How to Start a Daycare
If you have great childhood education skills or love interacting with children, you may have thought about opening your own daycare center.
Becoming a daycare provider can be a rewarding and profitable business that can benefit your community. But there are legal considerations to keep in mind whenever you are starting a business. This is especially true in a business that involves children.
Before you become a daycare owner, there are a few steps that will prepare you to open.
- Learn about licensing requirements. Licensing requirements for child care centers vary by state. You will want to be well informed on these regulations before you open your daycare center.
- Choose your location. You can do business as a child care center in a separate facility that you rent or own. Otherwise, you can operate on a smaller scale as an in-home daycare. Your state's licensing requirements may vary depending on your choice of location.
- Choose a name. It helps to have a name that is unique and makes your business stand out against your competitors. You will also want to make sure the name is not copyrighted or used by any other business.
- Form a marketing plan. You will need a good marketing strategy to help you reach out to local families who may need your services. This can include social media, a good website, or old-fashioned customer referrals.
- Research your local zoning laws. Find out whether child care centers are allowed in your location.
- Hire Staff. The number of employees you need to hire will also depend on your state's regulations. You will be required to have a certain ratio of staff members to children (called a staff-to-child ratio). Your state may also require your employees to have certain minimum levels of training.
- Run background checks. It is important that employees have clean background checks since they are responsible for children. This is also usually a legal requirement for any licensed childcare center or school.
- Check emergency exits. Daycares can be busy and crowded, which makes emergency exits an important safety issue. This is another area where there will likely be local regulations you must comply with.
- Research your insurance needs. Childcare providers usually need a few different types of insurance. In addition to liability insurance, you might need workers' compensation insurance, property insurance, and others. To find out more, you should contact your local division of child care services.
- Think about your business structure. Incorporating or forming a limited liability company (LLC) can reduce your personal liability and offer potential tax benefits.
- Fund your business. Will you pay for the startup costs with your personal money? Another option is to apply for a business loan from a bank. If you have difficulty getting a loan, there is also the possibility of securing investors. If you will need to remodel or pay licensing fees, be sure to include these costs as you plan your funding needs.
- Create a business plan. A business plan can help you formulate your goals and vision. It will also help you determine how to make your business profitable. Being able to show a good business plan can help investors understand why they should invest their money.
- Formulate your business's policies. You will need to have a plan for how to handle late payments, bad behavior, sick children, employee issues, cancellations, and more. It can help to avoid customer disputes if these policies are formulated in advance.
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Buying into a franchise might be a good option if you would like to simplify the process of opening a daycare center. When buying a franchise, the steps for opening are often clearly laid out for you by the franchisor. They will often also have solutions to help you meet the licensing requirements. They might even have legal staff available on a corporate level.
A franchisor may also train you and generally help to get the business off the ground. This knowledge can be especially helpful to business owners who have never opened a childcare center before.
If you buy into a franchise, another advantage is that you will be buying into a known brand that is proven in the marketplace. Your target market might already know and trust the brand, which can bring in a loyal customer base.
One of the largest downsides to the franchise option is that it can be very expensive. The franchisor also might not allow you to make your own choices when it comes to the layout and design of your center, location, and more. There may also be ongoing costs to owning a franchise. You may be required to pay royalties and other fees to the franchisor.
The choice of whether to go with a franchise will largely depend on your personal preferences and budget. If you are thinking about franchising, asking the franchisor to fill out a franchising questionnaire can be a good place to start.
There are many child care laws and licensing requirements to help ensure the health and well-being of children. To comply with these laws, you will have to meet certain minimum requirements.
You should check your state and local regulations, but the requirements usually fall into the following categories:
- State laws that dictate how many children can be in a daycare for each employee (staff-to-child ratio). So, as you expand, you may need to hire more staff. Low staff-to-child ratios are thought to improve learning outcomes and lower the transmission of disease, among other benefits.
- Your state may require you to run background checks on staff members. This is always a good idea and helps to ensure you are hiring the right people for the job.
- Certain certifications may be required. This could include CPR certification or minimum education levels. These training requirements will also depend on your state.
- Your state may have specific rules on health issues. These can include vaccinations, handwashing procedures, changing diapers, and preventing the spread of disease.
- You will need to have the appropriate insurance. Your local department of children and family services can help you determine the minimum insurance you will need.
Unless you qualify for an exemption, you will need to meet or exceed the licensing requirements of your state. There are also likely to be inspections on your child care center as time goes by. So, it is always important to stay in compliance with the rules. You should also keep good records with a file on each child.
You can find more information on your state's child care center requirements at the National Database of Child Care Licensing Regulations. On this website, you will find an interactive map that will help you to locate the regulations for your state.
In most states, there are certain exemptions from childcare licensing regulations. A child care business that falls into the exempt categories will not need to strictly comply with the childcare licensing regulations. But the regulations serve as a good guideline for the minimum standards you should aim for as a child care provider.
Relative providers are usually exempt from the licensing requirements. This means that child care within families is often exempt. Relatives are usually defined as nieces or nephews, siblings, grandchildren, or great-grandchildren. To be eligible for this exemption, the provider must also be over the age of 18.
In some states, you will need to be licensed if you care for two or more unrelated children. Other states will allow up to five unrelated children in an unlicensed childcare center.
Other situations which might exempt you from licensing include the following:
- Programs for school-age children run by public schools
- Summer camps
- Programs run by religious organizations and others
To learn more about whether you might be an exempt provider, you can visit the National Database of Child Care Licensing and Exemptions page.
If you live in an area with many young families and you enjoy caring for children, starting a daycare center may be a good fit for you. Educating children can be a very rewarding career and can provide a much-needed service to your community.
Before you open your daycare business, make sure to inform yourself of the legal hurdles that come along with this type of business.
How a Lawyer Can Help
Starting a new daycare business is an exciting time, but the legal requirements can be overwhelming.
If you have questions on licensing requirements, zoning, insurance, or other issues in the childcare business, you should contact a business attorney today.
And when you are ready to start your business, use our simple DIY business formation process to ensure you meet all the legal requirements in your state.
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