Starting a day care or child care business in New York involves a particular set of legal considerations that are specific both to the type of business and to New York State. These include choosing the proper business entity, obtaining licenses and permits, dealing with health and safety, getting adequate insurance, and dealing with employees.
As we review some of these considerations, keep in mind that the terms “day care” and “child care” are largely interchangeable in New York; many of the state’s laws, publications, and websites refer to “child care” rather than “day care.”
Choosing the Business Entity
While you could operate your day care business as a sole proprietorship or partnership, you should consider using a legal form that protects you from personal liability, such as a limited liability company or corporation. A day care center may not be the most dangerous business, but you will be taking care of the most precious thing in the lives of your clients: their children. You will be responsible for the health and safety of those children, many of whom may be toddlers, for hours every day. There is always a possibility that a child could be injured while on the premises of your day care business—in which case you would want the business, not you personally, to be responsible for any liability.
Learn more about choosing a business structure.
Licenses and Permits
In the State of New York, licensing of child care businesses is handled through the New York State Office of Children and Family Services (OCFS). Generally speaking, you need a license (for a day care center) or registration certificate (for a day care home) if you will be caring for three or more children who are non-family members for more than three hours per day. Operating without the required license or registration can result in significant penalties, including fines of up to $500 per day.
New York’s child care regulations define several different types of child care situations, which are referred to in the regulations as “Child Day Care Center,” “Small Day Care Center,” “Group Family Day Care Home,” “Family Day Care Home,” and “School Age Child Care.” The general rules for these situations are as follows:
Except for School Age Child Care, the ages of children being cared for may range from six weeks to 12 years. Other, more specific rules also apply. For example, a Small Day Care Center may not care for more than two children under age two at any one time; and, in exceptional cases, such as children under court supervision, children 13 and older may also receive care from day care centers or day care homes. Also, be aware that, in some instances, there are different rules for child care programs located in New York City.
OCFS has handbooks for family day care and group family day care providers, as well as sample applications for all types of care facility licenses, available on its website.
The license applications are extensive, running dozens of pages; some of the information that may be required includes:
Your application will need to be notarized and you will need to pay a State Central Register (SCR) fee.
Apart from preparing, submitting, and obtaining approval for your application, you will also need to complete a minimum of 15 hours of training within the first six months of being licensed, and at least 30 hours of training within the first two years. Depending on what type of care facility you have, the same training requirements may also apply to other employees. There are various options for how to receive this training, such as through EarlyChildhood.org and OCFS-sponsored video teleconferences.
Extensive information on licensing and training is available on the OCFS website.
Apart from state licensing, you should keep in mind that there may be local zoning laws that would prohibit running a child care business in a particular location. This is more likely to be an issue if you are thinking of operating the business out of your home and you live in a clearly residential, as opposed to commercial, area. Even if a child care center is permissible under the local zoning ordinance, you may be required to obtain a compliance certificate from the local zoning authority. In short, your best bet is to investigate zoning regulations before you open for business.
Health and Safety
The government is very concerned about the health and safety of infants and small children, and New York’s child care regulations are extensive. With some variation depending on whether you are operating out of your home or an independent child care center, key areas of state regulation include:
As the last item on the list indicates, the state has the authority to inspect or investigate your child care home or center. These inspections may occur at any time during hours of operation, and may include interviews of children and staff. They may also include inspecting any part of the child care center, or those parts of a home in which child care services are provided, as well as any records. Similarly, you should expect that a fire marshal or other fire prevention official will make an inspection to ensure there are adequate routes of escape in case of fire and that other fire safety regulations are being complied with. Parents of children under care also have the right to inspect all parts of a center or home used for child day care, and unlimited and on-demand access to their own children.
If you run your day care business out of your home, you may be able to deduct expenses for the business. To qualify, you must (a) provide day care to children and (b) be licensed by the state or exempt from the state’s licensing requirement. Details about how to figure the deduction can be found on IRS Publication 587, available at irs.gov.
There are particular risks associated with operating a child care center, primarily those related to the health and safety of infants and small children. These are on top of more generic business risks such as fire, theft, or other sources of property damage or personal injury.
Try to work with an insurance agent who has previous experience writing policies for child care providers. Consider coverage for sexual abuse or molestation, for corporal punishment, and for employees who are child care providers. In general, make sure you have an excellent general liability policy.
For more information, see Nolo's article on Obtaining Business Insurance.
Most day care centers have employees and, in many cases, there can be relatively frequent turnover. You should inform yourself about basic employment law issues such as illegal discrimination, workers compensation, and how to handle the hiring process. With regard to hiring in particular, learn how to:
Keep in mind that there are some employment laws that are specifically relevant to day care workers, such as state training requirements and rules relating to criminal records and fingerprinting. As noted above, New York requires at least one on-duty staff member at a child care center to be trained in pediatric CPR and First Aid.
A good resource for general employment issues is The Employer’s Legal Handbook, by Fred Steingold (Nolo). Also, many key employment laws are administered through the Department of Labor, and there are a variety of informative webpages within the Department of Labor website.