Last updated: April 30, 2026

How to Start a Daycare in Washington DC (2026)

DC’s child care market has a feature no state can replicate: the District is one of the only places in the country with truly Universal Pre-K, paid through the public school system and through the Pre-K Enhancement and Expansion Program (PKEEP), which channels public dollars to community-based child development centers serving 3 and 4 year olds. PKEEP is funded at $19.5 million in FY26, currently supports 26 community-based organizations serving roughly 1,050 children across all eight wards, and pays per-child rates competitive with the highest-paying private tuition. For a licensed center that hits the Capital Quality “Quality” tier, PKEEP transforms the business model — the city pays you to serve the kids you would otherwise have to convince parents to enroll.

The flip side: DC’s licensing standards are strict, and the regulatory build-out is heavier than most states. Adult-to-child ratios under DCMR 5-A Section 121 are among the tightest in the country (1:4 for infants, 1:8 for 3-year-olds, 1:10 for 4-year-olds) with mandatory two-staff supervision regardless of group size. Square-footage requirements (45 square feet per infant, 35 per other child) are above the national norm. Background checks cover staff and household members 14 and older for home-based providers, including the FBI fingerprint, DC Criminal History, Sex Offender Registry, and Child Protection Register. Plan for a 4-6 month licensing timeline from application to opening, more if your space needs renovation to meet the spatial standards.

Daycare Requirements in DC at a Glance

Requirement	Agency	Cost	Timeline
LLC Certificate of Organization	DLCP via mybusiness.dc.gov	$99	Immediate online
OSSE Child Development Facility license (Center, Home, or Expanded Home)	OSSE Division of Early Learning	License fee varies by facility type and capacity	3-6 months from application
Comprehensive background checks (each staff member + household 14+)	OSSE; DC Justice Info Services; FBI fingerprint	$50-$80 per person	2-6 weeks turnaround
Certificate of Occupancy (Center) or Home Occupation Permit (Home)	DC Department of Buildings (DOB)	Varies by square footage; HOP $73	2-8 weeks depending on premises type
Basic Business License with Child Development Facility endorsement	DLCP Business Licensing Division	$70 base + $25 endorsement + 10% surcharge ($104.50+ minimum 2-year)	Issued after OSSE license
Capital Quality enrollment (QRIS)	OSSE	Free; required for subsidy participation	Annual observation cycle
Pediatric First Aid + CPR certification (each staff member)	American Red Cross or equivalent	$80-$120 per person; renewed every 2 years	Required before opening
Pre-K Enhancement and Expansion Program (PKEEP) participation (optional but high-leverage)	OSSE PKEEP	Receive payment; per-slot rate set by OSSE	Annual application; requires Capital Quality “Quality” tier
Child Care Subsidy Program enrollment (optional)	OSSE Child Care Services	Receive payment; rates tied to Capital Quality tier	Application via OSSE
Universal Paid Leave (employer)	DOES Office of Paid Family Leave	0.75% of gross wages, no cap	Quarterly via ESSP
Workers Compensation Insurance	Private DC-licensed insurer	Class code 9059 (childcare); ~3-6% of payroll	Required at 1st employee

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

Step 1: Choose Your Facility Type

OSSE licenses three types of child development facilities under DCMR 5-A:

• Child Development Center — a separate, dedicated facility (commercial space, church basement, school lease, etc.). Any number of children up to your licensed capacity. Most stringent staffing and physical-plant requirements. Highest revenue ceiling.
• Child Development Home — care provided in the licensee’s primary residence for up to 6 children (counting the provider’s own children under 5). Lighter regulatory burden than centers, but ratio limits cap revenue.
• Expanded Child Development Home — in a residence, serving 6 to 12 children, with additional staffing, square-footage, and zoning requirements.

Pick before you start the licensing application. The forms, inspections, and BBL endorsement category differ by facility type, and switching mid-application is functionally a restart.

Step 2: Form the LLC and Register With OTR

File the $99 Certificate of Organization with DLCP through mybusiness.dc.gov. Register through OTR’s Form FR-500 at MyTax.DC.gov. DC daycare services are not subject to sales tax — the franchise tax (8.25% on net income with $250 minimum) and employer payroll taxes are the operative tax obligations. Pull your Certificate of Clean Hands from OTR within 30 days of submitting the OSSE application.

Step 3: Secure the Premises and Get the DOB Permit

For a Child Development Center, you need a Certificate of Occupancy (CofO) from the Department of Buildings (DOB) showing the space is approved for child care use. Existing offices and retail spaces almost always need a use change and a build-out (separate kitchens, accessible bathrooms, dedicated infant area, fenced outdoor play, fire egress). Allow 2-8 weeks for DOB permitting on top of construction time.

