Last updated: May 3, 2026

How to Start a Daycare in Indiana (2026)

Indiana licenses child care through the Family and Social Services Administration’s Office of Early Childhood and Out-of-School Learning (FSSA OECOSL) under IC 12-17.2 and 470 IAC 3-4.7. Indiana is unusual in offering five distinct provider categories: Licensed Child Care Center (the standard center license), Licensed Child Care Home Class I (up to 12 children plus 3 kindergarteners), Licensed Child Care Home Class II (13-16 children), Registered Child Care Ministry (a faith-based exemption from full licensing that exists in only a handful of states), and Unlicensed Registered Child Care Provider (CCDF-eligible home providers). Decide your provider type before you start the licensing process – the application path, ratios, training, and inspection regime are all different.

Three structural pieces of Indiana’s child care environment shape startup decisions. First, the Paths to QUALITY (PTQ) 4-level Quality Rating and Improvement System is being rewritten – Indiana is in a 3-year transition with full implementation of the revised PTQ by December 31, 2026. Second, FSSA OECOSL pays the cost of all required background checks (Indiana State Police limited criminal history, FBI fingerprinting, Sex Offender Registry, and Child Abuse and Neglect Registry) – one of the few states that does. Third, the On My Way Pre-K state-funded program currently operates in 20 pilot counties (including Marion, Allen, Lake, St. Joseph, Vanderburgh, Tippecanoe, Monroe, and Hamilton-area neighbors), giving 4-year-olds from households at or below 135% of the federal poverty level access to free pre-K through participating providers. If you locate in a participating county and reach a higher PTQ level, On My Way Pre-K vouchers can be a substantial revenue line.

Daycare Requirements in Indiana at a Glance

Requirement	Agency	Cost	Timeline
FSSA OECOSL Child Care License (Center / Class I Home / Class II Home)	FSSA Office of Early Childhood and Out-of-School Learning	$25-$100 license fee (centers vary by capacity); $50-$75 family home; FREE background checks	60-120 days from completed application to inspection
Background Checks (provider, staff, household members 18+)	OECOSL via Indiana State Police + FBI (IdentoGo fingerprinting)	FREE through OECOSL – state pays all fees	2-6 weeks for fingerprint clearances
Indiana LLC Articles of Organization	Indiana Secretary of State (INBiz)	$95 online / $100 paper; biennial $32/$50 Business Entity Report	1-2 business days online
Workers’ Compensation Insurance	Private insurer (competitive market)	NCCI 9059 (Day Care Center) – rate × payroll ÷ $100; required at 1+ employee per IC 22-3-2-2	Before first employee starts
Paths to QUALITY (revised PTQ) Enrollment	FSSA Paths to QUALITY	Free; required for CCDF and On My Way Pre-K provider status	Full revised PTQ rating required by Dec 31, 2026
CCDF Provider Eligibility (Child Care and Development Fund)	FSSA OECOSL CCDF Program	Free to register as eligible provider; subsidy reimbursement varies	After PTQ Level 1 achieved
On My Way Pre-K Provider Approval (20 pilot counties only)	FSSA OECOSL OMWPK via Brighter Futures Indiana	Free to apply; requires higher PTQ level	Application cycle annual; rolling enrollment
Local Zoning / Fire / Building approvals	City Zoning, Local Fire Marshal, Building Department (Indianapolis BNS, Marion County, Allen County, etc.)	Varies by jurisdiction	Before opening
Indianapolis-Marion County (if in Marion County)	Indianapolis BNS + Marion County Public Health Department	City-level food and facility permits as applicable	Before first day of operation
New Hire Reporting	Indiana New Hire Reporting Center	Free	Within 20 days per IC 22-4-10-8

How to Start a Daycare in Indiana (Step by Step)

Step 1: Choose Your Indiana Child Care Provider Type

Indiana’s five-category structure under IC 12-17.2 covers everything from a single-family-home setting to a 200-child enterprise. Pick deliberately:

Provider Type	Capacity / Setting	Authority
Licensed Child Care Center	Any capacity, non-residential setting	IC 12-17.2-4 + 470 IAC 3-4.7
Licensed Child Care Home Class I	Up to 12 children PLUS up to 3 children attending full-time kindergarten	IC 12-17.2-5 (residential setting)
Licensed Child Care Home Class II	13 to 16 children in any combination of full-time and part-time	IC 12-17.2-5 (residential setting; tighter staffing/inspection)
Registered Child Care Ministry	Faith-based facility operated by a church; registered but not licensed	IC 12-17.2-6 (unique faith-based exemption)
Unlicensed Registered Child Care Provider	Home setting under the licensing threshold; CCDF-eligible	OECOSL CCDF program

The Class I/Class II distinction is purely the child count band. The Registered Child Care Ministry track is a meaningful Indiana-specific structure – faith-based providers operating under a church organization are statutorily exempt from full state licensing but must register, maintain background checks, and meet basic health and safety standards. About 600+ Indiana child care facilities operate as Registered Child Care Ministries.

Step 2: OECOSL-Paid Background Checks

Indiana’s child care background check stack is comprehensive, federally compliant under the Child Care and Development Block Grant (CCDBG) Act, and – importantly – paid by OECOSL, not the provider. Required for the provider, every paid staff member, and (for home-based providers) every household member age 18 or older:

• Indiana State Police Limited Criminal History (LCH) – state-level criminal record check
• FBI National Criminal History Check – via IdentoGo fingerprint capture
• Indiana Sex Offender Registry – state and national registry searches
• Indiana Child Abuse and Neglect (CAN) Registry – state child welfare records
• Out-of-state checks for any state where the individual lived in the past 5 years

The clearance process typically runs 2-6 weeks depending on FBI fingerprint backlog. Plan your hiring timeline accordingly – you cannot put a staff member into ratio coverage until clearances are complete.

Step 3: Pre-Service Training Requirements

OECOSL requires pre-service training before staff can work unsupervised with children. Core required elements:

• Universal Precautions / blood-borne pathogen training
• Pediatric CPR + First Aid certification (American Red Cross or American Heart Association)
• Recognition and reporting of child abuse and neglect
• Safe Sleep Practices (for any infant care)
• Indiana Early Learning Foundations orientation – Indiana’s age-graded developmental learning framework
• Annual ongoing professional development hours per OECOSL minimums (varies by license type)

Indiana’s July 1, 2025 legislative changes updated several training requirements and ratio definitions. Confirm current pre-service hour requirements with your OECOSL Program Specialist before scheduling staff training.

Step 4: Form Your Indiana LLC and Set Up Payroll

File Articles of Organization through INBiz at inbiz.in.gov for $95 online or $100 paper. Indiana LLCs file a Business Entity Report every two years ($32 online / $50 paper). Get your free EIN at IRS.gov.

Register for Indiana withholding tax through INBiz – 2.95% flat state PIT for 2026 (HEA 1001), plus county LIT 0.5%-3.38% withheld by employee residence county. Register for unemployment insurance with the Department of Workforce Development – 2.5% new employer rate on the first $9,500 of each employee’s wages. Report all new hires within 20 days under IC 22-4-10-8.

Step 5: Workers’ Compensation

Indiana requires workers’ compensation under IC 22-3-2-2 the moment you have one or more employees. NCCI class code 9059 (Day Care Center) applies to most center-based child care. Indiana is a competitive market – any admitted carrier writes coverage; the Indiana Compensation Rating Bureau (ICRB) handles rating. Family home child care providers using only the licensee and unpaid family members may be exempt; the moment you bring on a paid employee, the requirement triggers. Non-coverage penalty: Class A infraction under IC 22-3-5-1, fines up to $10,000 plus double statutory compensation, medical expenses, and attorney fees.

