Starting a Child Care Business

Let Early Childhood Alliance help you start your own business in the rewarding career of becoming a child care professional.

The business of child care is enriching and rewarding and many providers remain in the field even after their own children are grown.

What types of child care programs can I start?

  • Licensed child care home—means a residential structure in which at least six (6) children (not including the children for whom the provider is a parent, stepparent, guardian, custodian, or other relative or any child who is at least fourteen (14) years of age and does not require child care) at any time receive child care from a provider.
  • Licensed child care center—means a nonresidential building where at least one (1) child receives child care from a provider.
  • Provider Eligibility Standard Certified Home (PES)—means a regulated residential structure certified to accept Child Care Development Fund (CCDF) vouchers.
  • Unlicensed Registered Child Care Ministry—means child care operated by a church or religious ministry that is a religious organization exempt from federal income taxation under Section 501 of the Internal Revenue Code.
  • Legally Licensed Exempt Home—means a non-regulated residential structure where 5 or fewer unrelated children are cared for.

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How many children can I care for?

It depends on the type of program:

  • Licensed Class I Child Care Home—generally up to 12
  • Licensed Class II Child Care Home—generally up to 16 (you will need to hold a regular license for one year prior)
  • Licensed Child Care Center—numbers vary based upon available space (35 square feet per child)
  • Unlicensed Registered Child Care Ministry—varies based on primary use of building
  • Legally Licensed Exempt Home Provider—up to 5 unrelated children

At what point do I need to get a license to care for children?

  • Residential Setting – prior to accepting the 6th unrelated child into care (a license is an option with 5 or fewer children).
  • Nonresidential Setting – prior to accepting the 1st child into care.

What are the benefits of becoming licensed?

  • Free referrals to help fill your child care openings
  • Professional development training/workshops
  • Lending library to access resources to enhance your program
  • Eligibility for the Federal Child and Adult Care Food Program (CACFP)—a monetary reimbursement for the nutritious snacks and meals you serve
  • Recognition as a professional business owner, which allows you to claim additional business-related tax deductions
  • The assurance for parents that the child care they have chosen has met health and safety regulations
  • Eligibility for Paths to QUALITY™ – Indiana’s Child Care Quality Rating and Improvement System for licensed programs or unlicensed registered ministries meeting additional voluntary standards.

How do I obtain a license?

Indiana legislation and regulation mandates that a person seeking a state license to operate a child care attend Orientation Training. This two hour child care start-up workshop provides an overview for participants who are interested in starting a child care business, and is the first part of a two-part series. It covers regulatory requirements, resources, and information on health, safety and business practices. It serves to help participants choose which type of care they would like to provide.

After completing Orientation I what do I do next?

You will need to attend Orientation II, the second training in the two-part orientation series. Orientation II is designed to outline regulatory requirements and licensing steps, and provides all the necessary paperwork and contact information to complete your goal of starting a child care program.

Where can I find and attend Orientation II trainings?

  • For homes within the Early Childhood Alliance coverage area, it is offered through ECA.
  • For homes outside the Early Childhood Alliance covarage area, consult the “Find My CCR&R” service.
  • For ministries and centers, consult the Family and Social Services Administration website

This list is a resource to support providers seeking information required for compliance with HEA 1073. HEA 1073 requires all licensed child care centers, licensed child care homes, and legally licensed exempt home providers that are eligible to participate in the CCDF program to provide documentation that their program is legally allowed to operate as a business in the county, city, or town in which the program is located.

In order to meet this requirement, the Office of Early Childhood and Out of School Learning is asking that, at initial application, or at the time the program’s license is to be renewed, either:

  1. a business permit or business license be provided to the OECOSL to provide proof that the program has a valid business permit or business license; OR
  2. a signed statement from the county, city, or town stating that a business permit or business license is not required for their program to operate be submitted.

This list is to be used as a resource for early childhood programs, however, each local Child Care Resource and Referral (CCRR) agency is serving as a resource as well. Programs are encouraged to contact their local CCRR for additional resource information. If you need help contacting your local CCRR, please check here

Additional Resources

Treating Family Child Care as a business

This video series presented by Tom Copeland, a licensed attorney and renowned tax and family child care business specialist, provides information on why it’s important to treat child care as a business and learn about the key aspects of planning.

Topics include legal issues, start-up costs, start-up tax issues, key aspects of a business plan, contracts, marketing, insurance, professional development and record keeping.