For a Child Development Home or Expanded Child Development Home, you need a Home Occupation Permit (HOP) from DOB (~$73). The HOP requires you to be the primary resident, places limits on signage and customer foot traffic, and may be restricted by your lease, condo bylaws, or HOA covenants — verify before applying.

Step 4: Complete the OSSE Pre-Licensing Application

OSSE’s Division of Early Learning runs the application process. Required components:

• Floor plan with measurements showing 45 sq ft per infant and 35 sq ft per other child of unencumbered program space
• Outdoor play area plan (75 sq ft minimum per child playing simultaneously, fenced, age-appropriate equipment)
• Staffing structure showing compliance with DCMR 5-A Section 121 ratios
• Operations manual covering daily schedule, illness policy, transportation, emergency response, food service, discipline, and family communication
• Director’s qualifications: at minimum, a degree in early childhood education and the experience requirements specified in DCMR 5-A
• Job descriptions and qualifications for all staff positions (Teacher, Assistant Teacher, Aide)
• Insurance certificates: general liability, workers comp (if employees), and commercial property

Step 5: Run the Background Checks

Every staff member and every household member 14 years or older (for home-based facilities) must clear OSSE’s background check package before the facility opens:

• DC Criminal History via the Metropolitan Police Department
• FBI fingerprint check via OSSE-coordinated Live Scan
• DC Sex Offender Registry check
• Child Protection Register (CPR) check
• National Crime Information Center (NCIC) check
• Out-of-state checks for any state the person has lived in within the past 5 years

Costs run $50-$80 per person with 2-6 week turnaround. Re-checks are required every 5 years. A staff member with a disqualifying offense cannot be employed; OSSE maintains the disqualification list under DCMR 5-A.

Step 6: Pass the OSSE Pre-Licensing Inspection

OSSE conducts an in-person inspection of the physical facility. Inspectors check:

• Square footage compliance (interior and outdoor)
• Bathroom-to-child ratios and developmentally appropriate fixtures
• Hand-washing sinks, diaper-changing stations, and infant-feeding setups
• Cribs (no drop-side, slat spacing under 2-3/8″), child-sized cots, and SIDS-prevention sleep practices
• Fire safety: smoke detectors, CO detectors, fire extinguishers, two-way egress, evacuation plan posted
• Outdoor play area fencing, surfacing, and age-appropriate equipment
• Food service equipment if meals are prepared on-site (also subject to DC Health review for centers)

The initial license is valid for 3 years; renewals require continued compliance and Capital Quality enrollment.

Step 7: Apply for the BBL With Child Development Facility Endorsement

After OSSE issues your license, apply for the Basic Business License (BBL) with the Child Development Facility endorsement through DLCP at mybusiness.dc.gov. Two-year BBL: $70 base + $25 endorsement + 10% technology surcharge. The OSSE license is the operating license; the BBL is the umbrella business license required of all DC businesses. Both must be active to operate.

Step 8: Enroll in Capital Quality and Pursue Higher-Tier Designation

OSSE’s Capital Quality Quality Rating and Improvement System (QRIS) has three published designations:

• Developing — baseline tier for newly licensed programs
• Progressing — mid-tier based on observation scores
• Quality — top tier; required for PKEEP and unlocks higher subsidy rates

Programs are evaluated annually using CLASS (Classroom Assessment Scoring System) for preschool, ITERS (Infant/Toddler Environment Rating Scale), or FCCERS (Family Child Care Environment Rating Scale) for home-based programs. Your tier is published on My Child Care DC, the parent-facing search tool that drives enrollment decisions. Reaching the Quality tier is the single highest-leverage business move for a licensed DC daycare.

DC’s Universal Pre-K and PKEEP: The Revenue Opportunity

DC funds Universal Pre-K for every 3 and 4 year old through three channels:

1. DC Public Schools (DCPS) Pre-K3 and Pre-K4 classrooms — in elementary schools, free to families
2. DC public charter schools — many serve Pre-K3 and Pre-K4 alongside their main grades
3. The Pre-K Enhancement and Expansion Program (PKEEP) — OSSE-funded community-based child development centers that serve Pre-K3 and Pre-K4 with public dollars at high-quality rates

PKEEP is the channel that matters for new daycare operators. To participate:

• You must be a licensed Child Development Center (homes do not qualify)
• You must hold the Capital Quality “Quality” tier designation
• You must apply annually through OSSE for the “High-Quality Designation” funding round
• You must meet enrollment, curriculum, and reporting standards specified in OSSE’s annual PKEEP guidance

Once accepted, OSSE pays a per-slot rate that is competitive with private full-tuition pricing — in past years exceeding $13,000 per child per school year for high-quality slots. FY26 funding is $19.5 million across 26 CBOs serving roughly 1,050 children. The economic effect for a center: a Pre-K classroom that PKEEP fills with 16 children produces roughly $200,000 in annual public revenue — before private-pay infants and toddlers in the rest of the building.

