How to open a home daycare: step-by-step licensing guide

Last updated 2026-07-09

What is a home daycare and how is it different from a center?

A home daycare, called a Family Child Care Home (FCCH) by most state agencies, runs out of the provider's own residence. You care for a small group of children, usually 6 to 12 depending on the state, instead of running a facility built for child care.

The difference between an in-home daycare and a center shapes everything: how you get licensed, how many kids you can watch, and how much you spend to start. Centers need commercial zoning, multiple trained staff, and building-code compliance for a dedicated structure. A home daycare uses the space you already have, though it still has to pass fire, sanitation, and square-footage rules.

Family child care homes make up roughly 35% of all licensed child care slots nationwide, according to Child Care Aware of America's annual report, and they stay the most affordable option for families in most markets ^[1]. That's a real business reason to open one. You fill a gap centers can't reach at their price point.

One honest caveat. Running child care in your home means your home is your workplace. Health inspectors walk through your kitchen. Licensing workers check your bathroom. Parents will have opinions about your living room. If that exposure feels like too much, a center model may suit you better, even at far higher startup cost. See the Daycare costs, licensing, and rules: the complete 2026 guide for a full side-by-side breakdown.

What types of home daycare licenses exist in most states?

Most states run a two-tier system for family child care. The small tier lets you work alone. The larger tier requires an assistant and usually a dedicated room.

License type	Typical child limit	Typical staff required	Common label
Family Child Care Home	5 to 8 children	Provider only	Tier 1 / Small FCC
Group Family Child Care Home	9 to 14 children	Provider + 1 assistant	Tier 2 / Large FCC

Some states add a third exempt tier. In many states, caring for 1 to 3 unrelated children (sometimes up to 5) with no license is legal, though the cutoff varies widely ^[2]. Staying below the threshold isn't always the safer play. If a child gets hurt, operating without a license can expose you to liability you wouldn't face as a licensed provider.

Opening a larger home operation usually means pursuing the Group Family license, or in some states a separate Small Center license. That path wants a dedicated room (not a dual-use living space), an extra staff member on-site, and sometimes separate bathroom access for the kids. It's a different regulatory road, not a bigger version of the small license.

The federal Child Care and Development Fund (CCDF) defines Family Child Care as care provided in a private home ^[3]. All 50 states accept CCDF block grant money, and doing so requires licensing standards that line up with CCDF rules. That's why the two-tier structure looks so similar from state to state.

What are the basic requirements to open a home daycare?

Requirements vary by state, but the core list is close to universal. Here's what you'll deal with.

Background checks. Every adult in the home, more than you, typically needs a state criminal history check. Many states also require an FBI fingerprint check and a child abuse and neglect registry search. Expect to pay $30 to $100 per person and wait 2 to 6 weeks for results ^[4].

Training hours. Most states require 15 to 45 hours of pre-service training covering child development, first aid, CPR, and safe sleep. Some states accept online coursework. Others require in-person classes. After you open, continuing education (usually 12 to 24 hours a year) is standard.

Physical space minimums. Most states require 35 square feet of indoor space per child, according to the National Association for Regulatory Administration ^[5]. Outdoor play space rules vary more. Some states accept a nearby park, others want a fenced yard.

Health and safety inspections. Your home goes through a licensing inspection before you open. Inspectors check working smoke and carbon monoxide detectors, safe storage of cleaning chemicals and medications, outlet covers, window guards, and functioning sanitation. A solid cleaning routine matters here. See daycare cleaning for what inspectors actually look for.

First aid and CPR certification. Almost universal. Get certified before you apply. Some states won't accept your application without it.

Zoning clearance. This is the one most people skip and regret. Your municipality may require a home occupation permit or zoning variance before you can run a business from your residence. Call your city or county zoning office before you spend money on anything else.

How do you actually apply for a home daycare license?

The application has a logical order. Skip steps and you'll lose weeks. Do them in sequence and most of it moves on its own.

Step 1. Contact your state licensing agency. Every state has one agency that licenses family child care, usually the Department of Health and Human Services, Department of Social Services, or Department of Early Childhood. The federal Office of Child Care keeps a state contacts directory that points you to yours ^[10]. Download the real application packet from that agency's site, not a third-party summary.

Step 2. Check zoning. Call your local zoning office, describe exactly what you want to do, and ask whether you need a permit. Get the answer in writing if you can.

Step 3. Finish required pre-service training. Do this before you submit. Most states want proof of training completion at the time of application.

