How To Open A Daycare In Colorado (License Requirements Included)

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A daycare business in Colorado can be a great idea for someone who has a lot of patience and enjoys working with kids. More parents are needing to use daycares because both parents are working since dual-income families are becoming more popular. In addition, single-parent homes are also becoming more common and in this case, daycare would be necessary while the parent is at work.

Like any business, starting a daycare does require planning. 

To open a daycare in Colorado:


  1. Determine a budget



  2. Advertise the business and gain clients 



  3. Decide between opening an in-home daycare or non-residential daycare



  4. Obtain the correct daycare license Apply for the correct Colorado State daycare license. There is a four-step process and specific licensing requirements and training certifications that must be completed properly to ensure that the daycare is running legally. It can take a couple of months to complete this process so it is important to plan. 


Step One: Determine a Budget

Although a daycare business is a good way to make money they are not cheap to set up. The average cost to start a daycare is between $10,000 to $50,000. In addition to the start-up cost, it costs approximately $60 per child for supplies, classroom materials, and food for each day. 

Choosing to do an in-home daycare will save some money with initial start-up costs since in-home daycares do not have to pay for the building, renting, or renovating a daycare space. However, in-home daycares have a smaller space to work with which limits the number of children they can care for. This means that they do not have the potential to earn as much as non-home daycares do. 

Step Two: Advertise the Business and Gain Clients 

There are three types of Colorado daycare licenses and before applying you must know how many children that the daycare will be caring for. Having a general idea of how many children will register for your daycare is critical also so you know how much profit to expect, how much staff will be required, and if an in-home daycare or non-residential daycare would be more beneficial. 

In-home daycares can be harder to advertise for and the best way to gain clients is by word-of-mouth. Daycare facilities have the benefit of having large building signs and being in more trafficked areas which help with advertising. They also have the option to work under an already established daycare franchise which may help with some advertisements for the daycare facility. 

Step Three: Deciding Between In-home Daycare vs Non-residential Daycare

Colorado requires both in-home and non-home daycares to follow the same licensing requirements and both must go through the same background checks and inspections. Not all states require in-home daycares to do this therefore, some parents do not feel in-home daycares are as safe. However, since Colorado does require this it makes parents feel safer about sending their children to in-home daycare facilities. 

Pros of In-home Daycare

In-home daycares have lower start-up costs and do not require as much staff to pay so the overall cost is cheaper. Another important factor to take into consideration when determining the type of daycare to open is the parents and kids that you plan on providing care for. Some reasons why parents may prefer in-home child care include:

    • A more “homey” atmosphere
    • Siblings can stay together and not be split between classrooms
    • Smaller class sizes
    • More relaxed schedule and curriculum 

Pros of Non-residential Daycare

Non-residential daycares have the potential to grow and expand which will help increase profits over time. Non-home child care can also be utilized as more than just daycare. They also include childcare centers, school-age childcare centers, preschools, neighborhood youth organizations, and day treatment centers. 

Some reasons why parents prefer non-residential daycares include:

    • Kids can be broken up into appropriate age groups
    • More classroom-like curriculum 
    • If the staff member is sick there is a backup option or substitute

Step Four: Obtain the Correct Daycare License

Once you determine if in-home or non-home daycare is right for you and how many children you plan on caring for then you can choose which daycare license you will need. Colorado has three types of childcare licenses. The three types of daycare licenses in Colorado are:

  1. Family Child Care Home License  
  2. Non-home Child Care License 
  3. Substitute Placement Agency License  

All three have the same steps to obtain the license, but different applications and application fees. The Substitute Placement Agency License is used for emergent childcare needs and can be used either short-term or long-term and requires some of the training requirements to be done before applying. 

Steps For Colorado Daycare Licenses

A daycare license is required in Colorado when watching two or more children that are not related to the individuals caring for the child. Four steps must be completed before being allowed to run a daycare which includes: 

  1. Submit the license application and pay fees (must choose in-home, non-home, or substitute placement)
  2. Complete training requirements 
  3. Complete two background checks and fingerprinting 
  4. Licensing inspection completed by a Licensing Specialist 

Submitting the License Application 

Colorado requires a lot of paperwork to be submitted with the application. Seven forms must be completed during this step. The seven forms that must be submitted in the application packet include:  

    1. Licensing fees
    2. Experienced Family Child Care Provider (ECCP) Acknowledgement form
    3. Proof of lawful presence in the United States
    4. Privacy Act Notification
    5. Childcare Provider Health Evaluation form 

The Privacy Act Notification and the Childcare Provider Health Evaluation form should be kept for personal records and may need to be shown during the inspection.  

Training Requirements 

Four training requirements are set by the State of Colorado and must be completed to operate any type of daycare facility. These four training requirements can be done after the application is submitted but must be done before opening the daycare. Colorado requires that all daycare facilities have completed:

    • Pre Licensing Training (set up by the state of Colorado) 
    • First Aid Certification  
    • CPR Certification 
    • Standard Precautions and Medication Administration Training 

Background Check and Fingerprinting 

Two types of background checks are required. One background check is a criminal background check which looks into the individual’s criminal history. The second background check is the child abuse and neglect background check which looks specifically into the individual’s criminal history of child abuse and neglect offenses. 

Both of these background checks are required for both opening and operating the daycare facility and are required for all employees or volunteers at the facility to complete. 

Learn more about licensing HERE.

Licensing Inspection

Once the application packet is reviewed and accepted a licensing number will be issued and assigned to the daycare facility. It is important to keep this number on file. 

A licensing specialist will contact you to schedule the inspection. This must be done within 45 days after the application has been accepted so if it gets close to 45 days then it is important to call Colorado’s daycare licensing number to get one set up. 

The Licensing Specialist verifies that the training requirements are completed, that the rules and regulations discussed in these training are being followed, and reviews the health statements.

How much are the licensing fees?

Licensing fees vary between the type of license, the number of children, and the ages of the children. In-home licenses have one base fee that they are required to pay, whereas the non-home license requires a base fee plus an additional charge per child if the daycare exceeds 16 children. 

In-home license fees are determined by the number of children and their ages. The fees cost $65 for one to six children or three children under two. The price goes up to $100 for seven to twelve children. 

An individual applying for a non-home license may have a base fee plus an additional charge per child. For one to fifteen children the license fee is $200 with no additional charge per child. For sixteen to thirty children the base fee is $175 plus there is an additional $3 charge per child. For 31 or more children the base fee costs $300 plus an additional $3 per child. 

Opening a daycare in Colorado can be a profitable business and the need for more daycare facilities is rapidly growing. There is also the flexibility of in-home or non-residential daycare options which have their unique benefits to each. The licensing process is not too difficult but does require specific paperwork, fees, and training to be complete. 

Related Questions 

How long does the licensing process take? 

All licensing steps must be completed before being able to care for children in a daycare. In total, this process can take approximately 60 to 90 days to complete so it is important to plan ahead of time. 

What are the staff-to-child ratio requirements for Colorado? 

Colorado does set staff to child ratios for different age ranges. For infants to toddlers who are 18 months, the ratio is 1:5, toddlers from two to three years old the ratio are 1:7, for children who are four to five years old the ratio is 1:12, and any children who are older than five the required ratio between staff and children is 1:15

Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.

To learn more on how to start your own daycare checkout my startup course and documents here.