Step 6: Submit Your OECOSL License Application

The OECOSL application includes:

• Facility floor plan showing classrooms, kitchen, restrooms, exits, and outdoor play area
• Square footage documentation meeting Indiana’s minimum of 35 square feet per child indoor / 75 square feet per child outdoor
• Local zoning approval from the city or county where you’ll operate
• Local fire marshal inspection report
• Local health department food handling clearance if you’ll prepare meals on-site
• General liability insurance certificate with childcare-specific coverage
• Workers’ comp certificate if you have employees
• Background check clearances for provider and all staff
• Proposed staffing plan showing ratios at full enrollment
• License fee: $25-$100 (centers vary by capacity); $50-$75 family home

Step 7: Pass the OECOSL Facility Inspection

OECOSL conducts an on-site inspection before licensure. Inspection covers:

• Fire suppression, smoke detection, carbon monoxide detection, exits, evacuation plan posted at every exit
• Locked chemical / cleaning supply storage out of children’s reach
• Secured outdoor play area with appropriate fall surfaces
• Compliance with staff-to-child ratios in IC 12-17.2-4-14.5 / 470 IAC 3-4.7 (see ratio table below)
• Posted documentation: license, ratios, emergency contacts, daily schedule, allergy/medication procedures
• Kitchen sanitation if meals are prepared on site
• Diapering and handwashing stations
• Naptime equipment and safe sleep environment for infants

Step 8: Indiana Staff-to-Child Ratios (the Ratios That Will Set Your Capacity)

Per IC 12-17.2-4-14.5 / 470 IAC 3-4.7, Indiana’s licensed child care center ratios and group size limits are:

Age Group	Staff:Child Ratio	Maximum Group Size
Infants (Birth – 11 months)	1:4	8
Young Toddlers (12 – 17 months)	1:5	10
Older Toddlers (18 – 23 months)	1:5	10
Two-Year-Olds	1:5 (max 10) or 1:7 (max 14)	10 or 14 depending on staffing
Preschool (3 years)	1:10	20
Pre-K (4 years)	1:12	24
School-Age (5+ years)	1:15	30

Both rules apply simultaneously. Even if you have enough staff to meet a ratio, you cannot exceed the group size cap for that age band. Indiana uses the youngest-child method for mixed-age classrooms – if your room has any infants, the entire room operates under the 1:4 / max 8 rule. This makes age-segregated rooms substantially more economically efficient than mixed-age classrooms in most center configurations. Plan room layouts and staffing rosters to optimize against these constraints. Family child care home ratios are governed under Class I (up to 12 + 3 K) and Class II (13-16) statutory limits rather than the center matrix above.

Step 9: Paths to QUALITY (PTQ) – Indiana’s QRIS in Transition

Indiana’s Quality Rating and Improvement System is Paths to QUALITY (PTQ), a 4-level program managed by FSSA OECOSL. The system is being rewritten:

• Current PTQ: Level 1 (health and safety baseline) → Level 2 (planned learning environment) → Level 3 (planned curriculum) → Level 4 (national accreditation – the highest, requires NAEYC, NAFCC, NECPA, or similar nationally recognized accreditation)
• Revised PTQ implementation: Indiana is in a 3-year transition. All currently participating providers retain their existing PTQ rating during the transition until they receive a new rating under the revised system. Full implementation of the revised PTQ is required by December 31, 2026.
• Required for: CCDF voucher acceptance, On My Way Pre-K provider participation, and most quality-improvement grants
• Cost: Free to enroll; achieving higher levels requires investments in curriculum, professional development, and accreditation fees
• Public consumer access: PTQ ratings are visible on the FSSA Child Care Finder, where parents shop providers

Step 10: CCDF Subsidy and On My Way Pre-K – The Two State Revenue Streams

Child Care and Development Fund (CCDF)

Indiana’s CCDF subsidy program pays providers directly for income-eligible families’ child care. Family income eligibility:

• Initial eligibility: at or below 135% of federal poverty level (~$43,000 for family of four in 2026)
• Continuing eligibility: may extend higher per CCDBG continuing-eligibility rules
• Priority groups: On My Way Pre-K participants, families below 100% FPL, and children of child care workers
• Provider requirement: CCDF-eligible status (PTQ Level 1 minimum), background checks current, license in good standing
• Reimbursement rates: Set by age group, county, and provider type; vary by region

The 2026 Indiana General Assembly is considering legislation to raise CCDF/On My Way Pre-K eligibility from 135% to 150% FPL. Watch the legislative session for changes.

