How to Start a Daycare in South Dakota (2026)

Last updated: February 26, 2026

Starting a daycare or child care center in South Dakota requires a license from the South Dakota Department of Social Services (DSS) – Child Care Services. Licensing requirements depend on the number of children in your care: formal licensing is required for group family child care homes (13-20 children) and day care centers (21 or more children). Smaller family child care programs may operate under a registration or exemption depending on their funding sources and enrollment. The DSS has up to 60 days to process a completed application and will conduct an annual inspection of licensed facilities. This guide covers every requirement for opening a licensed child care operation in South Dakota in 2026.

Daycare Requirements in South Dakota at a Glance

Requirement	Agency	Cost	Timeline
LLC formation (recommended)	SD Secretary of State	$150 online + $55/year annual report	1 business day
DSS child care license (Group Family or Center)	SD Department of Social Services	Verify current fees with DSS	Up to 60 days after complete application
Background checks (staff and household members)	SD DCI / FBI	Varies per individual	Before licensing approval
First aid / CPR certification (staff)	Red Cross / AHA accredited	$50-$100 per person	Before operating
Annual DSS inspection	SD DSS Child Care Services	No additional fee	Annual
Sales tax license	SD Department of Revenue	Free	Before first taxable service
Workers’ compensation (if hiring)	SD Department of Labor and Regulation	Varies by payroll	Before first employee
General liability insurance	Private carrier	~$1,500-$5,000+/year	Before operating

How to Start a Daycare in South Dakota (Step by Step)

Step 1: Determine Your Program Type and Licensing Category

South Dakota’s child care licensing requirements depend on the number of children in your care:

• Group Family Day Care Home: Provides group care for 13 to 20 children on a regular basis. These are mandated by law to be licensed prior to operation, regardless of funding source. Inspected once per year.
• Day Care Center: Provides group care for 21 or more children on a regular basis. Mandated by law to be licensed before operating, regardless of funding source. Inspected at least once per year.
• Family child care (fewer than 13 children): Requirements differ – these may be exempt from licensing or subject to registration depending on whether they receive state or federal child care assistance funds. Contact DSS directly to determine your specific obligations.

The official South Dakota DSS Child Care Licensing page is at dss.sd.gov/childcare/licensing. Contact: CCS@state.sd.us or write to: SD Department of Social Services, Child Care Services, 700 Governors Drive, Pierre, SD 57501-2291.

Step 2: Form Your Business Entity

File Articles of Organization with the South Dakota Secretary of State for $150 online at sosenterprise.sd.gov. Annual report: $55/year due on your formation anniversary date.

Child care is one of the highest-liability businesses you can operate. Children in your care can be injured, and parents can sue for damages. An LLC separates your personal assets from your business liabilities. This is not optional – it is essential protection.

Apply for a free EIN from the IRS at irs.gov. You will need it to register for taxes and open a business bank account.

Step 3: Contact DSS and Request Your Licensing Packet

Reach out to South Dakota DSS Child Care Services early in your planning process. The licensing packet contains all application forms, regulatory checklists, and physical environment standards you must meet. Reviewing the requirements before you sign a lease or begin renovations will save you time and money.

The DSS licensing handbook provides comprehensive guidance on all requirements: dss.sd.gov/docs/childcare/licensing/licensing_handbook.pdf.

Contact DSS at CCS@state.sd.us or visit dss.sd.gov/childcare/licensing for current fee schedules, forms, and contact information for your regional DSS office.

Step 4: Complete Background Checks for All Staff

South Dakota requires criminal background checks for all individuals who work in a licensed child care facility or have access to children in care. This includes:

• South Dakota Division of Criminal Investigation (DCI) background check
• FBI national fingerprint background check
• DSS child abuse and neglect registry check

Background checks must be completed and cleared before licensing approval. Plan for this process to take several weeks. Any individual with a disqualifying criminal history will be ineligible to work in a licensed child care facility.

