Daycare businesses provide a critical service to working families. Parents and guardians need reliable, responsible child care services to ensure that their children are well taken care of while adults in the household work hard to earn a living. Even during the COVID-19 crisis, with many people working remotely from home, daycares provide a necessary service. Parents still need someone to care for and provide enrichment to their infant and pre-school children.

Before starting a daycare, I recommend that you seek resources—such as an attorney, tax advisor, accountant, and business consultant—who can help with your legal, accounting, and industry-specific questions and decisions. In the meantime, I’ve created this step by step guide that provides key considerations and action steps for starting your own daycare business.

This guide for starting a daycare business will cover:

  • What is a daycare?
  • Components of a daycare business plan
    • Is it better to buy a franchise or start your own?
    • What equipment and supplies will your daycare need?
    • Do you need to set up an LLC or other business entity for a daycare?
    • What business licenses and permits might you need?
    • Are there special COVID-19 requirements you must follow?
    • What staff positions will you need to fill?
    • Does your daycare need business insurance?
    • What taxes does a daycare pay?
    • How much does it cost to start a daycare?
    • How will you fund your daycare?
  • Steps for starting a daycare business
    • Choosing a business name (and a domain name)
    • Designating a registered agent
    • Registering your business with the state
    • Obtaining an EIN
    • Opening a business bank account
    • Preparing your daycare location
    • Getting the required daycare permits and licenses
    • Creating a contract for clients
    • Hiring employees
    • Registering for payroll taxes
    • Promoting and advertising your daycare
    • Keeping your daycare legally compliant
  • Business resources for daycare providers
  • How CorpNet can help

What I share here is not meant as legal or accounting guidance but rather to give you a general idea of what you may need to consider when opening a daycare center.

What is a Daycare?

What is considered a daycare? A daycare is a licensed or certified business that offers services to take care of children not related to the business owner. Different states have different classifications for daycares according to the number of children they enroll.

Generally, there are “family child care” and “child care” providers.

  • Family Child Care – These providers often run their businesses from their private homes and care for mixed-age groups of children. States require them to register and meet specific rules, including limiting the number of children that they care for.
  • Child Care – These centers offer care for larger groups of children at a commercial location rather than in a private home. Usually, these businesses divide children into different groups according to age. Child care centers must comply with all state regulations.

Some states, like Pennsylvania for example, have other categories of child care centers, too.

In Pennsylvania, the Department of Human Services (DHS) oversees the following types of child care facilities in the state.

  • Child Care Centers – Facilities that care for seven or more children unrelated to the operator.
  • Group Child Care Homes – Facilities that care for seven to 12 children unrelated to the operator.
  • Family Child Care Homes – Facilities that care for four to six children unrelated to the operator.

For each of these types of daycare facilities, there are staff member to child ratios to be met (according to the ages of the children) and maximum group sizes allowed.

Similarly, California recognizes the following categories of child care centers. The Child Care Licensing Program of the Department of Social Services oversees daycare licensing in California.

  • Small Family Child Care Homes – A private home providing care for up to six children (up to eight children if specific criteria are met).
  • Large Family Child Care Homes – A private home that provides family child care for up to 12 children (up to 14 children if specific criteria are met).
  • Child Care Centers – Child care facilities of any capacity, other than a family child care home, in which less than 24-hour per day nonmedical care and supervision are provided to children in a group setting.

There are staff-to-child ratios that must be maintained for each of these categories.

For a list of all of the states’ definitions of licensed daycares, visit the website daycare.com

Action Plan on Posted Notes

Components of a Daycare Business Plan

Your business plan will be the roadmap for outlining your daycare business goals and what will be involved in achieving them. It will also help you get a handle on the costs, revenue, and profitability you might expect—which is especially critical if you intend to seek outside funding for your business. The elements included in a business plan can vary depending on the type of business, location, size, and other factors. Generally, most business plans include the following sections, which might be called different things or organized differently, depending on the business owners’ or stakeholders’ preferences.