On My Way Pre-K (state-funded pre-K)

Indiana’s state-funded pre-K program serves 4-year-olds from households at or below 135% of the federal poverty level, with a working/in-school/in-training parent. The program operates in 20 pilot counties as of the 2026-2027 school year:

• Allen, Bartholomew, DeKalb, Delaware, Elkhart, Floyd, Grant, Harrison, Howard, Jackson, Kosciusko, Lake, Madison, Marion, Marshall, Monroe, St. Joseph, Tippecanoe, Vanderburgh, Vigo

If you operate in one of these counties and meet PTQ requirements, On My Way Pre-K vouchers can substantially supplement your enrollment – particularly for full-day, full-year programs serving working families. Apply for OMWPK provider approval through Brighter Futures Indiana. Families apply through Early Ed Connect.

Indiana Child Care Market: Where the Demand Is

Hamilton County (Carmel/Fishers/Westfield/Noblesville) – center-based premium market: The fastest-growing area of Indiana drives sustained demand for high-quality center-based child care. Hamilton County household incomes are among the highest in the state, and parents will pay premium rates for PTQ Level 3 or Level 4 programs with low ratios, structured curriculum, and extended hours. Waitlists for infant rooms in particular run 6-18 months at established centers. New center capacity in Carmel and Fishers fills as it opens.

Indianapolis (Marion County) – mixed market: The Indianapolis market spans every demographic. Downtown employer-sponsored centers (Eli Lilly, Indiana University Health, Salesforce, Anthem) serve professional families at premium rates. Neighborhood centers in Broad Ripple, Irvington, and Fountain Square serve middle-income families. The far east, near west, and northwest sides have substantial CCDF / On My Way Pre-K demand and underserved capacity. The Marion County Public Health Department and Indianapolis BNS handle local approvals on top of OECOSL state licensure.

Fort Wayne / Allen County – On My Way Pre-K participating county: Allen County is in the OMWPK pilot, giving 4-year-old enrollment-revenue access for participating providers. The Fort Wayne market includes BAE Systems, GM Fort Wayne Assembly, Sweetwater Sound, and Lutheran/Parkview Health system employer demand for proximate centers.

Lake County (Gary/Hammond/Schererville) – Chicago-spillover and OMWPK: Many Lake County families work in Chicago metro jobs; child care demand follows that commute pattern – early opening (6:00 AM) and later closing (6:30+ PM) hours generate significant differentiation. Central Time zone scheduling (rest of Indiana on Eastern) is a real factor for staff dispatch and parent drop-off windows. Lake County is in the OMWPK pilot.

St. Joseph County (South Bend / Mishawaka) – Notre Dame and manufacturing: Notre Dame’s faculty, staff, and graduate-student families drive a sophisticated child care market with strong PTQ-rated demand. Elkhart County RV manufacturing supplies industrial-scale workforce demand for affordable, reliable child care.

Bloomington (Monroe County) – university town pattern: Indiana University faculty and staff plus the IU Health Bloomington Hospital workforce create concentrated demand. Monroe County is in the OMWPK pilot – 4-year-old enrollment from CCDF-eligible families is particularly strong.

Faith-based market through Registered Child Care Ministries: Indiana’s Registered Child Care Ministry pathway gives churches and church-affiliated organizations a viable mid-cost option that some parents prefer for religious/community reasons. About 600+ ministries operate statewide, concentrated in the Indianapolis suburbs, Fort Wayne, and southern Indiana.

