How to Start a Daycare in Illinois (2026)

Last updated: August 9, 2026

Illinois runs one of the more structured daycare licensing systems in the country. The Illinois Department of Children and Family Services (DCFS) administers licensing under the Child Care Act of 1969 (225 ILCS 10) and the detailed regulatory framework in 89 Ill. Adm. Code Part 407 (day care centers) and Part 406 (family child care homes). There is no state fee to apply or receive a license – a meaningful cost advantage – but the compliance timeline is long (6-12 months), staffing ratios are strict (1:4 for infants, 1:5 for toddlers), and fingerprint background checks are required for every person 18+ with access to children.

Two Illinois programs dramatically change the economics of running a daycare if you participate: the Child Care Assistance Program (CCAP) through IDHS provides state reimbursement for serving low-income families, and Preschool for All (PFA) through ISBE – massively expanded under Governor Pritzker’s $300M Smart Start Illinois initiative launched in 2023 – funds free preschool for 3-4 year olds with state dollars flowing to participating providers. ExceleRate Illinois, the state quality rating system, gates access to higher reimbursement rates through its Licensed / Bronze / Silver / Gold Circles of Quality.

This guide walks through what it takes to start and operate a licensed daycare in Illinois in 2026, with specific attention to DCFS requirements, staffing ratios, Chicago/Cook County overlay rules, and the revenue structure of CCAP and PFA.

Illinois Daycare Requirements at a Glance

Requirement	Agency	Cost	Timeline
Illinois LLC (Articles of Organization)	Illinois Secretary of State	$150 filing; $75 annual report	5-10 business days online
DCFS Day Care Center License (Part 407)	Illinois DCFS	Free (no application or license fee)	6-12 months; 6-month conditional then 3-year full license
DCFS Family Child Care Home License (Part 406)	Illinois DCFS	Free	2-4 months typical
Fingerprint Background Check (all staff + household 18+)	Accurate Biometrics (DCFS vendor)	Free to applicant	Before any unsupervised contact with children
Fire Marshal Inspection	Illinois State Fire Marshal or local	Varies; typically $50-$500	Before initial license
Local Health Department Approval	County health department	Varies	Before initial license
Local Business License (if required)	City/village clerk	Varies by municipality	Before operating
Chicago Day Care Center License	Chicago BACP	Specific BACP license required; fees vary by center capacity	Parallel to DCFS license
ExceleRate Illinois Participation	Illinois Network of CCR&R (INCCRRA)	Free; voluntary but gates CCAP rate tier	After initial license
CCAP Enrollment (optional revenue program)	Local CCR&R agency	Free to enroll	After full license; reimbursement rates tied to ExceleRate tier
Preschool for All (PFA) Grant (optional)	Illinois State Board of Education (ISBE)	Competitive application; state funding	Annual funding cycle
Workers’ Compensation Insurance	Private insurer	Varies by payroll	Before first employee
Commercial General Liability Insurance	Private insurer	$1,500-$5,000/year starter coverage	Before opening

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

Step 1: Choose Your License Type – Day Care Center (Part 407) or Family Child Care Home (Part 406)

Illinois DCFS licenses two distinct child care business models under different rules:

• Day Care Center (89 Ill. Adm. Code Part 407): Commercial facility serving generally more than 12 children. Higher capital requirement, stricter facility standards (separate rooms for age groups, commercial kitchen if meals served, dedicated outdoor play), and a longer licensing timeline (6-12 months). Revenue ceiling is also higher – most Illinois centers serve 30-120 children.
• Licensed Family Child Care Home (89 Ill. Adm. Code Part 406): Care provided in the licensed provider’s own residence. Capacity up to 12 children (including provider’s own children under 12). Lower startup capital, faster licensing, but lower revenue ceiling and zoning-sensitive in many suburbs.
• Day Care Group Home: Between the two – serves up to 16 children in a residential setting with a second caregiver. Specific Part 406 sub-category rules apply.
• License-exempt arrangements: Care for three or fewer children in a residence (excluding the provider’s own children) is license-exempt but also cannot accept CCAP reimbursement without registration – a meaningful tradeoff.

After choosing a model, form your Illinois LLC with the Secretary of State for $150. Annual report is $75 thereafter. Illinois’s 1.5% Personal Property Replacement Tax applies to LLC net income in addition to the 4.95% pass-through personal income tax.

Step 2: Attend DCFS Pre-Application Orientation

DCFS licensing is run out of regional offices. Your first step after deciding on a license type is contacting your regional DCFS licensing office or your local Child Care Resource & Referral (CCR&R) agency – there are 16 CCR&Rs statewide. CCR&R agencies provide free technical assistance on licensing, business planning, and operational compliance; DCFS strongly recommends engaging them before you apply.