  • Executive Summary – Company mission and objectives
  • Company Overview – Startup requirements, funding requirements, company ownership
  • Products and Services – Description of what you’ll provide to your customers
  • Market Analysis – Target market, industry outlook, competitor analysis
  • Execution – Sales strategy, sales forecasts
  • Management – Leadership, hiring plan, staffing requirements
  • Financials Projections – Break-even analysis, cash flow statement, balance sheet, income—Profit and Loss— statement
  • Appendix – Containing supporting details and assumptions

This is not an all-encompassing list of the possible items your business plan might include, but it will serve as a good starting point as you begin to work on yours.

Things to think about as you write your business plan include:

Should You Buy a Daycare Franchise or Start Your Own Daycare?

Whether you’ll purchase a franchise, an existing independent daycare, or start your own will affect what you need to do to open your daycare and how much it will cost. Primarily, you have the following three options:

  • Buy a daycare franchise.
  • Buy an existing daycare center.
  • Start your own daycare business.

Option 1. Buy a Daycare Franchise

Buying a franchise can eliminate a lot of research, planning, and time involved in starting a daycare business. With a daycare franchise, much of the infrastructure, operational guidelines, marketing assets, and brand reputation are already developed. Of course, you will pay (pretty handsomely) for those advantages, and the costs might be prohibitive. Franchisors usually charge an initial franchise fee and other fees (such as training, background checks, furnishings, website, marketing materials, software, security, and more). There will also be some ongoing charges (royalty fees and possibly other recurring costs, such as a monthly advertising fee). Buying a daycare franchise could cost in the hundreds of thousands to several million dollars.

Option 2. Buy an Existing Daycare Center

Is an existing daycare facility for sale in your area? This can save some of the steps and time required to get into business. It’s important to weigh the pros and cons carefully. This scenario’s potential advantages include having a location ready to go, qualified staff in place, and an existing clientele. On the flip side, if the current business has a poor reputation, it could prove challenging to turn that image around and gain prospective clients’ trust.

Option 3. Start Your Own Daycare Business

Throughout this article, I will focus on the scenario of starting your own daycare business from scratch. Business owners who go this route have many tasks and responsibilities to fulfill to launch a daycare center. Although there is much work involved, there are some significant advantages:

  • You start from a clean slate and have the freedom to create the business you’ve dreamed of.
  • You do not have a negative brand reputation lurking in the shadows that could derail your efforts.

When starting your own daycare, you’ll need to consider the type of daycare facility you will open. As I mentioned before, states recognize different categories of daycare operations based on where they are based and the number and ages of children in their care.

If you’re planning to open a daycare in your home, consider what additional space and amenities you’ll need to operate your business according to the state and local requirements for child care businesses. Also, make sure that no zoning ordinances exist to prevent opening a daycare facility where you live. Entrepreneurs who intend to operate their daycare from home also should check with their homeowners’ association (HOA), if they have one. In most states, HOAs may not forbid running a daycare (although this can happen if their governing documents do not allow in-home businesses on residential premises), there may be restrictions on enrollment numbers.

If you plan to rent, lease, or purchase a commercial property for a daycare, realize there may be zoning restrictions about the types of businesses that may operate in the area. It’s critical to ask the local municipality about any rules that may prevent a daycare from opening there. Also, research the state and local regulations that apply to daycare businesses. It’s essential to know what building amenities a property must have in place before opening a child care center.

What Equipment and Supplies Will You Need for Your Daycare?

The equipment, furnishings, and supplies you’ll need to purchase for your daycare center will depend on your business’s size, the ages of children you’ll care for, and other factors. Below, I’ve listed some of the possible necessities:

  • Tables and chairs
  • Gliders or rocking chairs
  • Cribs
  • Infant seats
  • Changing tables
  • Room dividers
  • Floor mats
  • Strollers
  • Sheets and blankets
  • Diaper disposal solutions
  • Trash cans
  • Learning materials
  • Arts and crafts supplies
  • Toys and games
  • Activity tables
  • Book display rack
  • Playground equipment
  • Towels
  • Kitchen supplies
  • Cleaning supplies
  • Bathroom supplies
  • First aid kits
  • Smoke and carbon monoxide detectors
  • Fire extinguishers
  • Audiovisual equipment
  • Dry-erase boards, markers, bulletin boards
  • Computers
  • Daycare management software solution
  • Accounting software
  • Shelving, cubbies, hooks for children’s clothing and supplies
  • Storage tubs and totes for toys

Other expenses to consider include:

  • Utilities – heating, cooling, electric, gas, internet access
  • Marketing – website development and maintenance, signage, business cards
  • Professional support – attorney and accountant fees, building maintenance

Does Your Daycare Need an LLC?

