Opening a daycare in Indiana

Starting a daycare in Indiana can be a rewarding way to make a difference in children's lives while building a successful business. Whether you're passionate about early childhood education or looking for a meaningful career change, this comprehensive guide will walk you through every step.

In this guide, we'll cover both family home daycare requirements and the state's requirements for larger child care centers, ensuring you have everything you need to open your doors with confidence.

1. Indiana daycare license requirements

All non-exempt child care providers in Indiana must obtain a license before opening. The Indiana Family and Social Services Administration (FSSA) regulates all licensed child care programs in the state through the Office of Early Childhood and Out-of-School Learning (OECOSL).

Types of child care licenses

Indiana offers several license types depending on the size and scope of your operation:

• Child Care Home: Serves up to 12 children at a time, plus 3 additional children enrolled in at least grade one. Care is provided in your residence for more than 4 hours but less than 24 hours per day.

• Class II Child Care Home: Serves more than 12 but not more than 16 children at a time in your residence. This option requires additional staffing and compliance measures.

• Child Care Center: A non-residential facility providing care for at least one child for more than 4 hours but less than 24 hours per day. Centers allow for greater capacity and earning potential but require more planning, staff, and regulatory compliance.

• Registered Day Care Ministry: A child care program operated by a church or religious organization exempt from federal income taxation.

Staff-to-child ratios

Indiana enforces strict staff-to-child ratios to ensure safety and quality care. When children are grouped in mixed age levels, the ratio is determined by the age of the youngest child in the group.

Child Care Home staff-to-child ratios:

• Can serve up to 12 children, plus 3 additional full-day kindergarten children

• For infants/toddlers under 16 months: Ratio is 1:4, unless 2 of the 6 children are at least 16 months old and walking, then ratio is 1:6

• No more than 3 children may be under 16 months of age

Class II Child Care Home staff-to-child ratios:

• Can serve 13 to 16 children at a time

• Requires at least two staff members

• Must follow the same age-based ratios as child care centers

2. Orientation training

Before you can apply for a license, Indiana requires all prospective daycare providers to complete orientation training through the Indiana Licensing and Education Access Depot (I-LEAD). This essential step helps you understand state laws, regulations, and best practices.

• Orientation 1: Training for child care providers covering the start-up process and general information. Required for all license types

• Orientation 2: License-type specific training. Child Care Home providers complete home-specific training, while Child Care Center providers complete center-specific training covering preparation for licensure.

Both orientations are available online through I-LEAD and must be completed before submitting your application.

3. Training and background checks

All daycare owners, directors, staff, and volunteers must meet Indiana's qualifications:

• Age requirements: Providers and directors must be at least 21 years old. Caregivers counted in ratios must be at least 18 years old.

• Education: All providers must have a high school diploma or GED. Directors need additional early childhood education coursework.

• CPR and First Aid: All staff must have current pediatric CPR and First Aid certifications and maintain those certifications throughout licensure.

• Background checks: All staff, household members (for home-based care), and regular volunteers must pass comprehensive background checks including state and federal criminal history and child abuse registry checks.

• Ongoing training: All providers must complete 10 hours per year of continuing education related to child care topics.

4. Prepare your facility

Your physical environment is crucial for both licensing approval and providing quality care. Requirements vary depending on whether you're opening a home daycare or commercial center.

Space and safety requirements

Your daycare facility must meet Indiana's health and safety standards:

• Indoor space: Provide at least 35 square feet of usable indoor space per child. Designate separate areas for sleeping, eating, and playing activities.

• Outdoor play areas: If you plan to serve children regularly outdoors, provide a safe outdoor play area enclosed by a 4-foot high fence or wall. Equipment must meet safety standards with proper fall zones.

• Safety equipment: Install smoke detectors, fire extinguishers, carbon monoxide detectors, and secure exits. All outlets must be childproofed.

• Supplies and equipment: Stock age-appropriate furniture, toys, books, and sleep equipment that meet safety standards. Review our Daycare Supplies List to ensure you have everything you need.

• Building approvals: For new construction or major renovations, obtain plan approvals from the Department of Fire and Building Services (DFBS) and the Indiana State Department of Health (ISDH) before beginning work.

5. Submit your license application

Once you've completed your training and prepared your facility, submit your application through I-LEAD. Create an I-LEAD account and select 'Open a New Program' from the dashboard.

Required documents include:

• Completed licensing application

• Proof of completed orientation training

• Background check consents for all required individuals

• Proof of CPR and First Aid certifications

• Floor plans or facility layout

• Written nutrition and food service plan with two-week menu (for centers)

• Lease agreement or proof of property ownership

• Health program form

• Zoning approval (if required by your locality)

6. Pass the facility inspection

After your application is submitted and all paperwork is complete in I-LEAD, an OECOSL licensing consultant will contact you to schedule an onsite inspection. This inspection verifies compliance with all state regulations.

During the inspection, be prepared to:

• Demonstrate emergency procedures and evacuation routes.

• Show daily daycare schedules and activity plans.

• Present staff qualifications and training records.

• Walk through all areas children will access.

• Answer questions about your policies and procedures.

Your facility must also pass fire, health, and building safety inspections before receiving final licensing approval.