Cost to Start a Daycare in Indiana

Licensed Child Care Home Class I (Up to 12 + 3K)

Item	Cost	Notes
Indiana LLC	$95	One-time online; $32 biennial
OECOSL home license fee	$50-$75	One-time
Background checks	FREE	OECOSL pays for provider + all household 18+
CPR / First Aid certification	$50-$120 per person	2-year cert
Pre-service training (online)	$0-$300	Many free through Brighter Futures Indiana
Outdoor play space (fence + safety surface)	$2,000-$5,000	If not already in place
Equipment (cribs, cots, age-appropriate toys, art supplies)	$3,000-$8,000	Initial setup
Childcare-specific liability insurance	$800-$1,800/year	Carrier varies
Workers’ comp (if employees)	NCCI 9059 rate × payroll	Required at 1+ employee
Estimated total: $6,000-$15,000 to open Class I home (excluding any home modifications)

Licensed Child Care Center (50-100 capacity, leased space)

Item	Cost	Notes
Indiana LLC + biennial reports	$95	Same as home
OECOSL center license	$25-$100	Varies by capacity
Facility build-out / leasehold improvements	$30,000-$150,000+	Restrooms, kitchen, classrooms, outdoor play, fencing, fire suppression upgrade
Equipment and furnishings	$25,000-$60,000	Cribs, cots, child-sized furniture, kitchen equipment, art and learning materials
Curriculum and materials	$3,000-$10,000	Age-graded curriculum, books, learning toys
Background checks	FREE	OECOSL pays for all staff
Pre-service training for full staff roster	$2,000-$5,000	CPR/First Aid + safe sleep + abuse recognition
Liability + property insurance	$3,500-$8,000/year	Childcare-specific carrier
Workers’ comp NCCI 9059	Variable; 8-15 staff payroll	Required from first employee
Marketing and licensing technology (Procare, Brightwheel)	$2,000-$5,000/year	Subscription pricing
Operating reserve (3 months payroll + rent)	$50,000-$120,000	OECOSL-recommended startup runway
Estimated total: $120,000-$400,000+ to open a 50-100 child center (depending on build-out and reserve)

Key Indiana Agencies for Child Care Providers

Agency	What They Handle	Contact
FSSA Office of Early Childhood and Out-of-School Learning (OECOSL)	Child care licensing, CCDF, On My Way Pre-K, Paths to QUALITY	in.gov/fssa/carefinder
FSSA Paths to QUALITY	4-level QRIS; revised PTQ full implementation by Dec 31, 2026	in.gov/fssa/pathstoquality
Brighter Futures Indiana / Early Learning Indiana	OMWPK applications, provider training, family-facing CCDF/OMWPK navigation	brighterfuturesindiana.org / 800-299-1627
Indiana State Police – IdentoGo Fingerprinting	Fingerprint capture for OECOSL background checks	IdentoGo Indiana sites statewide
Local Fire Marshal + City Building Department	Fire inspection, occupancy approval, building code (Indianapolis BNS, Marion County, Allen County, etc.)	Local jurisdiction
Local Health Department (94 LHDs)	Food handling clearance if preparing meals on-site	County-by-county
Indiana Workers’ Compensation Board	Workers’ comp compliance under IC 22-3-2-2 (NCCI 9059 for daycare)	in.gov/wcb
Indiana Department of Workforce Development	Unemployment insurance ($9,500 wage base, 2.5% new ER), new hire reporting	in.gov/dwd
Indiana Association for the Education of Young Children (Indiana AEYC)	NAEYC accreditation pathway, professional development, advocacy	inaeyc.org

Related Indiana Business Guides

• Starting a Business in Indiana: Complete Guide

← Back to all Indiana business guides

Frequently Asked Questions

What kinds of child care provider licenses does Indiana offer?

Indiana operates five categories under IC 12-17.2: Licensed Child Care Center (any capacity, non-residential), Licensed Child Care Home Class I (up to 12 children plus 3 kindergarteners, residential), Licensed Child Care Home Class II (13-16 children, residential), Registered Child Care Ministry (faith-based facilities operated by churches, registered but not fully licensed – an Indiana-specific structure), and Unlicensed Registered Child Care Provider (home setting, CCDF-eligible). Choose your provider type before applying – the application path, ratios, and inspection regime differ.