Check with your state or talk with an attorney to determine which business entity types are options for your daycare. The business structure you choose will affect your tax obligations, your personal liability related to business legal and debt issues, growth potential, and the ongoing compliance requirements you will need to fulfill to maintain the business entity. The LLC (Limited Liability Company) entity is one that many small business owners choose due to the personal liability protection it provides, tax flexibility it offers, and minimal ongoing compliance requirements.

I’ve listed other popular business entity types below. You can find more about each by visiting the links I’ve provided.

Note that while Sole Proprietorships and Partnership require less (or no) business registration paperwork and ongoing formalities, they do not offer business owners liability protection. Carefully weigh the pros and cons of each entity type before deciding on how to structure your daycare.

What Business Licenses and Permits Does a Daycare Need?

Each state has its own rules and regulations for daycares that operate in their jurisdiction. Examples of state agencies that oversee daycares are the Department of Children and Family Services, Department of Public Welfare, or similar department. In some states, there may be local agencies that also regulate and monitor daycares. Business owners should check with the appropriate agency to find out what’s required to start their daycare.

A helpful resource to determine the licensing requirements in a state is the daycare.com website. It has a PDF, “Licensing Threshold for Family Child Care Homes Caring for Unrelated Children,” which contains a state-by-state list of the criteria for when a daycare must get licensed or registered.

To get a daycare license, the provider must meet all of the state and local government agencies’ requirements governing child care facilities.

Requirements might include:

  • Certificate of Registration or Certificate of Compliance from the state
  • Zoning approval
  • An approved plan of operation
  • Outdoor fencing around playground areas
  • Completion of food safety courses
  • CPR training and certification
  • Clean driving record (no violations) for staff that will operate daycare vehicles
  • Criminal and child abuse background checks
  • Site inspection (to ensure the building complies with code and safety standards)
  • Staff education or training
  • Proper signage on the building

To retain a daycare license, daycare providers must:

  • Maintain staff-to-child ratios and group sizes set forth by the state or local agency that oversees them.
  • Follow an approved plan of operation.
  • Follow cleaning and disinfecting guidelines, using approved cleaners and disinfectants.
  • Maintain a health record of children’s immunizations.
  • Submit reports to government agencies as required.
  • Ensure staff members meet the state’s qualification requirements.
  • Conduct required safety drills.
  • Provide required documentation to parents (for example, a “Notification of Parents’ Rights”).

There may be other requirements, as well.

What COVID-19-related Requirements Must Daycares Follow?

The state child care licensing agency and state and local health departments are good resources for learning about COVID-19 requirements and advisories.

You will also find information about operating a daycare program during the pandemic on the following websites:

Although not explicitly COVID-19-focused, the National Health and Safety Performance Standards through Caring for Our Children (CFOC) provides a strong foundation for child care practices.

What Staff Will You Need to Hire?

Your staffing needs will depend on the category of daycare you operate and your state’s rules for the ratio of caregivers to children that must be maintained. In addition to wages and salaries, a daycare may also incur costs for providing company benefits and training.

According to the U.S. Bureau of Labor Statistics, the median pay for childcare workers in 2019 was $24,230 per year ($11.65 per hour). Of course, this might be higher or lower for each staff member depending on their position, level of education, professional credentials, and experience in the field.

Examples of the types of positions in a daycare center are below.

  • Director – A person to oversee the daycare’s programs and supervise other staff members
  • Preschool Teacher – An individual responsible for teaching children the basics of reading, writing, and other subjects to prepare them for Kindergarten
  • Infant Teacher – An individual that provides care and enrichment for babies
  • Toddler Teacher – An individual that provides care and enrichment for toddlers
  • Teacher Aide or Assistant – An individual who assists teachers in creating and executing lesson plans and activities
  • Administrative Assistant – Someone who helps the owner or director with clerical duties, such as answering phones, handling paperwork, scheduling appointments, etc.

If you research the roles in daycares, you’ll find other position names, as well.