• Orientation: DCFS and CCR&Rs host regular orientation sessions covering the application process, the rules in 89 Ill. Adm. Code Part 407 or 406, and common application-denial reasons
• Typical prerequisites before application:
  • Site identified and either owned or under signed lease
  • Zoning clearance for day care use (especially important in Chicago and restricted suburbs)
  • Fire marshal inspection scheduled
  • Health department pre-inspection where required
  • Director and lead teacher credentials identified (typically Gateways ECE Credential Level 3-5 for director)
• Application submission: Submit the formal license application (Form CFS-1050 for centers) to the regional DCFS licensing office with supporting documents

Step 3: Complete Fingerprint Background Checks

DCFS requires background checks for every person 18 years or older who has access to children – paid staff, volunteers, and, for family home licenses, all adult household members.

• Vendor: Accurate Biometrics (DCFS’s contracted fingerprinting vendor), with locations statewide
• Coverage: Illinois State Police, FBI, State and National Sex Offender Registry, Illinois DCFS Child Abuse and Neglect Tracking System (CANTS), and child abuse/neglect registry of any other state of residence in the past 5 years
• Cost: Free to applicants, household members, and employees of licensed facilities
• Turnaround: Usually 2-4 weeks for full clearance
• Recurring requirement: All staff re-fingerprinted at license renewal; new hires cleared before unsupervised contact with children

Disqualifying offenses are specified in the DCFS rules; certain convictions create a permanent bar from child care employment, others trigger a case-by-case review by the DCFS Background Check Unit.

Step 4: Meet Facility, Health, and Staffing Requirements Under 89 Ill. Adm. Code 407

Illinois day care center rules are detailed and strictly enforced. Key requirements:

Facility Minimums

• Indoor space: Minimum 35 square feet of usable space per child
• Outdoor space: Minimum 75 square feet of usable outdoor play space per child
• Separate areas: Infants housed in rooms separate from older children; isolated sick-child area required
• Handwashing: Handwashing sinks accessible in diapering/toileting areas and food prep areas
• Kitchen: Full commercial kitchen code compliance if you serve meals prepared on-site
• Safety: Outlet covers, locked storage for cleaning supplies and medications, secured exits, fire-rated construction appropriate to occupancy

Staff-to-Child Ratios and Group Size (Section 407.190)

Age Group	Staff:Child Ratio	Maximum Group Size
Infants (6 weeks – 14 months)	1:4	12
Toddlers (15 – 23 months)	1:5	15
Two-year-olds	1:8	16
Three-year-olds	1:10	20
Four-year-olds	1:10	20
Five-year-olds (preschool)	1:20	20
School-age (kindergartners+)	1:20	30

When age groups are combined, staffing follows the ratio for the youngest child in the group. Per the regulation, an early childhood teacher aided by an early childhood assistant may supervise a group of up to 30 children if all children are at least five years of age.

Staff Credentials

• Director: Typically Gateways Illinois Director Credential Level I, II, or III, depending on center size; relevant ECE education and experience
• Lead teachers: Gateways ECE Credential Level 3 or 5 (or equivalent degree + experience) strongly preferred and required for higher ExceleRate tiers
• Teachers in infant/toddler rooms: Infant Toddler Credential Level 3 or higher desirable
• All staff: Annual training hours, mandated reporter training, CPR and first aid certification, medication administration training where applicable

Step 5: Receive Conditional License, Then Full License

Once DCFS verifies initial compliance (successful inspection, approved background checks, facility minimums met), they issue a 6-month conditional license. Your licensing representative visits regularly during this window to monitor ongoing compliance.

If you meet all ongoing requirements through the conditional period, DCFS issues a 3-year full license. Licenses are renewed on a 3-year cycle thereafter, with annual monitoring visits, complaint investigations, and ongoing compliance reporting.

Step 6: Comply With Chicago-Specific Rules (If Operating in Chicago)

Chicago requires parallel city licensing for day care centers through Chicago BACP. The city license is separate from the DCFS license and has its own fee schedule (updated January 1, 2026 under the BACP fee updates). Chicago day care centers are classified under their own BACP license type with capacity-based fee tiers.

Additionally, Chicago’s Department of Public Health conducts its own food-service inspection if the center prepares meals, and the Chicago Fire Department may conduct separate fire inspections in addition to any state fire marshal review.

