How Much Does It Cost to Start a Daycare Center in Minnesota?

Compare in another state:

Starting a Daycare Center in Minnesota typically costs between $58,800 and $490,000, with a median estimate of $176,400. Minnesota’s cost of living is 2% below the national average, which helps reduce operating expenses like commercial rent and labor. LLC formation in Minnesota costs $155 to file. Most daycare center businesses take 4-12 months to launch.

Last updated: March 2026

Daycare Center startup costs illustration — typical equipment and setup

How Much Does It Cost to Start a Daycare Center in Minnesota?

Low

$58,800

Medium

$176,400

High

$490,000

National average: $60,000 – $500,000

Interactive Startup Cost Calculator

Startup Cost Calculator

Daycare Center in Minnesota

Budget:

Facility Lease & Build-Out

$78,400

Playground Equipment

$19,600

Indoor Furniture & Learning Materials

$29,400

State Licensing & Inspections

$4,900

Staff Hiring & Training

$19,600

Insurance

$9,800

Childcare Management Software

$1,960

Marketing & Community Outreach

$4,900

Working Capital Reserve

$39,200

Options

Include 3 months working capital

Employees:Just Me1–34–10

One-Time Costs

$207,760

Monthly Costs

First Year Total

$207,760

Full Cost Breakdown

Cost Category	Low	Medium	High	Notes
Facility Lease & Build-Out	$19,600	$78,400	$245,000	Daycare facilities must meet strict state square footage requirements per child (35-50 sq ft indoor + 75 sq ft outdoor).
Playground Equipment	$4,900	$19,600	$58,800	CPSC-compliant commercial playground equipment costs $8,000-$30,000. Engineered wood fiber or rubber surfacing is required.
Indoor Furniture & Learning Materials	$9,800	$29,400	$78,400	Budget $500-$2,000 per classroom for furnishings. Infant rooms require cribs ($200-$500 each).
State Licensing & Inspections	$980	$4,900	$14,700	Background checks for all staff and household members cost $30-$100 each. Licensing fees vary by state and capacity.
Staff Hiring & Training	$4,900	$19,600	$58,800	Most states require lead teachers to have CDA (Child Development Associate) credentials or a degree in early childhood education.
Insurance	$2,940	$9,800	$29,400	Abuse/neglect liability insurance is mandatory for childcare centers. Budget $500-$2,000/year for this specific coverage.
Childcare Management Software	$490	$1,960	$5,880	Brightwheel, Procare, and HiMama are popular daycare management platforms at $1-$3 per child per month.
Marketing & Community Outreach	$980	$4,900	$14,700	Word of mouth from satisfied parents is the most effective marketing. Pediatrician referrals are also valuable.
Working Capital Reserve	$14,700	$39,200	$117,600	Daycares typically fill to 60% capacity in year 1, 80% in year 2, and 90%+ in year 3.
Total Startup Cost	$59,290	$207,760	$623,280	Required costs only

Licenses & Permits in Minnesota

General Business License

Minnesota does not have a statewide general business license. Businesses must register their entity with the Minnesota Secretary of State and register with the Minnesota Department of Revenue for sales and use tax and withholding tax purposes. Some Minnesota cities require local business licenses, though this varies by municipality. Minneapolis and Saint Paul have their own business licensing requirements. Many business types are regulated through specific licensing programs at the state level.

Industry-Specific Licenses

Food Handler License — Minnesota Department of Agriculture or Local Health Department
Cost: $100-$800 • Renewal: Annual
Residential Building Contractor License — Minnesota Department of Labor and Industry
Cost: $150-$500 • Renewal: Annual
Cosmetology Salon License — Minnesota Department of Labor and Industry — Board of Cosmetologist Examiners
Cost: $50-$150 • Renewal: Annual
Real Estate Broker License — Minnesota Department of Commerce — Real Estate
Cost: $150-$400 • Renewal: Annual
Child Care Center License — Minnesota Department of Human Services — Child Care Licensing
Cost: $50-$200 • Renewal: Annual
On-Sale Intoxicating Liquor License — Minnesota Department of Public Safety — Alcohol and Gambling Enforcement or Local Authority
Cost: $300-$3,000 • Renewal: Annual
Cannabis Retailer License — Minnesota Office of Cannabis Management
Cost: $2,500-$10,000 • Renewal: Annual
Pesticide Business License — Minnesota Department of Agriculture
Cost: $50-$200 • Renewal: Annual

Home-Based Business Rules

Minnesota municipalities regulate home-based businesses through local zoning ordinances. Minneapolis allows home occupations in all residential zones with restrictions on customer visits, signage, and deliveries. Saint Paul has similar home occupation rules. Minnesota's rural areas are generally very accommodating of home-based businesses. The state's Cottage Food Law specifically supports home-based food production and direct consumer sales.