Step 4. Complete background checks. Submit fingerprints for yourself and any adult household members. Some states start this as part of the application. Others make you do it independently first.

Step 5. Submit your application with all attachments. Typical attachments: proof of training, first aid and CPR cards, a floor plan or layout sketch, proof of homeowner's or renter's insurance, and your home daycare policies document.

Step 6. Prepare for the inspection. The inspector schedules a visit. Fix the obvious hazards first: fresh batteries in smoke detectors, all medications and chemicals locked above child reach, any pool or water feature secured, clutter cleared from child-accessible areas.

Step 7. Get your license and set a start date. Timelines run 4 weeks to 6 months depending on your state and how complete your application is. California's Community Care Licensing Division targets a 60-day review for complete applications ^[6].

Once you have your license number, you can legally enroll children, accept subsidy payments, and advertise as a licensed provider.

How much does it cost to open a home daycare?

Startup cost depends on what you already own and which state you're in. Here's an honest working range from $705 on the low end to $5,450 on the high end.

Expense	Low end	High end
Application and licensing fees	$25	$400
Background checks (per adult)	$30	$100
Pre-service training	$0 (free state programs)	$500
First aid/CPR certification	$50	$150
Liability insurance (first year)	$300	$1,200
Equipment (cribs, highchairs, gates)	$200	$2,000
Zoning/home occupation permit	$0	$500
Supplies (toys, art materials, food)	$100	$600
Total	$705	$5,450

Those numbers are realistic, not rosy. The widest variable is equipment. Starting from nothing for infants, safety-rated cribs alone run $150 to $300 each, and you may need several.

Insurance gets its own sentence. Standard homeowner's or renter's insurance almost never covers commercial child care liability. You need a separate home daycare insurance policy or a business endorsement, and many states demand proof of it before licensing. Daycare liability insurance typically runs $300 to $600 a year for a small family daycare, though rates move with your state and coverage limits.

Now the money coming in. The average weekly rate for family child care is around $200 to $280 per child nationally, with wide regional swings ^[1]. Six children paying $220 a week is roughly $68,640 a year before expenses. Nobody has perfectly clean data on net income for solo family providers. The honest picture from operators in mid-cost markets is take-home pay of $25,000 to $45,000 after expenses, especially in the first two years.

What staff-to-child ratios apply to home daycares?

Home daycare ratios are simpler than center ratios because the provider is usually the only adult. The ratio limit is really just the total capacity for your license type.

The American Academy of Pediatrics recommends no more than 4 infants (under 12 months) in a family child care setting with one provider, no more than 6 children total of any age, and no more than 2 children under 24 months in a group of 6 ^[7]. Those are recommendations, not federal law, but many state rules track closely to AAP guidance.

Actual state caps vary. Here's a sample.

State	Max children, one provider	Max infants (under 12 mo)
Texas	6	4
New York	6 (Family CC)	State limits by age mix
California	8 (licensed, with assistant)	Varies by age mix
Florida	6 (unregistered) to 12 (licensed)	4 infants max
Illinois	8 (with assistant)	Varies

Add an assistant and most states let you expand total capacity by 2 to 4 children. Always check your state's exact rule before enrolling past what your license specifies. Exceeding capacity is one of the most common violations found in inspections, and it can trigger immediate suspension.

Do you need a business license and a tax ID to run a home daycare?

Yes to both, in almost every case. Your state child care license is not a business license.

Most municipalities require a business license or home occupation permit to run any commercial activity from a residence. The fee is usually $25 to $100 a year. Some counties fold this into the zoning step. Others treat it separately. Call your city clerk's office and ask specifically about home-based child care businesses.

For federal taxes you need an Employer Identification Number (EIN) from the IRS, even if you never hire anyone. Parents need your EIN to claim the Child and Dependent Care Tax Credit on their returns ^[8]. You can get an EIN free at IRS.gov in about 10 minutes.

Pick a business structure before you open. Most solo home daycare providers run as sole proprietors, which is simple but gives no personal liability separation. An LLC costs $50 to $500 to form depending on the state and adds some protection, though it doesn't replace insurance. Talk to a CPA who works with small child care businesses. The tax treatment of your home-use deduction, food program reimbursements, and equipment depreciation is genuinely complicated.

The IRS lets family daycare providers deduct the business-use percentage of home costs (mortgage interest, utilities, repairs) under the time-space formula. IRS Publication 587 covers this in detail ^[8].

How do you get paid through the subsidy system?