  • Group supervisor
  • Assistant group supervisor
  • After-school assistant
  • Infant child care worker
  • Classroom aide
  • Classroom assistant
  • Child care worker

Regardless of what a daycare entrepreneur chooses to call staff member positions, it’s critical to find responsible, skilled, trustworthy candidates who meet all of the criteria required by law to serve in those positions.

What Education and Experience Do Daycare Owners and Staff Need?

The states’ rules vary regarding what experience and education daycare staff members need to be qualified for their positions.

The names of roles that states mention in their regulations vary.

  • Director
  • Group leader
  • Child care supervisor
  • Group teacher
  • Lead caregiver
  • Caregiver
  • Assistant group supervisor
  • Staff

The above are just a few examples of the wording states might use.

States describe what responsibilities those roles entail. Daycare owners must ensure that the staff members at their facility in those roles (even if they’re called something else) have the necessary qualifications required by the state.

Qualifications requirements may include:

  • Minimum age requirements
  • High school diploma (or equivalent)
  • Early childhood education degree
  • Previous experience working with children
  • Orientation training
  • Ongoing education training
  • Health and safety training
  • Health assessment
  • Background checks (criminal and child abuse)

Some states require daycare workers to have a nationally recognized credential, such as the Child Development Associate (CDA) Credential™ through the Council for Professional Recognition. Once obtained, the CDA credential must be renewed every three years. Other optional accreditation is available through other organizations, including The National Association for Family Child Care (NAFCC™).

It’s critical to review the requirements and get hiring and training policies in place before hiring staff.

What Kind of Insurance Does a Child Care Center Need?

Entrepreneurs need to protect themselves and their business legally and financially. I recommend talking with a trustworthy, experienced insurance agent who can advise on a business owner policy that will meet your needs. States may require daycares to buy certain types of coverage before they’re allowed to operate there.

Various types of coverage that a daycare operator might need or consider include:

  • Commercial General Liability Insurance – Helps protect the business if someone sues the daycare, claiming negligence or harm caused to them physically or to their personal property.
  • Professional Liability Insurance – Helps protect the business if it is sued because a member of its staff has shown negligence in caring for children enrolled.
  • Abuse and Molestation Liability Insurance – Helps protect the business if it is sued due to a claim against an employee that sexually or otherwise abuses a child.
  • Commercial Property Insurance – Helps to protect the property (building and its contents) the daycare owns.
  • Workers’ Compensation – This mandatory insurance paid by employers covers employees’ medical expenses, lost wages, funeral costs, etc. in the event of work-related accidents and illnesses. Laws and requirements for workers’ compensation vary by state.
  • Unemployment Insurance – Unemployment insurance, a federally mandated program, temporarily replaces some of the wages that workers have lost if they were laid off or let go through no fault of their own. The program is funded by employers who must pay into FUTA (Federal Unemployment Insurance Act) as part of their payroll taxes. The FUTA tax paid corresponds to an employee’s wages and is not deducted from the employee’s paycheck. In most states, there is also SUI (State Unemployment Insurance)—or SUTA (State Unemployment Tax Act)—tax. I’ll provide more detail about this in the soon-to-follow payroll section.
  • Business Interruption Insurance – If a disaster forces a daycare to close temporarily, this type of policy helps pay for expenses and compensate for lost revenue. Review policies carefully to understand what they do and do not cover. Unfortunately, during the coronavirus crisis, many entrepreneurs discovered that their policies don’t cover pandemics.

What Taxes Does a Daycare Have to Pay?

Tax obligations vary by state. Below are several types of tax that can impact a daycare’s bottom line:

  • Federal income tax
  • State income tax
  • FUTA tax (federal unemployment)
  • SUI tax (state unemployment)
  • FICA (Social Security and Medicare) taxes – FICA tax is paid by both the employee and employer. 7.65 percent of an employee’s wages must be withheld from each paycheck, and then the employer must pay a matching 7.65 percent.
  • Self-Employment taxes – If a daycare owner operates as a sole proprietor, Limited Liability Company, or S Corporation, the owner must pay self-employment taxes (Social Security and Medicare taxes). Sole proprietors and LLC owners must pay self-employment taxes on all net earnings received. S Corporation business owners pay self-employment taxes on only the wages and salaries they receive from the company.

There may be other state and local taxes and fees depending on where a daycare is located.