7. Develop policies and procedures

Clear, well-written policies are the backbone of a successful daycare. They set expectations for families and staff, ensure consistency, and protect your business.

Your family handbook should cover:

• Hours of operation, holidays, and closures

• Tuition rates, payment policies, and late fees

• Enrollment and withdrawal procedures

• Health and illness protocols, including a daycare sick policy

• Discipline and behavior management approaches

• Emergency plans and reporting procedures

• Drop-off and pick-up routines

• Meal, snack, and nap schedules

• Procedures for reporting suspected abuse or neglect

• Staff qualifications and training requirements

Review and update your handbook regularly to ensure it remains current and compliant with any regulatory changes.

Curriculum and daily schedule

Design a developmentally appropriate daycare curriculum that supports children's growth through play, exploration, and hands-on experiences. Your daycare schedule should include:

• Circle time and group activities

• Outdoor play and physical activity

• Arts, crafts, and music

• Story time and literacy development

• Rest and nap periods

• Meals and snacks

8. Set up your business operations

Running a daycare is more than just caring for children—it's also a business. Set up strong operations from the start to help you stay organized and successful.

Creating a business plan

A solid daycare business plan outlines your mission, target market, services, and financial projections. It should include:

• Your daycare's vision and mission statement

• Market analysis and competition assessment

• Description of services and target demographic

• Marketing and outreach strategies

• Staffing and operations plan

• Budget and financial forecasts

• Management structure and key roles

A business plan not only guides your decisions but can also help secure funding or loans.

Legal and financial requirements

Establishing your daycare as a legitimate business involves several important steps:

• Business structure: Register your daycare with the Indiana Secretary of State. Choose a business structure (sole proprietorship, LLC, or corporation) based on your tax and liability needs.

• Tax ID: Obtain a federal Employer Identification Number (EIN) from the IRS for tax reporting purposes.

• Insurance: Secure liability insurance to protect your business. Many providers offer specialized daycare policies. Workers' compensation is required if you employ staff.

• Record keeping: Maintain detailed records of attendance, health information, emergency contacts, staff credentials, training certificates, and financial documents.

9. Indiana daycare grants and funding

Child care providers in Indiana can access various daycare grants and funding opportunities to support startup, expansion, and ongoing operations. These programs aim to increase child care availability and improve quality.

Federal programs:

• Child Care Development Block Grant (CCDBG): Federal funding administered through OECOSL to help low-income families afford child care and improve program quality

• Child and Adult Care Food Program (CACFP): Reimbursements for meals and snacks served to children in daycare settings

Indiana state programs:

• Child Care Expansion Grants: State-funded competitive grants to expand quality child care access, especially in underserved communities. Awards range from $200,000 (existing program expansion) to $750,000 (new program creation).

• Early Childhood Capacity Building Grants: Support for providers to achieve Paths to QUALITY Level 3 or 4 ratings and expand seats for eligible four-year-olds

• School-Age Child Care Project Fund: Funding for before and after school programs through OECOSL

• CCDF Agreement Center funding: Support for providers serving CCDF-eligible children who maintain Paths to QUALITY Level 2 or above

10. Marketing your daycare

Effective marketing helps you attract families and build a strong reputation in your community. Consider these strategies:

• Register with TrustedCare to connect with families in your area who are searching for child care.

• Create a professional website with program details and enrollment information.

• Create a Google Business profile to increase visibility.

• Use social media to share updates, photos, and parent testimonials.

• List your daycare on Indiana's Early Learning Marketplace and local directories.

• Host open houses and facility tours for prospective families.

• Partner with local schools, healthcare providers, and businesses.

• Encourage referrals through incentives and positive reviews.

• Participate in community events and parenting groups.

Check out our guide about how to make your daycare more profitable for more tips and free advertising strategies.

11. Hire qualified staff

If you're planning a larger operation, you'll need qualified staff who meet Indiana's requirements:

• Caregivers: Must be at least 18 years old with a high school diploma or GED. Experience with children and early childhood coursework preferred

• Directors: Must meet caregiver qualifications plus have additional early childhood education credentials and supervisory experience

• Background checks: All staff must undergo comprehensive background checks and maintain clearance throughout employment.

• Training: All staff need current CPR and First Aid certifications and must complete ongoing professional development.

Look for candidates with early childhood education experience who genuinely love working with children.

12. Ongoing compliance and license renewal

Maintaining your daycare license requires consistent attention to regulations and professional development:

• License renewal: All licenses are valid for two years and must be renewed. Submit updated documentation and pay renewal fees on time.

• Inspections: OECOSL may conduct unannounced inspections at any time. Keep your facility and documentation in inspection-ready condition.

• Continuing education: Complete 10 hours of annual training on child care topics to stay current on best practices.

• Background check renewals: Renew background checks every three years for all staff and household members.

• Record keeping: Maintain detailed, up-to-date records of children's attendance, health information, staff qualifications, and finances.

Starting a daycare in Indiana requires careful planning and dedication, but the reward of shaping young lives makes it worthwhile. By following these steps, meeting all licensing requirements, and maintaining high standards of care, you'll be well-positioned to build a successful daycare that serves your community.