Step 5: Meet Staff Training Requirements

All staff in a South Dakota licensed child care facility must meet training requirements including:

• First Aid and CPR certification from an accredited provider (American Red Cross, American Heart Association). Recertification required on schedule. Cost: approximately $50-$100 per person.
• Training in child development, health and safety, and mandatory reporting of child abuse and neglect
• Specific training requirements vary by staff role and program type – review the DSS licensing handbook for your category

Step 6: Prepare Your Facility to Meet DSS Standards

Your facility will be inspected by a DSS licensor before your license is issued. Key physical environment requirements include:

• Safe indoor play space (minimum square footage per child, per DSS regulations)
• Safe outdoor play area with appropriate fencing and equipment
• Age-appropriate and functional toileting and handwashing facilities
• Safe sleep environment for infants (firm, flat, separate sleep surfaces; no soft bedding)
• Fire safety compliance (smoke detectors, fire extinguishers, exit routes, evacuation plan)
• Food service area meeting health and sanitation standards (if meals are provided)

Do not sign a lease or begin construction without reviewing DSS facility requirements first. Non-compliant facilities must be corrected before a license can be issued.

Step 7: Submit Your Application and Pass DSS Inspection

Submit your completed licensing application with all required documentation to DSS Child Care Services. The department is required by law to provide written notice of approval or denial within 60 days of receiving a complete application.

A DSS licensor will conduct an onsite inspection of your facility before issuing your license. After initial licensing, your facility will be inspected at least once per year. DSS may conduct additional unannounced inspections as warranted.

Cost to Start a Daycare in South Dakota

Item	Cost	Notes
LLC formation	$150	One-time; $55/year annual report
DSS licensing fee	Verify with DSS	Contact dss.sd.gov/childcare/licensing for current fee schedule
Background checks (per person)	Varies	DCI + FBI fingerprint; required for all staff
First Aid / CPR training (per person)	$50-$100	Per staff member; renewal required per certification schedule
Facility build-out / modifications	$5,000-$50,000+	Varies widely depending on facility type and condition
Equipment, furnishings, toys	$2,000-$15,000	Age-appropriate; varies by capacity
General liability insurance	$1,500-$5,000+/year	Annual; child care-specific policy essential
Workers’ compensation	Varies by payroll	Required for most employers with employees
Year 1 Total (estimated, excluding facility)	~$10,000-$75,000+	Varies significantly by size and type of program

Estimated total startup cost: $10,000-$75,000+ depending on program size and facility

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← Back to all South Dakota business guides

Frequently Asked Questions

Do I need a license to open a daycare in South Dakota?

Yes, if you care for 13 or more children. A Group Family Day Care Home (13-20 children) and a Day Care Center (21+ children) are both required by South Dakota law to be licensed by the DSS before operating. Smaller programs serving fewer than 13 children have different requirements – contact DSS Child Care Services at dss.sd.gov/childcare/licensing to determine your specific obligations.

How long does it take to get a daycare license in South Dakota?

The South Dakota DSS must provide written notice of approval or denial within 60 days of receiving a complete application. In practice, total time from first contact to license issuance – including background checks, facility preparation, and the inspection – typically runs 3-6 months. Start the process well before you plan to open.

What background checks are required for South Dakota daycare staff?

All staff and individuals with access to children in a licensed South Dakota child care facility must undergo: (1) a South Dakota DCI criminal background check, (2) an FBI national fingerprint background check, and (3) a DSS child abuse and neglect registry check. Any disqualifying history prevents employment in a licensed facility. Background checks must be cleared before licensing approval.

Does South Dakota inspect licensed daycares?

Yes. Licensed Group Family Day Care Homes and Day Care Centers in South Dakota are inspected at least once per year by a DSS licensor. Additional unannounced inspections may occur. Annual inspections verify ongoing compliance with all health, safety, staffing, and facility requirements.

Does South Dakota have a no-income-tax advantage for child care businesses?

Yes. South Dakota has no state income tax on individuals or corporations. This means a South Dakota daycare owner pays no state income tax on business profits – a meaningful advantage compared to running a daycare in states with 5-10% income tax rates. You still owe federal income taxes, Social Security, and Medicare taxes.