Generally, daycare services are not subject to sales tax. However, there may be exceptions. Ask a trusted tax expert for guidance or reach out to the state and local tax authorities to learn what they require.

Entrepreneurs that seek to set up their daycare as a nonprofit may have an exemption from certain taxes. Many stipulations must be met to qualify for nonprofit status.

How Much Does It Cost to Open a Daycare?

This is something you will be getting a feel for as you research what your daycare will need and decide how you will operate your business. As you may have guessed, the costs can vary immensely. SBDCNet, in a recent blog post, shared that sources estimate startup costs might average anywhere from $10,000 to over $95,000. The costs could likely be more if building renovations are required or the entrepreneur must make other significant purchases.

How Will You Fund Your Daycare – What If You Have No Money?

If you do not have the finances necessary for starting your daycare, you will need to seek funding from other sources. Business registration costs, property and building expenses, equipment needs, staffing requirements, license and insurance costs, marketing expenses, and other factors will affect how much you’ll need to start a daycare. It’s also crucial to have some funds on hand to cover ongoing operating expenses and unexpected expenses as your business ramps up.

Possible sources of funds when starting your own daycare business:

  • Your personal assets
  • Friends and family members who want to invest in your venture
  • Business or partners (one or more people who will share ownership with you)
  • Banks or credit unions
  • Local, state, and federal government programs and grants (The SBA and Small Business Development Centers are useful resources for finding these opportunities.)

Daycare Room With Children Present

Steps for Starting a Daycare Business

OK, so now that you’ve begun to gain an understanding of the many considerations involved in opening a daycare, let’s take a look at some of the steps you may need to take to launch your business.

1. Choose a Daycare Business Name

A daycare’s business name will arguably be its most powerful branding tool. Given that customers will be putting their child’s well-being in your business’s hands, consider what your business name communicates to potential clients.

  • Does the name instill trust?
  • Does the name give a sense of positivity and goodwill?
  • Does the name give the impression that you’re providing a capable yet fun experience?
  • Does the name sound official? (i.e., Some people may feel more confident entrusting a business with “LLC” or “Inc.” behind the name. To use those abbreviations, business owners must formally register their daycare as the appropriate entity type.)

Before using a business name, it’s critical to make sure that another similar business has not already claimed it. Infringing on a name that’s already in use could create legal problems for your company.

Domain Name Search

As you think of business names, it’s also beneficial to check if the corresponding domain name is available. Having a website URL that will match your daycare name can help people find you online. For example, suppose you want to call your business, “Above and Beyond Child Care Center.” You could use one of the below sites to verify if “aboveandbeyondchildcare.com” or “aboveandbeyondchildcarecenter.com” are available to use as your website URL.

  • Whois.net
  • Doming.com
  • GoDaddy
  • Nameboy

Business Name Search

CorpNet has a free business name search tool that can help you identify if a business name is available. Also, an attorney can help check and confirm a business name’s availability. Consider using CorpNet’s trademark search tool, too, to see if any other daycares or related businesses in the U.S. have applied for or been granted a trademark for the name.

When a business forms an LLC or C Corporation, the business name will automatically be registered at the same time. However, Sole Proprietorships and Partnerships that want to use a name that does not include the owner’s legal name must file a DBA (fictitious name) to use their desired name.

2. Designate a Registered Agent

Businesses that form an LLC or incorporate must designate a registered agent in the state(s) in which they operate. What is a registered agent? It is a company or individual authorized to accept “service of process (official government notices and legal paperwork) on the daycare’s behalf.“ A registered agent must maintain office hours Monday through Friday from 8 a.m. to 5 p.m. and meet whatever other criteria the state requires. In some states, business owners may serve as their own registered agent. However, for privacy reasons and to ensure important documents don’t get lost in the shuffle with other mail, it can be beneficial to use a third-party registered agent. Some registered agents, like CorpNet, offer services in all 50 states, which simplifies matters if entrepreneurs want to expand their daycare into other states.

3. Register Your Daycare Business with the State

A daycare that will operate as an LLC or a Corporation must file registration paperwork with the state.

A business might also have to complete other Secretary of State filings or reports, such as an initial report.

LLCs and Corporations that want to be treated as an S Corp for tax purposes must also submit IRS Form 2553.

