How Do i Start a Daycare Business (Step by Step Guide)

Hey guys are you willing to start a daycare business. We tell how to do start with simple steps by step guide. Check benefits, difficulties, pros and cons. So, Keep reading this article also know what are the required documents, and how much you can earn from this daycare.

What is Daycare Business

Benefits of Daycare Business

Daycare Business Pros and Cons

Why start a Daycare business

Documents required

Daycare Business Model

Types of Daycare

Forecast Business

Key factors for daycare success

Starting Daycare is easy or difficult

Tax benefits of starting daycare business

How to budgeting your daycare business

Sample Daycare Business Budget for Forecasting

Top daycare franchise business Providers in USA


What is Daycare Business

Daycare, also known as child care or preschool, provides supervision, care, and early childhood education during the day. Catering to infants, toddlers, and preschoolers, these centers offer a safe, stimulating environment where children learn, play, and socialize while parents work. Activities include structured learning, outdoor play, arts and crafts, and meals. The goal is to support children’s holistic development while ensuring their safety and well-being.

Benefits of Daycare Business

Owning a daycare business offers numerous benefits, both for the children in your care and for the business owner.

Daycare Business Pros and Cons

The pros and cons of start a daycare business:



Daycare Business is a one of the Self-Employment based business. So, You have the freedom to make decisions and run the business according to your vision. Additionally, It is a profitable businesses.

Rewarding Work: Daycare Directly impacting children’s lives and contributing to their development can be incredibly fulfilling. At a time of demanding, daycare schedules can offer more flexible as compared to traditional office jobs.


Startup Costs for daycare business is High. Because Licensing, facility setup, equipment, and staff recruitment require significant initial investment. Additionally, You also face Ongoing Expenses like Rent, utilities, payroll, supplies, insurance, and maintenance costs can be substantial. Daycares often require long hours and can be physically and emotionally demanding. but You need to follow government strict regulations and licensing requirements need to be met and maintained. One of the challenging work in this business is staff management. Here you need to Recruiting, training, and managing staffs.

Daycares are responsible for the safety and well-being of children, leading to potential legal and financial risks. The childcare market can be competitive, requiring effective marketing and differentiation strategies. Additionally, They are prone to the spread of germs and illnesses, requiring constant vigilance and hygiene practices.

Documents required for Daycare Business

The specific documents required for a daycare business can vary depending on your location, but some common requirements include:

Licensing and Permits

Daycare License is the most crucial document. This issued by the relevant government authority in your area. It ensures you meet child care regulations and can legally operate. Same time, Business Permit provided depending on your location. Additionally, You might need a separate business permit or operate under your daycare license. So, Verify if your chosen location complies with zoning regulations for running a daycare facility.

Staff Requirements

Employees might need certifications in first aid, CPR, and child development. Sametime Staff might need health clearances or vaccinations depending on local regulations. Additionally, Criminal background checks are mandatory for all staff working with children.

Business Documents

Business Plan is needed to start a daycare business. This outlines your daycare’s vision, operational strategy, financial projections, and marketing plan. Additionally, Tax Registration Documents and Insurance Policies. So, You need to register your business with the relevant tax authorities. Then You obtain liability insurance and other necessary insurance coverage for your daycare.

Additional Documents

Daycare Business Owner need to provide detailed floor plans of your facility, including emergency exits and fire safety protocols. Additionally, You maintain comprehensive records for each child, including emergency contact information, health history, and parental consent forms. Then Daycare Establish clear employment contracts and employee handbooks outlining policies and procedures.

Types of Daycare

childcare center business

There are several types of daycare, each offering unique settings and care arrangements. Here’s a breakdown of the most common ones:

Center-Based Care

Child Care Centers are dedicated facilities providing care for various age groups, typically in non-residential buildings. So, They often group children by age and provide structured activities and educational programs. But Preschool Programs provide a service for primarily focused on children ages 3-5, preschools offer early learning experiences and socialization opportunities in a classroom setting. Additionally, School-Age Programs provide care before and after school hours, catering to children in elementary or middle school.

Home-Based Care

Family Child Care Homes Licensed providers care for small groups of children (usually fewer than in centers) within a residential setting. So, This can offer a more intimate and home-like environment. Additionally, Nannies provide individual care for children within the family’s home, offering personalized attention and flexibility. But Shared Nannies offers two families share the cost and services of a single nanny, splitting the hours and responsibilities.

Other Options

Au Pairs offer young adults from other countries live with a host family and provide childcare in exchange for cultural exchange and educational opportunities. But Babysitters offer Provide temporary childcare for short periods, often in the evenings or on weekends. Additionally, Relative Care provide a service for family members like grandparents or aunts/uncles provide care for children, offering a familiar and potentially more cost-effective option.

Additional Factors to Consider

  • Licensing: Check if the daycare is licensed and follows safety regulations.
  • Philosophy and Curriculum: Different daycares might have varying educational approaches (e.g., Montessori, play-based learning).
  • Staff Qualifications and Experience: Consider the training and background of caregivers.
  • Schedule and Availability: Choose a daycare that aligns with your child’s needs and your work schedule.
  • Cost: Daycare costs can vary significantly depending on the type, location, and features offered.

Key factors for daycare success

daycare success

By focusing on these key factors, daycares or preschools can create a high-quality learning environment that promotes children’s well-being, academic preparation, and sets them up for future success.

Quality of Care

Before starting a daycare, Your top priority is ensuring a safe and healthy environment for children. This includes proper supervision, hazard-free facilities, and hygiene protocols. If You have well-trained and experienced caregivers who are passionate about early childhood education is crucial. So, looking for staff with certifications in CPR, first aid, and child development.