Does Indiana pay for child care provider background checks?

Yes – OECOSL pays the cost of all required background checks for the provider, every paid staff member, and (for home-based providers) every household member age 18 or older. Required: Indiana State Police Limited Criminal History, FBI fingerprinting through IdentoGo, Indiana Sex Offender Registry, Indiana Child Abuse and Neglect Registry, and out-of-state checks for any state lived in during the past 5 years. Allow 2-6 weeks for clearances. This is one of the few states that fully covers background check costs.

What are Indiana’s child care center staff-to-child ratios?

Per IC 12-17.2-4-14.5 and 470 IAC 3-4.7: Infants (0-11 mo) 1:4 / max group 8; Young Toddlers (12-17 mo) 1:5 / max 10; Older Toddlers (18-23 mo) 1:5 / max 10; Two-Year-Olds 1:5 (max 10) or 1:7 (max 14); Preschool (3 years) 1:10 / max 20; Pre-K (4 years) 1:12 / max 24; School-Age (5+) 1:15 / max 30. Both rules apply – even with sufficient staff you cannot exceed the group size cap. Mixed-age rooms operate under the youngest-child rule. Family child care home capacity is capped by Class I (up to 12 + 3 K) or Class II (13-16) statutory limits.

What is Paths to QUALITY (PTQ) and is it required?

Paths to QUALITY (PTQ) is Indiana’s 4-level Quality Rating and Improvement System. Level 1 = health and safety baseline; Level 2 = planned learning environment; Level 3 = planned curriculum; Level 4 = national accreditation (NAEYC, NAFCC, NECPA, etc.). Indiana is in a 3-year transition to a revised PTQ – all currently participating providers retain their existing rating during the transition until they receive a new rating under the revised system. Full implementation of the revised PTQ is required by December 31, 2026. Enrollment is free and required for CCDF voucher acceptance and On My Way Pre-K provider participation.

How does Indiana’s Child Care and Development Fund (CCDF) subsidy work?

Indiana’s CCDF subsidy pays providers directly for income-eligible families’ child care. Family income eligibility is at or below 135% of the federal poverty level (~$43,000 for family of four in 2026); continuing eligibility may extend higher. Priority groups include On My Way Pre-K participants, families below 100% FPL, and children of child care workers. To accept CCDF, providers must be CCDF-eligible (PTQ Level 1 minimum), have current background checks, and operate under a license in good standing. The 2026 Indiana General Assembly is considering legislation to raise eligibility from 135% to 150% FPL.

What is On My Way Pre-K and which counties does it operate in?

On My Way Pre-K is Indiana’s state-funded pre-K voucher program for 4-year-olds from households at or below 135% of federal poverty level with a working/in-school/in-training parent. As of the 2026-2027 school year, it operates in 20 pilot counties: Allen, Bartholomew, DeKalb, Delaware, Elkhart, Floyd, Grant, Harrison, Howard, Jackson, Kosciusko, Lake, Madison, Marion, Marshall, Monroe, St. Joseph, Tippecanoe, Vanderburgh, and Vigo. Children must be 4 by August 1, 2026 and start kindergarten in 2027-2028. Providers apply for OMWPK approval through Brighter Futures Indiana; families apply through Early Ed Connect.

How much does it cost to start a daycare in Indiana?

A Licensed Child Care Home (Class I, up to 12+3 K children) runs $6,000-$15,000: Indiana LLC ($95), OECOSL home license ($50-$75), free background checks, CPR/First Aid ($50-$120/person), pre-service training ($0-$300), outdoor play space ($2,000-$5,000 if needed), equipment ($3,000-$8,000), and childcare liability insurance ($800-$1,800/year). A Licensed Child Care Center (50-100 capacity) runs $120,000-$400,000+ with leasehold improvements ($30K-$150K+), equipment ($25K-$60K), curriculum, full staff training, $3,500-$8,000/year insurance, NCCI 9059 workers’ comp, and a 3-month operating reserve ($50K-$120K).