If you’ve been overwhelmed by the administrative and legal requirements of starting your own in-home preschool or childcare, you’re not alone. Many potential directors ask us about business licensing and zoning during the startup phase.

We hope to clear up some questions you might still have about whether you need a family child care business license or zoning permit and how to go about getting one if you do.

Just think: soon you’ll have your business up and running and you can enjoy the benefits of working for yourself, in your own home, doing what you love.

Starting a preschool or child care in your home? The business side of setup can get overwhelming very quickly. In this post, we go over how to determine if your city requires a business license or zoning permit for your new family child care.

What is a business license?

A business license is issued by the local government to legally allow you to conduct business. To get the license, you must meet local requirements and pay an annual fee. Business licenses usually cost from $80 up to a couple hundred dollars per year. Costs are set by local governments and can vary across your state.

Here’s the thing: you may not need a business license to operate a family child care. Whether you need one or not will depend on your city and county laws.

You will, however, need a family child care license, which is another entity entirely.

Business license v. family child care license

Family child care licenses are issued by the state to make sure all adults in the home have undergone a background check and the space is safe for children. They also ensure periodic inspections to guarantee the home is still operating within regulations and has proper paperwork on file.

Reading a book in in-home preschool
School Director Diep Vo reading with a student at Little Butterfly Small School in San Lorenzo, CA

The Community Care Licensing Division of the California Department of Social Services presides over this process. There are two types of licenses you can get for in-home child care: small for up to 8 children or large for up to 14 children.

These state-mandated child care licenses differ from business licenses: business licenses are controlled by the city or county your business is located in and are required for most businesses, not just in-home child cares.

What is a zoning permit?

A zoning permit allows you to use land for another purpose besides what it is zoned for. You may need a special zoning permit to operate an in-home preschool or child care in your area.

The state of California gives cities three options of how to treat zoning permits and family child cares:

  • No permit necessary – the city can choose not to require any special permit for family child care homes
  • Nondiscretionary permit – the city can choose to require a zoning permit and may make rules in any of the four following areas for large family child cares. If you apply for the permit and follow the rules, you must be granted the permit and your neighbors cannot argue.
    • Space and concentration
    • Traffic control
    • Parking
    • Noise level
  • Conditional use permit – the city can choose to require a zoning permit and may create rules around the same four areas as in the nondiscretionary permit. In addition, a zoning administrator will give notice to any property owners within 100 feet of the family child care property line and they have the opportunity to ask for a hearing and contest the child care.

Small family child care homes

California state law says you don’t need to worry about business licenses and zoning permits if you operate a small family child care. Small family child care homes are considered a residential use of property by law and “No local jurisdiction shall impose any business license, fee, or tax for the privilege of operating a small family day care home” according to the California Health and Safety Code section 1597.45.

Your city and/or county may say they require that you get a zoning permit and/or business license, but technically you are not legally obligated to do so according to California state law.

Children playing in-home preschool
Children playing at the American French Preschool

Large family child care homes

You will need to check with your city and county Planning Departments and Finance Departments to know what you will need in terms of zoning permits and business licenses, respectively, if you wish to open a large family child care.

  1. Start by checking your city and county Finance Department and Planning Department websites.
  2. If the information you find isn’t clear, call each department and ask what they require to start a family child care. Just make sure that they point to a legal document to support whatever requirements they say you’ll need, otherwise you might end up going in circles trying to get the correct legal information.

When should I apply?

You should look into the zoning permit first, especially if you are moving somewhere with the intention of opening or transitioning to a large family child care on your property. You will want to make sure you will be allowed to do so before you make any further commitments.

As for the business license, it depends. Some business license applications will require that you have already received your family child care license from the state. In this case, you will want to apply for the business license after the state family child care license. On the other hand, the family child care licensing application might require that you already have a business license so you can get stuck in a circle. It’s key to get in touch with the Finance office in the beginning stages of starting your in-home preschool or child care to find out more about what you will need to do and when.

San Francisco case study: Getting a large family child care business license & zoning permit

We spoke with officers from the San Francisco city government and asked them about the procedure involved in getting a business license and zoning permit for a large family child care. San Francisco is unique in that it’s both a city and a county, so you wouldn’t need to check with both. This is what we learned:

Zoning map of San Francisco
Source

Zoning permit

You’re not required to have a zoning permit to care for fewer than 14 children but it’s “a good idea” (says the Planning Department) to get one. San Francisco offers nondiscretionary zoning permits for small and large family child cares and you have to go to their office to get it. (Again, state law says you cannot be required to have any permit or business license as a small family child care.)

You need to contact them beforehand to check your zoning to make sure it’s even possible to proceed, but you only apply for the permit AFTER you have your family child care license from the state.

For more than 15 children (extremely unlikely as this breaks licensing rules), you would need a conditional permit.

If you will be making modifications to the residence, you may need a one-time building permit, also from the Planning Department.

Business license

To start a large family child care, the San Francisco Business Portal says you will need something called a business registration, not a license.

You should apply for your business registration after you have started the state’s family child care licensing process because you will need proof of your family child care license first.

Circle time in in-home daycare
Another Wonderschool Director, Pattie Martinez, and her students

The fee amount depends on your estimated annual gross receipts and if your business is categorized as Schedule A or B. Family child care is Schedule A, according to the San Francisco Business Portal. If you have between $0-$100,000 in annual gross receipts, the minimum annual fee for your large family child care business registration will be $91.

To register your business, go to the Office of the Treasurer and Tax Collector website or stop by their office in person. Make sure that if you are using a unique name for your business that you include it in your registration paperwork. This should be the same name you use to register for a Fictitious Business Name (see below). You will need to have already decided what type of business entity you will be to fill out the business registration information.

After you register your business, you need to file for a fictitious business name if you have created a special name for your business. This can be done in person at the Office of the County Clerk and will also incur a fee.


References:

Know the Law About Business Licenses and Zoning Permits for Family Child Care Homes in California from the Child Care Law Center