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Starting a childcare business

If you're thinking of setting up a childcare business, then we can help. Starting and running any business is challenging and setting up a childcare business can be a time consuming process. Our information will help you to set up and run a successful, high quality and sustainable early years childcare setting.


Type of childcare business

Are you looking to set up group-based childcare, or are you looking to offer one-to-one care for children?

You can find out about the types of childcare.

Age group of children

You'll need to decide on the age range of the children that you are going to care for in your setting.

If you're joining the Early Years Register to look after children under the age of 5, you must follow the standards set out in the Early Years Foundation Stage (EYFS) Framework. This sets out the standards that schools and childcare providers must meet for the learning, development and care of children from birth to 5.

The early years quality team can provide both specialist and bespoke training tailored to your settings needs.

Setting up your business legally

When starting a business, choosing the right business structure is crucial. Business structures include companies registered with Companies House, charities registered with the Charity Commission, sole trader, partnership, voluntary management committee, but there are others.

A sole trader, partnership, voluntary management committee, is legally and financially liable for decisions made and the subsequent consequences.

Although insurance may be taken out, it may not provide complete cover, therefore personal assets and money could be at risk.

You'll need to make sure that all legal requirements are met when setting up your childcare business. The following is not an exhaustive list but should include:

  • Ofsted registration
  • public liability insurance
  • employers' liability insurance
  • lease or premises agreement
  • planning permission
  • registration with HM Revenue & Customs
  • employing staff
  • health and safety

You can get government guidance on setting up your business.

And there's information on setting up as a charity.

HM Revenue & Customs (HMRC)

To help you with starting up your childcare business HMRC provide a wide range of help and support to help you run your business including videos, emails, e-learning, record keeping apps and online presentations (webinars).

There's help and support aimed at anyone starting a business as a sole trader (running the business on your own). It will answer many of your queries about tax, National Insurance, business records and expenses and help you to ensure you are compliant with regulations from HMRC, Companies House and the Charity Commission.

Ofsted registration

If you're considering setting up as a childminder, nursery or providing other types of childcare you'll need to view the guidance provided by Ofsted which explains the types of provider that need to register, the process and fees.

There are 2 Ofsted registers - the Early Years Register and the Childcare Register. You can apply to join one or both registers at the same time.

If you're not required to register, then in some circumstances you may choose to do so by joining the voluntary part of the Childcare Register.

If you're not sure whether you need to register, you can ring the Ofsted helpline for more information, tel: 0300 123 1231.

For further information you can watch Ofsted's short film about registering as an early years provider.

You can make an application online and get more information about providing childcare services in England.

Ofsted childcare categories

Once you've decided on the type of childcare you'd like to deliver, and the number of hours and days a week you will operate, you'll need to consider Ofsted registration requirements where appropriate. Ofsted has provided guidance in 4 categories, advising what you need to do next and how to register as a childcare provider if you want to apply to:

Providing childcare services in England

You can get further information about the registration requirements.

Suitable premises

The number of children you can look after will depend upon the useable space inside your premises. The Early Years Foundation Stage (EYFS) Framework tells you how much space is needed for each child depending on their ages and provides guidance to ensure suitability of premises. This isn't an exhaustive list and providers should consider the following:

  • are the premises suitable for the age range and number of children?
  • are the premises accessible to children with physical disabilities?
  • are the premises accessible to parents?
  • are there adequate sinks and toilets for the number of children, and is there a separate toilet for adults?
  • is there a secure outdoor space and how easy is it to access?
  • is the building in a good state of repair?
  • is there sufficient storage space for equipment?

Staffing

How many staff you need to employ depends on how many children you look after and how old they are. Please refer to Early Years Foundation Stage (EYFS) Frameworkfor guidance.

For your business, identify how many staff members you need legally and how the team structure is going to look. You'll also need to consider:

  • what qualification levels are necessary for your staff?
  • staff salaries
  • other staff costs such as recruitment, induction, training, national insurance costs, pensions

Recruiting suitable people

The skills and experience of staff in a provision are the most important factors in creating high standards of education and care for children.

The recruitment and retention of appropriately qualified, high quality staff is essential to the success of your childcare business. You'll need a strong management team who'll bring a range of skill sets that complement one another.

For further information see:

Early years funding

If you're caring for children aged between 2 and 4 years, your childcare business or provision may want to offer early years entitlement funded places for 2, 3 and 4-year-olds. Your childcare business or provision will need to be contracted with the local authority to receive funding for eligible children. You can view the contracting process and requirements.

For your new business to be sustainable we'd also recommend that providers consider the following when setting up their childcare setting:

  • consultation and market research
  • competitor analysis
  • marketing and promoting your setting
  • business and financial planning for new childcare
  • offering early years funded places

We have more information on early years business support.

Other support

There are other organisations that can offer guidance and support. Check which one best suits your business needs:

  • National Day Nurseries Association provide support for nursery, information and advice, childcare training and a quality improvement scheme, e-Quality Counts
  • Early Years Alliance is an early years membership organisation and voluntary sector provider of quality affordable childcare and education in England
  • Business Smart is funded by the DfE and provides ideas, inspiration and tools to help new and existing childcare practitioners develop and maintain a sustainable business
  • PACEY is the Professional Association for Childcare and Early Years who promote best practice and support childcare professionals to deliver high standards of care and learning
  • Coram Family and Childcare focuses on childcare and early years to make a difference to families' lives now and in the long term
  • find out what you need do to set up a business depending on your type of business, where you work and whether you take people on to help
  • early years business sustainability guides have all early years providers need to consider business sustainability with insights from successful providers to help you to continue to provide high-quality early years care and education