The Child Care and Development Fund (CCDF) is the main federal subsidy that pays child care costs for low-income families. States run it under their own brand names (CCAP, child care assistance, and so on). To accept subsidy-funded children, you must be licensed and listed as an eligible provider in your state's system ^[3].

Here's the process after licensing. Register with your state's Child Care Assistance Program office, usually the same agency that licensed you. You'll sign a provider agreement and get a provider ID number. When an enrolled family is approved for subsidy, the state pays you directly at a set reimbursement rate (different from what you charge private-pay families) and the family pays the co-pay.

Subsidy reimbursement rates have long sat below market rates in many states, which creates a real money problem for providers. A 2024 rule from the Department of Health and Human Services requires states to set rates at or above the 75th percentile of current market rates by 2025 ^[3]. Whether your state has actually complied is worth checking with your local Child Care Resource and Referral agency.

The USDA Child and Adult Care Food Program (CACFP) is a separate federal program that reimburses you for nutritious meals and snacks served to children. Most licensed family daycare providers qualify. Reimbursement rates in 2024 ran $0.46 to $1.89 per meal component depending on meal type and the child's income level ^[9]. It adds up fast if you serve infants or run long hours. Enroll through a CACFP sponsoring organization in your state.

What policies and paperwork do you need before you open?

Your licensing agency hands you a list of required policies, but even states with light documentation rules expect some basics in writing before your first child walks in.

At minimum, write these:

1. Enrollment agreement. Hours of operation, tuition, late fees, closure days, and termination notice period. Get a signature before care begins. 2. Health policy. When a child must stay home sick, how you administer medication, and what happens if a child gets ill during the day. 3. Emergency and disaster plan. Evacuation route, shelter-in-place steps, emergency contacts, and how you notify parents. Many states require this document at licensing. 4. Discipline policy. Prohibited actions (physical punishment, isolation, food withholding) and how you handle behavior problems. Most states require this in writing. 5. Safe sleep policy if you serve infants. The AAP's 2022 safe sleep guidance specifies back-to-sleep, a firm flat surface, and no soft bedding ^[7]. Many states have adopted this by regulation. 6. Media and screen time policy. Some states cap screen time for children under 2 at zero minutes. Others cap it at 30 minutes a day.

Keep signed copies of every document. If you ever face a complaint or lawsuit, your paperwork is your first defense. Providers who lose licensing disputes usually lose because they have no documentation, not because the complaint was true.

ChildCareComp has a compliance toolkit with template policy documents formatted to meet the most common state requirements. It saves the hours it takes to build these from scratch.

How do you market a home daycare and fill your spots?

Word of mouth is still the most reliable way to fill a family daycare. Your neighbors, the parents at your kid's school, your church or community group, and your Facebook friends are your first 20 leads. Tell everyone you know before you open.

Beyond your personal network, use these channels.

Your state's provider search. Every state with CCDF funding runs a searchable database of licensed providers. Make your listing complete and accurate. Many parents start their search right here.

Child Care Resource and Referral (CCR&R). CCR&Rs work in every state and refer families to licensed providers at no cost to you. Find yours at childcareaware.org ^[1].

Care.com, Winnie, and Google Business Profile. Free to list. Care.com has paid tiers, but the free profile gets you found. Google Business Profile matters for local search. Claim yours and add photos.

Pricing. Look at what other licensed family daycare providers in your zip code charge. The daycare cost data by state and age group is public through CCR&R market rate surveys. Don't undercut licensed competitors just to fill spots. Underpricing makes you financially fragile and signals lower quality to some parents.

Fill infant spots first if you can. Infant care is the shortest supply in most markets and pays the highest weekly rate. Many providers build an infant waitlist for the 6-to-18-month range before they even open. Part time daycare slots (morning-only, two or three days a week) can fill gaps without a full-time enrollment, though they make your revenue harder to forecast.

What are the most common reasons home daycares fail or lose their license?

Straight talk. Most home daycares that close in the first two years close for money reasons, not compliance reasons. The provider underpriced, didn't account for paid days off, or didn't plan for slow enrollment in the opening months.

The most common licensing violations, based on state monitoring data across multiple years ^[2], are these:

• Exceeding licensed capacity
• Inadequate supervision (leaving children unattended, even briefly)
• Failing to complete annual continuing education
• Unsafe sleep practices for infants
• Improper storage of medications or hazardous materials
• Failing to keep required records (emergency contacts, immunization records, attendance logs)

Every one of these is preventable with systems. Build a daily checklist. Set calendar reminders for your training renewal deadline. Keep your licensing binder current.