An attorney can assist daycare owners in completing and submitting their business formation paperwork. Consider asking an online business document filing service, like CorpNet, to reduce legal fees for assistance with your business registration and compliance filings.

4. Obtain an EIN

Many banks will require that companies have an EIN (Employer Identification Number) to open a business bank account. An EIN, which the IRS issues at no charge, is a unique I.D. number (similar to a Social Security Number). You’ve probably heard EINs referred to also as “Federal Tax ID Numbers.”

Any company that will hire employees (or registered as an LLC or Corporation) must obtain an EIN.

5. Open a Dedicated Business Bank Account

After a daycare’s business entity is formed, it’s time to open a business bank account and credit accounts in the business name. Doing so will allow business expenses to be paid from the funds in those accounts, and revenue from customers can go to the appropriate place.

While it’s always ideal to keep business records and funds separate from entrepreneurs’ personal accounts, it’s mission-critical for businesses operating as LLCs or Corporations! With those entity types, business owners risk losing the personal liability protection that insulates them from the business’s legal and financial troubles if they mix their personal and business finances. That could put daycare owners at risk of having their homes, savings accounts, vehicles, and other assets used to pay damages in lawsuits or other business debt.

6. Get Your Daycare Location Ready

Before you can pass inspections and obtain the necessary licenses and permits for your daycare, you’ll need to prepare your location to meet all rules and regulations. Hopefully, you have done all the research required as you developed your business plan. Whether you need plumbing amenities, updated electrical infrastructure, remodeling or new construction, get qualified professionals and tradespeople to help you complete the work correctly.

7. Get the Required Licenses and Permits

I discussed some of the possible licensing considerations for daycares earlier in this article. Business owners should contact their state and local government offices to determine the requirements specific to their type of child care facility and the location at which it will operate. You can save some time identifying the necessary licenses and permits by using CorpNet’s Business License Service Packages. We can even prepare and submit your applications for you!

8. Create a Daycare Client Contract

It’s essential to formalize the details of what your daycare will provide and set other expectations with your clients, as well. A daycare contract is a legally binding document that protects the business, parents or legal guardians, and children. An attorney can help create a contract with the necessary details and terms and conditions that are fair to all parties involved.

Some components that a daycare agreement might include are listed below. Note that this is not an all-inclusive list, and the elements may vary depending on the type of child care facility and other factors.

  • Parties involved
  • Names and ages of the children to be enrolled
  • Parent or guardian contact information
  • Medication policy
  • Emergency contact information
  • Services and supplies provided
  • Parent and guardian responsibilities (information they must provide and supplies they must bring)
  • Fees and payment schedule
  • Hours of operation (time that parents may drop off their children and when they need to be picked up)
  • Late pick-up policy and associated fees
  • Sick child policy
  • Late payment policy
  • Vacation policy (will the daycare charge families even if children do not attend)
  • Discipline policy
  • Inclement weather policy
  • Abuse and neglect reporting policy
  • Termination procedures
  • Confidentiality
  • Signatures

You can find several online resources to help you write your own child care contracts. Alternatively, a childcare attorney can advise you on the elements of your contract. A daycare’s client agreement should be completed and reviewed by legal counsel before the business seeks clients.

Often, daycares must have clients sign other forms, too. For example:

  • Permission to administer OTC medications (such as acetaminophen or an antihistamine), sunscreen, insect repellent, etc.
  • Medical history and emergency medical care form
  • Sign-in and Sign-out sheets
  • Accident and injury report form
  • Field trip release form
  • Photo release form (if taking photos that the business will use for marketing purposes)

9. Hire Employees

When hiring staff for your daycare, it’s critical to understand all of the laws that employers must abide by. An H.R. consultant can help ensure you conduct the hiring process correctly and comply with requirements after bringing staff on the payroll.

Job applications, job interviews, background checks, and all other elements must follow all applicable hiring and anti-discrimination, minimum wage, and child labor laws. Employment laws exist at the federal and state levels, so it’s essential to research what you may and may not do when hiring and retaining a workforce. Also, have a training plan to onboard new employees so that they understand all business rules, policies, and procedures.

