How Much Money Is Needed to Start a Daycare?

by Katie Jensen; Updated September 26, 2017

If you're a stay-at-home mom who would like to start a small business but still be available for your own kids, child daycare may be the opportunity you're looking for. If the daycare is in your home, start-up costs are minimal. You will most likely only need a business license. Do check with your city and state business development offices to see if your home needs to be inspected or if you need a special license if you're watching babies. Sometimes there is a restriction on how many children you can care for if you are to operate a licensed daycare.

Facility

Young children need to be fed, bathed, changed and and given the opportunity to take naps. The facility may be as small as an extra bedroom. In that case there are no costs involved. If you plan on caring for a number of children, it may be necessary to lease a facility. How large and where the facility is located determines the lease. You will need bathrooms, laundry hookups and a kitchen, which increases the lease cost. Facilities cost from a few hundred dollars a month to a few thousand dollars a month. You will need the first and last month's lease payment plus a security deposit.

Equipment

Cribs and changing tables are required. Cots and blankets for nap time will be needed. Children have accidents so you'll need bathing equipment. A kitchen is necessary for meal preparation. Age appropriate toys will have to be obtained. Cleaning and sanitizing equipment such as a vacuum, floor cleaner, washer, dryer and disinfectants are required. If your child daycare is taking place at home, you can use most of your own equipment with minimal expenses for what you don't have. Otherwise the equipment can cost upward of $10,000 depending on the size of the facility.

Licensing

In most cases, you will be required to obtain a business license, which could cost up to $500, depending on your city and state. Licensing and inspection fees may be required if you plan on taking care of babies or more than a few children. It's tempting to ignore the licensing requirements if you're operating out of your home. If you do, there could be fines and penalties.

Insurance

Check with your homeowner's insurance company to see if additional coverage will be necessary. If you're leasing a facility, the owner may require certain insurance. Liability insurance is necessary to protect you if a child, their parent or one of your employees becomes hurt on your property. The cost of the insurance depends on the coverage provided, how large the facility, location, number of employees and number of children and their ages.

Marketing

Even if the daycare business is in your home, you will have some marketing expenses to let parents know about the service. It may be as simple as flyers to hand out in the neighborhood to glossy brochures if you plan on caring for a number of children in a separate facility. The cost ranges from $10 to $5,000 for a professionally designed and written brochure.

Wages

Of course, you'll be paying yourself a salary, but if you have more than a few children to watch you will have to hire helpers. Different states have different requirements for the adult-child ratio for daycare. It depends on the age of the children. Included in the wages should be Social Security payments, unemployment taxes and the cost of a background check on the childcare worker.

About the Author

Katie Jensen's first book was published in 2000. Since then she has written additional books as well as screenplays, website content and e-books. Rosehill holds a Master of Business Administration from Arizona State University. Her articles specialize in business and personal finance. Her passion includes cooking, eating and writing about food.