Then You create a warm and positive atmosphere that fosters emotional well-being and social interaction among children. After that You need to provide stimulating activities that cater to the developmental needs of different age groups. So, this could include play-based learning, creative exploration, music, storytelling, and outdoor play. Additionally, You must Implement a curriculum that promotes cognitive development, language skills, social-emotional learning, and early literacy.

Business Operations

Daycares need a sound financial plan to cover operational costs and ensure long-term sustainability. So, This involves setting competitive tuition fees, managing expenses effectively, and reaching a healthy occupancy rate. You also need to develop a strong marketing strategy to reach potential families.

You can utilize online platforms, local advertising, and community partnerships to showcase your daycare’s strengths and unique offerings. Additionally, You maintaining compliance with all local and state licensing regulations is essential for operating legally and avoiding potential risks. You must maintain open and transparent communication with parents regarding their child’s development, daily activities, and any concerns.

Additional Considerations

As you consider additional factors for success, take into account the following suggestions. Convenience and flexibility can be improved by offering options such as part-time enrollment, extended hours, or before/after school care, thereby meeting the diverse needs of families. Additionally, Community involvement, achieved through establishing relationships with local schools, libraries, and family resource centers, enhances program quality and appeals to families.

The facility’s features, including cleanliness, appropriate equipment, and sufficient indoor and outdoor play areas, play a crucial role in creating a stimulating environment. Furthermore, integrating technology for educational purposes, while also maintaining a balance with traditional play and exploration, can enhance children’s learning experiences.

Tax benefits of starting daycare business

Tax benefits of starting daycare business

There are several potential tax benefits for starting a daycare business, which can help increase your profitability and make it more financially sustainable. Here’s a breakdown of some key benefits to consider:

Business Deductions

Business Expenses: Many operational costs associated with running your daycare can be deducted from your business income, reducing your taxable income. These might include:

  • Employee salaries and benefits (wages, payroll taxes, health insurance)
  • Rent or mortgage payments (for the daycare facility)
  • Utilities (electricity, water, gas)
  • Supplies (diapers, wipes, cleaning materials, educational resources, toys)
  • Marketing and advertising costs, Maintenance and repairs (for the daycare facility)
  • Continuing education fees for staff development

Tax Credits

Qualified Business Income Deduction (QBI Deduction) allows eligible businesses, including many daycare operations, to deduct a portion of their qualified business income from their taxable income. Work Opportunity Tax Credit (WOTC) incentivizes hiring individuals from certain qualified groups, potentially reducing your payroll tax burden.

Sample Daycare Business Budget for Forecasting

Disclaimer: This is a sample budget and may not reflect the specific details of your daycare business. You will need to adjust it based on your own projected numbers and expenses.


Full-time tuition: $12,000 / 12 months / X children = $1,000 per child per month

Drop-in care: $3,000 (total additional service charges) – $2,000 (additional service charges from extended hours) = $1,000 (revenue from drop-in care). Assuming a rate of $X per day for drop-in care, we can calculate the average daily attendance for drop-in care as $1,000 / $X.

Additional services revenue: Already provided as $3,000.

Sample Daycare Business Budget for 12 children

IncomeAmount ($)
Tuition Fees$12,000
Additional Service Charges (e.g., extended hours, meals)$3,000
Government Grants or Subsidies$2,000
Total Income$17,000
ExpensesAmount ($)
Rent or Mortgage$2,000
Property Taxes$150
Loan Payments$0 (if not applicable)
Staff Salaries and Benefits$5,000
Food and Supplies$1,200
Activity Materials$600
Marketing and Advertising$500
Professional Fees (accounting, legal)$300
Repairs and Maintenance$300
Continuing Education for Staff$200
Total Expenses$10,050
ProfitAmount ($)
Total Income – Total Expenses$17,000 – $10,050 = $6,950

Top daycare franchise business Providers in USA

Several daycare franchise businesses are considered top contenders in the USA, each with their own strengths and considerations. Here are a few to get you started on your research journey:

Leading Franchise Businesses

Kiddie Academy Founded in 1981. It boasts a long history and a focus on both education and play-based learning through their “Life Essentials” curriculum. Ultimately, They have over 230 franchises nationwide. Consider factors like: Initial investment (from $425,000) and competition in your target area.

Primrose Schools Established in 1982. It emphasizes a play-based balanced learning approach and a strong focus on parent communication. Ultimately, They have over 380 franchises across the USA. Consider factors like: Higher initial investment (from $550,000) and potentially higher operational costs.

The Goddard School Founded in 1986. It offers a play-based curriculum aligned with state standards and focuses on fostering a nurturing environment. Ultimately, They have over 480 franchises nationwide. Consider factors like: Potentially larger franchise fees (from $619,900) and a focus on following their established curriculum.

Additional Options to Explore

Learning Experience Academy Founded in 1980. It offers a play-based curriculum with a focus on technology integration. They have over 215 franchises nationwide. Consider factors like: Their unique approach to incorporating technology and the potential for competition in your target area.

Montessori Kids Universe Founded in 1988. It focuses on the Montessori method of education, known for its emphasis on self-directed learning and exploration. Additionally, They have over 12 franchises nationwide. Consider factors like: This might be a good choice if you’re passionate about the Montessori approach, but the number of franchises is currently lower compared to others.

Resources for Research:

Franchise Business Review ON Additionally, This website provides reviews and rankings of various franchise opportunities. International Franchise Association (IFA) – So, This organization offers resources and guidance for aspiring franchise owners.


Which is best place to start daycare business in USA?

Determining the best place to start a daycare business in the USA involves considering factors like population density, family demographics, regulatory environment, economic conditions, competition, and available resources. Thorough market research and consultation with local experts are essential for making an informed decision tailored to individual circumstances.