10. Register for Payroll Taxes

Daycares with employees must also register for state payroll tax accounts before they open. Employers must pay some payroll-related taxes, such as FUTA. And some taxes, such as State Unemployment Insurance Tax (SUI) and State Income Tax (SIT), must be withheld from employees’ paychecks. Usually, the employer must pay SUI (rates vary by state), but SUI is also withheld from the worker’s pay in some states. Employers must also withhold federal income tax from workers’ pay. As I mentioned earlier, business owners must withhold half of FICA taxes (Social Security and Medicare) from employees’ wages, too.

Daycare owners must report and remit payroll taxes to the appropriate tax agencies.

11. Market Your Daycare Business

Until you have earned a reputation that generates word of mouth and brings clients your way, you will need to put effort into marketing your daycare. Some branding and marketing assets include:

  • Company logo
  • Signage outside your building
  • Business cards
  • Website
  • Google My Business and Bing Local profiles
  • Social media
  • Email marketing

Remember that the quality of all of the above will impact your brand reputation, so it may be worth getting professionals’ assistance to handle the design, writing, and photography for your marketing assets.

12. Keep your Daycare Legally Compliant

Daycares must remain up to date on the compliance requirements that apply to them. I’ve listed some examples below:

  • State and local government reports
  • Tax filings
  • Licenses and permits
  • Retaining a registered agent
  • Industry certifications (if required)

A business may need to tend to other compliance formalities, as well, to stay in good standing with the IRS and state and local governments. Attorneys and tax professionals offer guidance on what your daycare must do and the deadlines for completing compliance tasks. A resource for tracking upcoming business entity reporting and filing deadlines is the CorpNet Compliance Portal.

HELP on Cork Board

Resources for Daycare Providers

As you can see, there is a lot to think about when starting a daycare. The following resources provide helpful information about the child care industry and what entrepreneurs must do to operate a safe, legal, and successful daycare facility.

Get Started With CorpNet’s Help!

CorpNet is here to help demystify all of the forms and filings involved in starting your daycare business. Our team of experts will ensure all of your state business registration, registered agent services, business license applications, and other filing needs are prepared accurately and submitted promptly. You can count on us to save you time and give you peace of mind—for less money than you would pay an attorney to handle the paperwork for you.

Contact us today to get started!


Sources and References:

“About the Child Development Associate (CDA) Credential™. Council for Professional Recognition. https://www.cdacouncil.org/about/cda-credential.
Accessed August 11, 2020.

Castleberry, Emma. “How to Start a Daycare Business.” Bplans. https://articles.bplans.com/how-to-start-a-daycare-business.
Accessed August 7, 2020.

“Child Care Workforce Qualifications, Training, Professional Development.” U.S. Department of Health and Human Services (HHS). https://childcareta.acf.hhs.gov/sites/default/files/public/rg3e_childcareworkforce_508_0.pdf.
Accessed August 11, 2020

“Daycare Business” (2020, June 8). SBDCNet. https://www.sbdcnet.org/small-business-research-reports/daycare-business.
Accessed August 13, 2020.

Flavin, Brianna (2017, October 30). “Your Step-by-Step Guide to Opening a Daycare.” Rasmussen College. https://www.rasmussen.edu/degrees/education/blog/how-to-open-a-daycare.
Accessed August 4, 2020.

Hamill, Virginia (2020, August 7). “Daycare Insurance: Coverage, Top Providers & Costs.” Fit Small Business. https://fitsmallbusiness.com/daycare-insurance-cost-coverage/#:~:text=Most%20daycares%20need%20more%20than,policy%20for%20a%20reduced%20rate.
Accessed August 12, 2020.

National Association for Family Child Care. https://www.nafcc.org. Accessed August 11, 2020.

“Occupational Outlook Handbook: Childcare Workers.” U.S. Bureau of Labor Statistics. https://www.bls.gov/ooh/personal-care-and-service/childcare-workers.htm.
Accessed August 11, 2020.

State Definition of Licensed Family Child-Care Homes. Daycare.com. https://www.daycare.com/news/states_family.html.
Accessed August 4, 2020.

“What to Do When a Day Care Pops up in Your HOA.” HOAleader.com. August 2014.  https://www.hoaleader.com/public/What-Do-When-Day-Care-Pops-up-in-Your-HOA.cfm
Accessed August 7, 2020


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