licensing.

Step 4: Apply for License (Week 8-10)

• Complete license application thoroughly
• Submit required documents (training certificates, background checks, home inspection request)
• Pay application fees
• Schedule initial home inspection

Processing time: 4-12 weeks typically from application to approval

Step 5: Business Formation (Weeks 8-12)

• Choose business structure (sole proprietorship, LLC)
• Register business name
• Obtain EIN from IRS
• Open business bank account
• Set up bookkeeping system
• Purchase liability insurance

Learn more about LLC formation in specific states: how much is an LLC in Florida

Step 6: Purchase Equipment and Supplies (Weeks 10-14)

• Buy furniture (tables, chairs, cribs/cots, storage)
• Stock toys and learning materials by age group
• Purchase kitchen and feeding supplies
• Stock health/safety supplies
• Set up first aid kits and emergency supplies

Money-saving tips:

• Buy used furniture (inspect for safety recalls first)
• Join local childcare provider groups for equipment swaps
• Shop garage sales for toys (check recall lists)
• Request donations from families once enrolled

Step 7: Create Policies and Contracts (Weeks 12-14)

Parent handbook covering:

• Hours of operation and holidays closed
• Tuition rates and payment policies
• Pickup/drop-off procedures
• Sick child policy
• Discipline philosophy
• Nutrition and meal plans
• Emergency procedures
• Communication methods

Enrollment contract including:

• Child and family information
• Emergency contacts and authorizations
• Medical information and medication policies
• Tuition agreement and payment schedule
• Termination procedures
• Liability release

Sample templates: Many state licensing agencies provide free templates, or purchase comprehensive packages from NAFCC or Tom Copeland’s resources.

Step 8: Market Your Daycare (Weeks 14-ongoing)

Start marketing BEFORE official opening to build waitlist:

Online presence:

• Create simple website or Facebook Business Page (free options fine)
• List on Care.com, Winnie, UrbanSitter
• Join local parent groups on Facebook
• Register with Child Care Aware referral database

Community outreach:

• Flyers at pediatrician offices, libraries, community centers
• Business cards at local businesses
• Nextdoor neighborhood posts
• Partnership with local employers (HR departments)
• Word-of-mouth through friends, family, neighbors

Open house: Host tours by appointment for interested families

Step 9: Pass Final Inspection and Launch (Week 16-20)

• Complete final licensing inspection
• Receive license/registration
• Conduct pre-enrollment meetings with first families
• Complete enrollment paperwork
• Begin care on scheduled start date!

Managing and Growing Your Home Daycare

Daily Operations

Typical schedule structure:

• 7:00-8:00 AM: Arrival, free play, breakfast
• 8:00-9:30 AM: Circle time, planned activities
• 9:30-10:00 AM: Snack
• 10:00-11:00 AM: Outdoor play (weather permitting)
• 11:00-12:00 PM: Lunch
• 12:00-2:30 PM: Nap/quiet time
• 2:30-3:00 PM: Snack
• 3:00-4:30 PM: Afternoon activities, free play
• 4:30-6:00 PM: Pickup, quiet activities

Adapt based on ages served and family preferences.

Maintaining Quality and Compliance

• Keep detailed attendance records
• Document incidents and accidents immediately
• Maintain current immunization records
• Conduct monthly fire drills
• Update emergency contacts regularly
• Complete annual continuing education requirements
• Prepare for annual relicensing inspections

Growing Revenue

Fill enrollment quickly:

• Accept subsidy/voucher payments (expands eligible families)
• Offer flexible scheduling (part-time options attract more families)
• Maintain waitlist and prioritize filling full-time spots

Increase rates strategically:

• Annual rate increases (5-7% standard)
• Give 30-60 days notice to current families
• Apply higher rates to new enrollments immediately
• Grandfather loyal families at old rates for 2-3 months as courtesy

Add services:

• Before/after school care for school-age children
• Summer camp programming
• Weekend/evening care (premium rates)
• Tutoring or enrichment programs

When to Expand

Signs you’re ready to grow:

• Consistently full enrollment with waitlist
• Turning away families regularly
• Comfortable with current operations and confident in systems
• Financial stability to invest in expansion

Growth options:

• Hire assistant to increase capacity within home (if allowed by state)
• Open second location (requires significant capital and licensing)
• Transition to commercial center (major investment but higher capacity)
• Network with other providers for referral partnerships

For comparison of various business expansion options, see our guide on best businesses to start in Florida for location-specific opportunities.

Frequently Asked Questions

Final Thoughts: Building Your Home Daycare in 2026

Starting a home daycare business combines purpose with profit, providing essential community service while building sustainable income around your own family’s needs. The childcare industry’s strength (steady demand, recession-resistant, essential service) creates stable opportunity for quality providers.

Your journey from decision to first enrolled child typically spans 3-6 months, researching requirements, completing training, preparing your home, obtaining licenses, and marketing to families. While the process requires careful attention to regulations and upfront investment, thousands of home daycare providers prove the model works across all types of communities.

The licensed home daycare providers earning $30,000-$75,000+ annually started exactly where you are, researching, planning, questioning whether they could really do this. They invested the time learning their state’s requirements, modified their homes to meet safety standards, completed training, and opened their doors to their first nervous families.

Most report the first year is hardest (building enrollment, managing finances, establishing routines) but by year two, their businesses stabilize with full enrollment, positive cash flow, and rewarding daily work with children.

Take the first step today: research your state’s specific licensing requirements, assess your home’s suitability, and calculate realistic startup costs. Each small action moves you closer to opening day.

The families in your community need quality, affordable childcare. You can provide it while building a business around the life you want to live.

Start your home daycare journey today.