One field, three on-ramps
Child care is the most heavily regulated program in this library: essentially every state licenses it, and there is little of the exemption question that shapes afterschool. Instead, the decision that shapes everything is the model. There are three on-ramps, and they differ enormously in cost and regulation.
- Family child care home — run in your own residence, small group, lightest rules, lowest cost. The fastest way in.
- Child care center — a commercial facility with full licensing, zoning, building and fire approvals, strict ratios and credentialed staff. High cost.
- Head Start / Early Head Start — not a license at all, but a competitive federal grant. Most providers join it through a partnership rather than becoming a grantee.
Underneath all three sits one federal floor from the Child Care and Development Fund (CCDF): a comprehensive background check and health-and-safety rules. The numbers, ratios, group sizes, space and staff credentials, are set by your state.
High demand, high cost
Demand is strong but price-constrained. Child Care Aware of America put the national average annual price at $13,184 in 2025, which takes about 10% of a two-parent household's median income and 33% of a single parent's. In most states, infant care costs more than in-state public college tuition. Meanwhile supply is shifting: licensed centers fell about 1% from 2024 to 2025, while family child care homes rose 1.4%. Families often cannot pay the true cost of care, so public funding, subsidy, food reimbursement and Pre-K, is usually part of the business model.
Form the legal entity
Match the structure to the model and your funding plan:
- Sole proprietor — simplest, common for a solo family child care home (no liability shield).
- LLC or corporation (for-profit) — liability protection and access to loans and equity; most private centers.
- 501(c)(3) nonprofit — a board-governed charity (IRS Form 1023 $600, or 1023-EZ $275), needed for tax-deductible donations, most foundation grants, and many Head Start applications.
Timeline and budget
No authoritative national dataset reports child-care startup costs, so the ranges below are planning estimates, anchored to the hard fees elsewhere in this section. The gap between a home and a center is large.
Payroll is the biggest operating cost, and for centers it starts before classrooms fill, so budget months of operating reserve.
Work the sequence
Once the model is chosen, the path is a sequence. Beyond your model's page, see: facilities and enrollment, ratios and staffing, background checks and safety, and funding and accreditation. Federal rules beyond CCDF apply throughout: the ADA and IDEA (inclusion of children with disabilities), the FLSA (child-care staff are generally owed minimum wage and overtime), and mandated reporting.
Related resources
Start by choosing your model: family child care home, child care center, or Head Start. See also Federal Programs and Starting an Afterschool Program.
Frequently asked questions
- What is the first decision in starting a child care program? The model: a family child care home (in your residence, lightest rules), a child care center (commercial, full licensing), or the Head Start grantee path (a federal grant, not a license). It sets your cost, rules and timeline.
- Do I always need a license for child care? In almost every state, yes, child care is the most heavily regulated program of its kind, with little of the exemption question that applies to afterschool. The license type and rules depend on your model and state.
- How much does it cost to start a child care program? A family child care home can start for a few thousand to roughly $15,000; a small leased center commonly runs $100,000 to $500,000 or more; a purpose-built center can exceed $1 million. No national dataset exists, so treat these as estimates.
- Should my program be a nonprofit or for-profit? It depends on funding. Sole proprietor or LLC fits a for-profit home or center; a 501(c)(3) is needed for tax-deductible donations, most foundation grants, and many Head Start applications. Child-care subsidy pays both.
- What is the federal floor for child care? The Child Care and Development Fund (CCDF) requires a comprehensive background check and a set list of health-and-safety topics for licensed and subsidy-receiving providers. States set the ratios, group sizes, space and staff credentials on top.