Fraud is a serious risk in the subsidy system, and it carries federal criminal charges, more than license revocation. Billing for children who aren't present, falsifying attendance records, or splitting fees with parents to make them look subsidy-eligible are federal crimes. The Minnesota daycare fraud cases show how hard these get prosecuted.

The other thing that closes home daycares is burnout. You're with young children in your own home 9 to 10 hours a day. That's relentless. Build in planning time, set hard closing hours, and take your licensed days off. Providers who treat this like a job with boundaries last longer than providers who treat it like a calling with none.

How long does it take to open a home daycare from decision to first day?

Realistically, 3 to 6 months from the day you decide to open to the day your first child arrives. Some providers do it in 6 weeks. A few wait 9 months. The biggest variable is background check processing and inspector scheduling at your state agency.

Here's a realistic timeline, 10 to 28 weeks start to finish.

Phase	Typical duration
Research, zoning check, business planning	2 to 4 weeks
Complete pre-service training	2 to 6 weeks
Submit fingerprints and background checks	1 to 3 weeks processing
Submit application with all documents	1 week (your time)
State reviews application, schedules inspection	2 to 8 weeks
Inspection, corrections if needed	1 to 4 weeks
License issued, enroll children	1 to 2 weeks
Total	10 to 28 weeks

Plan for the longer end. If you're fast and your state is fast, great. But if you promise parents an 8-week open date and your background check takes 6 weeks by itself, you'll have to reschedule families and lose trust before you've started.

Use the waiting time. Get CPR certified, set up your space, build your policy documents, open your business bank account, and get on the CCR&R referral list now so referrals start arriving the day you're licensed.

Frequently asked questions

How many kids can I watch in a home daycare?

The number depends on your state and license type. Most states license small family child care homes for 5 to 8 children with one provider, and group family homes for 9 to 14 children with a provider plus at least one assistant. Infant limits are tighter: the American Academy of Pediatrics recommends no more than 4 infants per provider. Always confirm the exact capacity on your license certificate, because exceeding it is the most cited violation in inspections.

Do I need a license to watch kids in my home?

It depends on how many unrelated children you care for. Most states exempt you if you watch only 1 to 3 unrelated children, but that threshold varies. Once you pass the exempt number, you must be licensed to operate legally. Caring above the exempt limit without a license can bring fines, forced closure, and civil liability if a child is injured. Check your state's licensing office for the exact threshold in your county.

How much can I make running a home daycare?

Average weekly rates for family child care run $200 to $280 per child nationally, higher for infants and in expensive metros. Six children paying $240 a week is about $74,880 in gross revenue a year. After food, supplies, insurance, training, and taxes, most solo providers in mid-cost markets report net income of $25,000 to $45,000. Your income tracks your capacity, local rates, and how many subsidy versus private-pay families you serve.

What training do I need to open a home daycare?

Most states require 15 to 45 hours of pre-service training before licensing. Common topics include child development basics, first aid and CPR, safe sleep, mandated reporter training, and health and sanitation. After opening, continuing education (usually 12 to 24 hours a year) is required to renew your license. Some states offer free training through their CCR&R network. Check your state licensing agency's website for the exact hours and approved providers.

What insurance do I need for a home daycare?

Your existing homeowner's or renter's insurance almost certainly excludes commercial child care. You need a separate liability policy or business endorsement for family child care. Most states require proof before issuing a license. Premiums typically run $300 to $600 a year for a small home daycare, though rates vary by state and the number of children. See the detailed breakdown at home daycare insurance for coverage types and what to ask your broker.

Can I run a home daycare if I rent my home?

Yes, but you need two things your landlord may not have mentioned. First, your lease must permit home-based business use. Many standard leases prohibit it, and your landlord can evict you for running a business without permission. Second, renter's insurance rarely covers child care liability, so you need a separate policy. Get written permission from your landlord before applying. Some states require a landlord consent form with the application.

How do I accept childcare subsidy payments as a home daycare?

You must be licensed first. After licensing, register as an approved provider with your state's Child Care Assistance Program (CCAP or equivalent). You'll sign a provider agreement and get a provider ID. The state pays you directly at its reimbursement rate, and the family pays the co-pay. Rates vary by state and are supposed to sit at or above the 75th market percentile under the 2024 federal CCDF rule, though compliance varies. Contact your CCR&R for current rates.

What does a home daycare inspection look for?