The downside: PKEEP eligibility flows from Capital Quality, which is observation-driven and takes time to climb. Most new centers operate at Developing or Progressing for 1-2 years before reaching Quality, which means PKEEP revenue is a year-2-or-3 milestone, not a launch revenue source.

DC Child Care Subsidy and the Pay Equity Fund

The DC Child Care Subsidy Program covers child care for low- and moderate-income families up to 300% of the Federal Poverty Level (raised from 250% in 2023). FY26 funding is $86 million; as of March 2025 the program served roughly 6,800 children. Subsidy reimbursement rates are tied to Capital Quality tier — higher tiers receive higher per-child reimbursement. Many DC centers serve a mix of subsidy and private-pay families.

The Early Childhood Educator Pay Equity Fund is a DC-specific program that supplements the salaries of qualified early childhood educators at participating Child Development Centers, with the goal of paying ECE staff at parity with DCPS Pre-K teachers. Important 2025-2026 caveat: OSSE activated a Pay Equity Fund waitlist on April 1, 2025 and is not currently accepting new providers. New centers should plan their financials without assuming Pay Equity Fund participation in the first 12-24 months. The Mayor’s FY26 budget restored full funding to existing participants but did not lift the new-provider waitlist.

DC Daycare Wage and Insurance Costs

DC’s wage floor and benefit obligations make ECE labor costs higher than in any state — budget accordingly:

• Minimum wage: $17.95/hour through June 30, 2026; $18.40/hour starting July 1, 2026. Most ECE staff earn above minimum wage but the floor pushes the entire wage scale up.
• Universal Paid Leave: 0.75% employer-paid premium with no wage cap. For a 12-staff center with $700,000 in payroll, UPL costs $5,250/year on top of UI and FICA.
• Workers compensation: required at 1+ employee. Class code 9059 (childcare) typically runs 3-6% of payroll — one of the higher class rates because daycare claims include lifting injuries, slip/falls, and exposure to disease.
• Accrued Sick and Safe Leave: 1-24 employees accrue 1 hour per 87 hours worked; 25-99 employees accrue at 1 per 43 hours; 100+ at 1 per 37 hours.
• Health insurance and retirement: not state-mandated for daycares specifically, but offering them is essentially required to recruit and retain Capital Quality “Quality”-tier staff in DC’s competitive ECE labor market.

DC Daycare Market: Supply Shortage and Affordability Crisis

DC has a structural child care supply shortage that creates demand for new licensed providers, particularly for infants and in specific wards:

• Infant capacity is the biggest gap. The 1:4 infant ratio caps revenue per square foot in a way that makes infants the least profitable age to serve, so most centers minimize infant slots. Wait lists for infant care of 9-18 months are typical across the District.
• Wards 7 and 8 have the lowest licensed-care density and the highest unmet need. OSSE PKEEP funding has historically prioritized geographic equity, so new high-quality providers east of the river have a smoother path to PKEEP eligibility.
• Federal employee customer base: Federal agencies and federal contractors maintain on-site or near-site child care benefits; private centers near major federal worksites (Capitol Hill, NoMa, L’Enfant Plaza, Federal Triangle, the World Bank-IMF corridor) capture demand from non-eligible federal workforce families.
• Average DC daycare cost: ranges from $1,800-$3,000 per month for full-time infant care, among the highest in the country. The Subsidy Program and PKEEP partially buffer affordability for eligible families.
• Pay Equity Fund waitlist effect: Centers that opened before April 1, 2025 and were enrolled in the Pay Equity Fund have a labor-cost subsidy that new entrants don’t. This compresses the new-entrant business model and may push new operators toward the Home and Expanded Home formats while waitlist policies evolve.