Step 7: Participate in ExceleRate Illinois and Pursue Higher Credentialed Status

ExceleRate Illinois is the statewide Quality Rating and Improvement System (QRIS) administered through the Illinois Network of Child Care Resource and Referral Agencies (INCCRRA). It is voluntary but economically significant because CCAP reimbursement rates tier off ExceleRate ratings.

• Licensed Circle of Quality: Baseline – you meet DCFS licensing standards
• Bronze Circle: Enhanced staff credentials, basic curriculum, learning environment measures
• Silver Circle: Higher staff credentials, research-based curriculum, family and community partnerships
• Gold Circle: Highest tier – advanced staff degrees and credentials, documented child outcomes, rigorous curriculum and assessment

Gateways to Opportunity is the parallel credentialing system for staff. Gateways ECE Credential Levels 3-5, Infant Toddler Credential Levels 3-5, and Illinois Director Credential Levels I-III meet ExceleRate training requirements across all Circles of Quality. Scholarship funds are available through Illinois Student Assistance Commission (ISAC) via the Early Childhood Access Consortium for Equity (ECACE) program for staff pursuing ECE credentials.

Step 8: Enroll in CCAP and Pursue Preschool for All Funding

Child Care Assistance Program (CCAP)

CCAP, administered by the Illinois Department of Human Services, subsidizes child care for working low-income families. Enrolled providers receive state reimbursement at rates tiered off:

• Child age (infant rates > toddler rates > preschool rates > school-age rates)
• Region (Chicago/collar counties typically higher than downstate)
• ExceleRate tier (Gold and Silver providers receive higher per-child rates)
• Hours of care (part-time vs. full-time)

CCAP enrollment is free. Apply through your local CCR&R agency. Serving CCAP families provides predictable weekly enrollment and state-funded payments but involves ongoing documentation and compliance with CCAP rules.

Preschool for All (PFA) and Smart Start Illinois

Preschool for All is a state-funded free preschool program for 3- and 4-year-olds administered by the Illinois State Board of Education (ISBE). PFA providers receive per-pupil funding from the state.

The Smart Start Illinois initiative, launched with a $300 million FY2024 investment, has materially expanded PFA capacity – 11,000 new preschool seats have been added statewide through FY2025 expansion rounds. ISBE also provides quality improvement grants to PFA and PFA Expansion (PFAE) programs in good standing to fund competitive wages and reduce the pay gap between early childhood teachers and K-12 teachers.

PFA contracts are competitive and require participation in a state-approved curriculum, alignment with Illinois Early Learning Standards, and staff with approved credentials. But for centers that can qualify, PFA dollars can fund a meaningful portion of 3-4 year old programming.

Step 9: Register for Unemployment Insurance, Workers’ Comp, and Paid Leave

Day care centers typically grow quickly past the minimum-employee thresholds:

• Workers’ compensation: Required from one employee, no threshold. Daycare class codes typically NCCI 8868 (College – professional) adjacent rates or 9101 (Educational services) – verify with your carrier.
• IDES UI: Child care services classify under NAICS 624410, not sector 56, so the standard 3.35% new employer rate applies. Taxable wage base $14,250 for 2026.
• Paid leave: Chicago daycares follow the Chicago Paid Leave Ordinance (80 hours total). Cook County outside Chicago follows Cook County Paid Leave. Downstate daycares follow PLAWA (40 hours).
• Illinois Secure Choice: Mandatory at 5+ employees with 2+ years in business – almost any Illinois daycare that makes it past year 2 hits this threshold
• Minimum wage: $15.00/hour state; $16.20/hour Chicago effective July 1, 2026

Illinois Daycare Market Context

• Chicago: ~2.7M residents, high infant/toddler demand, premium rates especially on the North Side and North Shore suburbs. But licensing complexity and real estate costs are high. Zoning for day care use in residential Chicago neighborhoods is constrained.
• Collar counties (DuPage, Kane, Lake, Will, McHenry): Strong suburban demand, more zoning-friendly, lower per-child rates than Chicago city but also lower operating costs
• Downstate markets (Champaign-Urbana, Peoria, Rockford, Springfield, Bloomington): Often underserved – limited supply of licensed centers means open capacity fills quickly. University towns have cyclical demand but strong year-round infant/toddler business
• Smart Start funding tailwind: State investment in preschool expansion is a policy commitment through at least the current gubernatorial term. Providers positioned to take PFA funding have a growing state revenue stream to layer onto private tuition.
• Workforce bottleneck: Like most states, Illinois is short on credentialed ECE staff. Gateways and ECACE scholarships are helping but wages for ECE staff remain below K-12 teacher wages, creating retention pressure.