Inspectors check physical safety first: working smoke and carbon monoxide detectors, secured hazardous materials, safe sleep spaces for infants, no recalled equipment, and adequate space per child. They also review paperwork: required policy documents, emergency plans, children's enrollment files with emergency contacts and immunization records, and your training certificates. Renewal inspections are unannounced in most states, though the initial licensing inspection is usually scheduled. Fix obvious hazards before you apply.

Is an in-home daycare better than a center as a business?

It depends on your goals. A home daycare has much lower startup cost ($700 to $5,500 versus $50,000 to $500,000+ for a center), faster licensing, and no commercial lease. But your capacity ceiling is 12 to 14 children, your home is your workplace, and growth or resale options are limited. Centers can serve 40 to 100+ children with more staff flexibility. For most first-time operators without outside capital, home daycare is the lower-risk entry. Many center owners started at home.

How do I handle taxes for a home daycare?

Get a free EIN from IRS.gov before you open; parents need it to claim the Child and Dependent Care Tax Credit. File as a sole proprietor on Schedule C or as an LLC. You can deduct the business-use percentage of home expenses using the IRS time-space formula (IRS Publication 587 explains it). CACFP food reimbursements have specific tax treatment. Hire a CPA who has worked with family child care providers. The home-use deduction alone can be worth $2,000 to $6,000 a year.

What records am I required to keep for a licensed home daycare?

State requirements vary, but common required records include each child's enrollment form and emergency contacts, immunization records, daily attendance logs with arrival and departure times, medication authorization and administration logs, incident and injury reports, your training certificates and first aid card, and fire and emergency drill records. Most states require you to keep children's records for 1 to 3 years after disenrollment. Keep physical or digital backups in a fireproof or cloud-based system.

Do I need to feed the children, and can I get reimbursed?

Most licensed home daycares must provide meals and snacks that meet basic nutritional standards. You can get reimbursed through the USDA Child and Adult Care Food Program (CACFP) if you enroll with a sponsoring organization in your state. Rates in 2024 ranged from roughly $0.46 to $1.89 per meal component depending on meal type. CACFP also requires you to follow USDA meal pattern guidelines, which means no sugary drinks and portion minimums by age group.

What happens if I get a complaint filed against my home daycare?

Your licensing agency must investigate complaints, usually within 24 to 72 hours for allegations involving child safety. The investigator visits your home, interviews you, and may interview the complaining family. Outcomes range from no finding (unsubstantiated) to corrective action plans, fines, probation, or license revocation. Keep your records clean, keep your policies in writing, and respond cooperatively. Most substantiated violations are for things like capacity overages or missing paperwork, not serious harm.

Sources

1. Child Care Aware of America, 'The US and the High Cost of Child Care' annual report: Family child care homes make up roughly 35% of licensed child care slots; average weekly rates and CCR&R referral network described
2. National Association for Regulatory Administration (NARA), 'Child Care Licensing Study': Most common licensing violations across states include capacity overages, supervision failures, and record-keeping deficiencies; state-by-state exempt thresholds
3. U.S. Department of Health and Human Services, Child Care and Development Fund (CCDF) regulations and 2024 final rule: CCDF defines family child care as provided in a private home; 2024 rule requires states to set rates at or above 75th market percentile by 2025
4. U.S. Department of Health and Human Services, Office of Child Care, background check requirements: Background checks for child care providers include state criminal history, FBI fingerprint check, and child abuse registry; typical costs $30–$100 per person
5. National Association for Regulatory Administration (NARA), 'Licensing Curriculum' indoor space standards: Most states require 35 square feet of indoor space per child in family child care settings
6. California Department of Social Services, Community Care Licensing Division, Family Child Care Home licensing process: California CCL targets a 60-day review period for complete family child care home applications
7. American Academy of Pediatrics, 2022 Safe Sleep Policy Statement and Family Child Care Home recommendations: AAP recommends no more than 4 infants and 6 total children per family daycare provider; 2022 safe sleep guidance specifies back-to-sleep on firm flat surface with no soft bedding
8. Internal Revenue Service, Publication 587: Business Use of Your Home: Family daycare providers can deduct home business-use expenses via the time-space formula; EIN required so parents can claim Dependent Care Tax Credit
9. USDA Food and Nutrition Service, Child and Adult Care Food Program (CACFP) reimbursement rates 2024: CACFP 2024 reimbursement rates ranged from approximately $0.46 to $1.89 per meal component depending on meal type and family income tier
10. U.S. Department of Health and Human Services, Office of Child Care, state licensing contacts directory: Every state has a single agency responsible for family child care licensing; the Office of Child Care maintains the directory