Cost to Start a DC Daycare

Cost Category	Home (6 children)	Center (40 children)
LLC formation	$99	$99
OSSE license fees + background checks (4-12 staff)	$200-$500	$1,000-$2,500
DOB Home Occupation Permit or Certificate of Occupancy	$73	$500-$3,000+
Build-out / renovation to meet DCMR 5-A standards	$2,000-$10,000	$50,000-$300,000
Furniture, equipment, curriculum materials	$5,000-$15,000	$30,000-$80,000
BBL with Child Development Facility endorsement (2-yr)	$104.50	$104.50
Insurance year 1 (GL, property, workers comp, auto if applicable)	$2,000-$5,000	$8,000-$25,000
Pediatric First Aid + CPR certification (per staff)	$80-$120	$80-$120 each
Pre-opening payroll buffer (3 months)	$15,000-$25,000	$60,000-$200,000
Total to launch	~$25,000-$60,000	~$200,000-$700,000+

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Frequently Asked Questions

What agency licenses daycares in DC?

The Office of the State Superintendent of Education (OSSE) Division of Early Learning licenses all child development facilities in DC under DCMR 5-A. OSSE handles licensing, inspections, background checks, Capital Quality QRIS, and Pre-K Enhancement and Expansion Program (PKEEP) administration. The license is separate from and prerequisite to the Basic Business License (BBL) issued by DLCP. Visit osse.dc.gov.

What are DC’s adult-to-child ratios for daycares?

Under DCMR 5-A Section 121, DC’s ratios are among the strictest in the country: 1:4 for infants (birth-24 months) with max 8 per group; 1:4 for younger toddlers (24-30 months) with max 12; 1:8 for older toddlers (30 months-3 years) with max 16; 1:8 for 3-4 year olds with max 16; 1:10 for 4-5 year olds with max 20; 1:15 for school-age (6-15) with max 30. Centers must have at least two staff supervising each group at all times, and ratios must be maintained during nap, transport, and non-peak hours.

What is DC’s Capital Quality rating system?

Capital Quality is OSSE’s Quality Rating and Improvement System (QRIS) with three designations: Developing, Progressing, and Quality. Programs are evaluated annually using CLASS (preschool), ITERS (infant/toddler), or FCCERS (family child care). Higher tiers unlock higher Child Care Subsidy reimbursement rates and PKEEP eligibility. The tier is published on My Child Care DC for parents searching for care. Reaching “Quality” is the single highest-leverage business move for a DC daycare.

What is PKEEP and how does it generate revenue?

The Pre-K Enhancement and Expansion Program (PKEEP) is OSSE’s program that funds public Universal Pre-K seats at community-based Child Development Centers (not at DCPS or charter schools). FY26 funding is $19.5 million; participating CBOs serve roughly 1,050 children across all eight wards. To qualify a center must be licensed, hold the Capital Quality “Quality” tier, and apply annually for OSSE’s High-Quality Designation. Per-slot rates are competitive with high private tuition. Most new centers reach PKEEP eligibility in years 2-3 after climbing through Capital Quality.

How long does DC daycare licensing take?

Plan for 4-6 months from OSSE application to opening for a Center, slightly less for Homes. Breakdown: 4-8 weeks for premises permitting (DOB Certificate of Occupancy or Home Occupation Permit and any build-out), 2-6 weeks for background checks per staff/household member, 4-8 weeks for OSSE pre-licensing inspection scheduling and clearance, then BBL issuance after the OSSE license. Operators who pre-stage staff hiring and background checks in parallel with premises permitting can compress this to 3-4 months.

What are the background-check requirements for DC daycare staff?

Every staff member and every household member 14 years or older (for home-based facilities) must clear a comprehensive background check before the facility opens. The package includes DC Criminal History (MPD), FBI fingerprint, DC Sex Offender Registry, Child Protection Register, National Crime Information Center, and out-of-state checks for any state lived in within the past 5 years. Cost: $50-$80 per person; turnaround 2-6 weeks. Re-checks required every 5 years. OSSE maintains the disqualifying offense list under DCMR 5-A.

Can I run a daycare from my home in DC?

Yes. DC licenses two home-based formats: Child Development Home (up to 6 children, including the provider’s own children under 5) and Expanded Child Development Home (6-12 children, with additional staff and space requirements). Both require a Home Occupation Permit (~$73) from DOB before licensing, household-member background checks for everyone 14+, the same DCMR 5-A ratios, and OSSE inspection. Lease terms, condo bylaws, and HOA covenants may restrict home-based child care — verify before applying.

Are DC daycare services subject to sales tax?

No. DC daycare and child care services are not subject to the District’s general sales tax (6.0% through Sept 30, 2026; 7.0% from Oct 1, 2026). The operative tax obligations for daycares are the Unincorporated Business Franchise Tax at 8.25% on net income over the $12,000 threshold (Form D-30) and employer payroll taxes (UI, withholding, Universal Paid Leave at 0.75%). Daycares still register through OTR’s FR-500 because the Combined Business Tax Registration also handles franchise tax and employer accounts.