Resources

Monthly Operating Costs

After launch, plan for these ongoing monthly expenses for your Daycare Center:

Low

$8,000/mo

Medium

$25,000/mo

High

$70,000/mo

Revenue Potential

Annual Revenue Range

$150,000 – $1,000,000 (annual)

Profit Margins

10-20%

Break-Even Timeline

18-36 months

How Minnesota Compares to Neighboring States

Minnesota is close to the national average for Daycare Center startup costs, with a cost-of-living index of 98. Compared to neighboring Wisconsin ($171,000 median startup cost), Minnesota has higher costs for a Daycare Center.

State	Est. Cost	LLC Fee
Minnesota (current)	$176,400	$155
Wisconsin	$171,000	$130
Iowa	$163,800	$50
South Dakota	$174,600	$150
North Dakota	$178,200	$135

Common Mistakes to Avoid

1
Underestimating licensing timeline — state childcare licensing takes 3-9 months in most states
2
Not budgeting for staff-to-child ratios — state regulations require 1 teacher per 4-6 infants
3
Skipping abuse/neglect liability insurance — it's mandatory and the most critical coverage for daycare centers
4
Opening without a full enrollment waitlist — use the pre-opening period to build a waitlist of 30+ families
5
Not including subsidy billing in operations — accepting Child Care and Development Fund (CCDF) subsidies significantly increases enrollment

Next Steps to Launch Your Daycare Center

1
Obtain a Minnesota childcare facility license from the Minnesota Department of Children and Family Services before accepting children
2
Register your Daycare Center as an LLC with the Minnesota Secretary of State ($155 filing fee)
3
Pass the Minnesota fire marshal inspection — exits, smoke detectors, extinguishers, and evacuation plans are required
4
Complete criminal background checks on ALL staff per Minnesota childcare licensing requirements
5
Meet Minnesota staff-to-child ratio requirements: typically 1:4 for infants, 1:6 for toddlers, 1:10 for preschool-age
6
Get childcare-specific liability insurance and workers compensation coverage ($5,000–$12,000/year)
7
Install the physical requirements: fenced outdoor play area, age-appropriate bathroom facilities, and kitchen if serving meals
8
Enroll in the USDA Child and Adult Care Food Program (CACFP) to offset meal costs if you serve qualifying children

Frequently Asked Questions

Opening a daycare center costs $60,000 to $500,000. A small home-based daycare for 6-8 children can launch for $10,000-$30,000. A licensed commercial daycare center for 30-50 children typically costs $100,000-$250,000. A large full-service childcare center for 100+ children can exceed $500,000.

State childcare licensing takes 3-9 months on average. The process involves submitting an application, facility inspections (fire, health, licensing), background checks for all staff, staff training verification, and a licensing visit. Start the licensing process immediately after finding your facility.

Capacity depends on your facility size and state ratio requirements. Typical ratios: infants (1:4), toddlers (1:6), preschoolers (1:10-12). A 2,500 sq ft facility at 35 sq ft per child can serve 71 children maximum, adjusted for ratio requirements. Most states cap home daycares at 6-8 children.

Daycare centers can net 10-20% profit margins at full capacity. A 50-child center charging $1,200/month average tuition grosses $720,000/year. After staff labor (60-65% of revenue), rent, supplies, and insurance, net profit runs $72,000-$144,000. The key is maintaining 85%+ occupancy consistently.

Requirements vary by state and staff role. Lead teachers typically need a CDA credential ($425 to obtain), an associate's degree in early childhood education, or a bachelor's degree. Aides may need only 18+ years of age and a high school diploma plus CPR certification. All staff must pass a background check.

Related Businesses in Minnesota

Preschool

Childcare & Education

$50,000 – $400,000

View in Minnesota →

Tutoring Business

Childcare & Education

$2,000 – $100,000

View in Minnesota →

Dance Studio

Childcare & Education

$20,000 – $250,000

View in Minnesota →

Martial Arts Studio

Childcare & Education

$20,000 – $200,000

View in Minnesota →

Music School

Childcare & Education

$10,000 – $150,000

View in Minnesota →

Start a Daycare Center in Other States

See the national overview for Daycare Center or browse all businesses you can start in Minnesota.