Cost to Start a Daycare in Illinois

Line Item	Family Home (Part 406)	Day Care Center (Part 407)
Illinois LLC + annual report	$150 + $75	$150 + $75
DCFS license application and license	Free	Free
Background checks (all adults)	Free (applicant cost)	Free (applicant cost)
Facility upfit / renovation	$2,000-$8,000 (home modifications)	$50,000-$300,000+ commercial buildout
Fire marshal inspection fee	$50-$200	$200-$500
Equipment (cribs, tables, toys, outdoor play)	$3,000-$10,000	$20,000-$75,000
Initial 3 months commercial rent (if applicable)	N/A	$10,000-$45,000
Director + lead teacher first month salaries	N/A	$10,000-$25,000
General liability insurance	$800-$2,000/year	$2,500-$8,000/year
Workers’ comp (once staffed)	Often exempt if solo	$3,000-$15,000/year
Commercial property insurance	Via homeowners rider	$1,500-$5,000/year
Training and credentialing	$500-$2,000	$3,000-$10,000
Curriculum, assessment tools	$500-$1,500	$3,000-$12,000
Marketing and website	$500-$2,000	$3,000-$10,000
Approximate Total (Year 1)	$15,000-$40,000	$100,000-$500,000+

Related Illinois Business Guides

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Frequently Asked Questions

How much does a daycare license cost in Illinois?

There is no fee to apply for or receive a DCFS daycare license in Illinois – the state does not charge for center licenses (Part 407) or family child care home licenses (Part 406). Fingerprint background checks are also free to applicants. Actual startup costs are driven by facility upfit, equipment, insurance, and staff, ranging from roughly $15,000-$40,000 for a family home operation to $100,000-$500,000+ for a new day care center.

What are the staff-to-child ratios in Illinois daycare?

Under 89 Ill. Adm. Code 407.190: infants (6 weeks-14 months) 1:4 with max group size of 12; toddlers (15-23 months) 1:5 with max group of 15; 2-year-olds 1:8 with max group of 16; 3-year-olds 1:10 with max group of 20; 4-year-olds 1:10 with max group of 20; 5-year-olds (preschool) 1:20 with max group of 20; school-age 1:20 with max group of 30. When age groups are combined, the ratio for the youngest child applies.

How long does DCFS daycare licensing take in Illinois?

Expect 6-12 months for a new day care center (Part 407) including orientation, application, facility inspection, fire marshal inspection, health department approval, and staff background checks. Licensed Family Child Care Homes (Part 406) are typically faster at 2-4 months. DCFS issues a 6-month conditional license once initial compliance is verified; after successful monitoring through the conditional period, a 3-year full license is issued.

Do Illinois daycare staff need background checks?

Yes – every person 18 years or older with unrestricted or unsupervised access to children must complete DCFS fingerprint background checks through Accurate Biometrics. That includes paid staff, volunteers, and (for family home licenses) all adult household members. Checks cover Illinois State Police, FBI, state and national sex offender registries, DCFS Child Abuse and Neglect Tracking System, and other-state registries for any state of residence in the past 5 years. Background checks are free to applicants, household members, and employees of licensed facilities.

What is ExceleRate Illinois and do I need to participate?

ExceleRate Illinois is the statewide Quality Rating and Improvement System (QRIS) with four Circles of Quality: Licensed, Bronze, Silver, and Gold. Participation is voluntary but economically significant – CCAP reimbursement rates are tiered off ExceleRate ratings, so Gold and Silver centers receive higher per-child state dollars. Gateways to Opportunity is the parallel professional development system covering ECE Credentials (Levels 3-5), Infant Toddler Credentials (Levels 3-5), and the Illinois Director Credential (Levels I-III).

What is Preschool for All and how does Smart Start Illinois affect my daycare?

Preschool for All (PFA) is a state-funded free preschool program for 3-4 year olds administered by ISBE. Providers that win PFA contracts receive per-pupil state funding. The Smart Start Illinois initiative launched with a $300M FY2024 investment and has added 11,000 new preschool seats statewide through FY2025 funding rounds. If you operate a preschool-age program and can meet PFA curriculum and staff credential requirements, PFA dollars can supplement private tuition revenue meaningfully.

Do I need workers’ compensation for a daycare in Illinois?

Yes – from one employee, no threshold. Sole-proprietor family home providers with no employees may operate without workers’ comp, but most day care centers immediately need coverage. Daycare operations have meaningful injury exposures (lifting children, playground incidents, communicable disease). Illinois penalties for operating uninsured are severe: $500/day fines, $10,000 minimum, Class A misdemeanor for negligent failure, Class 4 felony for knowing failure, and personal liability for officers.