Guide for new child care businesses

Consider how much time you have to open and run your business. As an aspiring business owner or entrepreneur, you're responsible for everything needed to run your business. Your time investment won’t stop when your business opens. You'll need to check in regularly with families, be present, connect with staff, and seek out feedback for your business to be successful. 

Before you invest your hard-earned money in your new child care business, you’ll need to make sure you're doing it legally. Will you run as a sole proprietorship? Will you have W-2 employees? Will you choose to incorporate? Depending on your answers, you may be required to have an Employee Identification Number (EIN), which is your business’s tax ID, and other paperwork drafted.  

Assuming you have a location selected, check with your local zoning board and any other appropriate local agencies to make sure it meets your city or county zoning requirements. If you’re opening a home-based child care program, verify there are no restrictions in your property deeds, and/or neighborhood associations against running a home-based business. If you don’t have a location selected, it’s time to start looking while keeping these requirements in mind. 

Decide what type of child care business you want to open. The type determines the steps you need to take to become a provider. In Texas, permits are issued by the Health and Human Services Commission Child Care Regulation (HHSC CCR). Their website has information about permit requirements, the application process, and ongoing compliance. They'll let you know what you need to do to meet any local and state licensing requirements, including qualification requirements to own and operate a child care business. 

Know the rules and regulations 

There are safety and qualification rules for you and all staff members you hire. Child care licensing rules include staff-to-child ratios, which state how many staff members you need to care for a certain number of children. Licensing rules also require background checks for you, your staff, and anyone in your home who will be around the children you care for. 

Additional requirements may include making safety modifications if you are opening a home-based program or if you are opening a center in a space not previously used for child care. This is to ensure that you have enough space (both indoor and outdoor) for the children in your care. You also may need inspections by your fire department and building department.  

Another legal requirement to keep in mind: purchasing insurance for your business. For home-based programs, your homeowner’s insurance won't cover any losses related to your child care business. 

Understand your responsibilities 

When opening up a child care program, make sure you understand your responsibilities. These include: 

1. Required notifications to HHSC CCR
2. Information required to be publicly available to families
3. Operational policies
4. Record-keeping requirements, such as records of accidents, incidents, and personnel
5. Requirements of personnel
6. Child to caregiver ratios and group sizes
7. Basic care requirements, including night-time care and safe sleeping
8. Nutrition and food services 

Make sure you have read thoroughly and understand the minimum standards for the type of child care business you'll be opening.  

When it comes to child care, safety is the most important thing. Your program must meet certain building and safety rules to open. You must always meet the minimum standards set by HHSC CCR.

To make sure your program is as safe as possible, be sure that any staff you hire are properly trained. Your building must meet the standards, your equipment must be right for the children's ages and checked often, and you must always follow safety procedures.

Have your contracts, policies, and procedures in place before you open your doors, and before you begin hiring. All policies and procedures should be detailed in a child care parent contract, which can be written or posted online, and families should be asked to sign a contract stating they have read and agree to your policies. Learn more about creating policies and procedures in a child care parent contract and other resources on the Operations webpage. 

If your child care business has employees, you’ll want to create similar policies and procedures regarding your hiring and employment processes. Again, you should detail these policies in a handbook and employees should be asked to sign a contract acknowledging that they have read and agreed to all of the information. Learn more about creating a child care employee handbook on the Employee management webpage.

This is an important step, and it’s unfortunately often overlooked. Taking the time to write a business plan for your child care program can help you know what you need to get your business started and keep it running profitably. Learn more about creating a business plan on the Operations webpage.

An annual budget is a critical tool for managing your child care business. It helps you plan ahead for what you will spend and monitor your actual revenue and expenses to keep you on track. Learn more about budget and finances on the Managing business finances webpage.

The market for child care programs is likely to be very competitive. It’s important to think about marketing your business so that prospective families will know what you offer and why your child care business is unique. Learn more about marketing and managing enrollment on the Operations webpage.

Hirig carefully and at a steady pace helps ensure you choose the right people for your team, setting your program up for long-term success. To access hiring resources, visit the Hiring webpage. 

The CCS program offers scholarships to help eligible families pay for child care. CCS helps make child care affordable so that families can seek or maintain employment, go to school, or attend job training. There are many benefits to serving children in the CCS program, including receiving tuition payments, participating in Texas Rising Star, and accessing business support. Learn more about serving CCS children and the process on the Offering Child Care Services webpage. 

Disclaimer 

The information contained here is for educational purposes only and is not intended to constitute legal, tax, or financial advice.