Start-Up Costs for New Providers


Say you started your business in 2014 – have you kept records on all of the expenses to get your business off the ground?  Let’s start with licensing expenses.  Start-up costs can get lost in the flurry of having a new business.  Child Care Providers have their very own set of start-up costs that need to be anticipated.

We are also including a Chron .com  article by Marie Huntington of Demand Media on what goes into setting  up a child care business.  Our next post will be the SBA’s tools and resources specifically about setting up a child care business.

“The increase in two-family household incomes has created a huge demand for childcare related services. Established childcare facilities generally attract parents of infants, preschool children and school-age children who are looking to place their children with daycare providers because of their need to work outside the home. According to Entrepreneur, the start-up costs for a childcare center range from $10,000 to $50,000.


The actual start-up costs for your childcare center will depend on how you choose to establish and operate your business. For instance, opting to start a childcare center in your home will be less costly than leasing or buying a building or office location. Home-based childcare centers have lower overhead costs, including rent and costs associated with building utilities and maintenance. Also, other factors to consider when ascertaining the start-up costs for a childcare center are the daycare hours; whether you choose to supply food for the children; the amount of children you plan to accommodate; how much you plan to charge; and staff considerations, such as salaries and employee benefits.


Forbes says that the costs to start a childcare center if you’re taking over an existing facility can run at least $30,000. Forbes also reveals that supplies and equipment can costs between $300 to $400 per child. According to, educational supplies and equipment can total up to $4,100. Other expenses include marketing costs, furniture and administrative expenses; Self-Help averaged the total costs for a start-up childcare center to be $83,030.

State Regulations

Every state has its own regulations regarding the requirements to become a licensed childcare provider and other requirements, such as the qualifications to legally operate a childcare facility, the teacher-to-child ratio and safety requirements for staff and children. Your state may charge fees to register as a licensed childcare center. States establish childcare regulations to protect the health and safety of children. These childcare requirements are set by the childcare licensing agency in your state.


The National Resource Center for Health and Safety in Childcare and Early Education provides information on the childcare licensing requirements for each state. Also, the National Childcare Information and Technical Assistance Center provides licensing information for each state. Other organizations that may provide resourceful information are the National Association for the Education of Young Children, National Association for Family Child Care and the National Child Care Association.

Miscellaneous costs to include

Licensing Fees (child care license, local business license)
Smoke and Carbon Monoxide Detectors
Criminal background checks
Inspection Fee – fire and building
Water testing (esp. if using well water)
Medical exams
Safety Precautions – outlet covers, safety locks, first aid kit, security gate, etc.
Training classes
Vehicle Expenses
Children activity expenses
Playground equipment
Home Remodeling

Source:, Forbes understands your business better than almost any other tax preparer. Why? Because their experience spans more than 25 years in the field, and more than 18 years providing seminars to the YMCA Child Resource Services Providers on taxes and recordkeeping and audits,  pro bono.  Call us at 619-589-8680.