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

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Starting a Daycare Center in Minnesota typically costs between $56,400 and $470,000, with a median estimate of $169,200. Minnesota’s cost of living is 6% 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: May 2026

Daycare Center startup costs illustration — typical equipment and setup

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

Low

$56,400

Medium

$169,200

High

$470,000

National average: $60,000 – $500,000

Interactive Startup Cost Calculator

Startup Cost Calculator

Daycare Center in Minnesota

Budget:

Facility Lease & Build-Out

$75,200

Playground Equipment

$18,800

Indoor Furniture & Learning Materials

$28,200

State Licensing & Inspections

$4,700

Staff Hiring & Training

$18,800

Insurance

$9,400

Childcare Management Software

$1,880

Marketing & Community Outreach

$4,700

Working Capital Reserve

$37,600

Options

Include 3 months working capital (+$70,500)

Employees:Just Me1–34–10

Startup Costs

$199,280

Monthly Costs

$23,500

First Year Total

$481,280

Full Cost Breakdown

Cost Category	Low	Medium	High	Notes
Facility Lease & Build-Out	$18,800	$75,200	$235,000	Daycare facilities must meet strict state square footage requirements per child (35-50 sq ft indoor + 75 sq ft outdoor).
Playground Equipment	$4,700	$18,800	$56,400	CPSC-compliant commercial playground equipment is a meaningful four-to-low-five-figure capital purchase. Engineered wood fiber or rubber surfacing is required.
Indoor Furniture & Learning Materials	$9,400	$28,200	$75,200	Plan a meaningful three-to-low-four-figure budget per classroom for furnishings. Infant rooms require cribs as individual mid-three-figure capital items.
State Licensing & Inspections	$940	$4,700	$14,100	Background checks for all staff and household members are a low per-person cost. Licensing fees vary by state and facility capacity.
Staff Hiring & Training	$4,700	$18,800	$56,400	Most states require lead teachers to have CDA (Child Development Associate) credentials or a degree in early childhood education.
Insurance	$2,820	$9,400	$28,200	Abuse/neglect liability insurance is mandatory for childcare centers and is the most critical add-on; premiums scale with enrollment capacity.
Childcare Management Software	$470	$1,880	$5,640	Brightwheel, Procare, and HiMama are popular daycare management platforms billed on a monthly per-child subscription model.
Marketing & Community Outreach	$940	$4,700	$14,100	Word of mouth from satisfied parents is the most effective marketing. Pediatrician referrals are also valuable.
Working Capital Reserve	$14,100	$37,600	$112,800	Daycares typically fill to a majority of capacity in year 1 and reach near-full occupancy by year 3.
Total Startup Cost	$56,870	$199,280	$597,840	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: Varies — contact agency • Renewal: Annual
Residential Building Contractor License — Minnesota Department of Labor and Industry
Cost: Varies — contact agency • Renewal: Annual
Cosmetology Salon License — Minnesota Department of Labor and Industry — Board of Cosmetologist Examiners
Cost: Varies — contact agency • Renewal: Annual
Real Estate Broker License — Minnesota Department of Commerce — Real Estate
Cost: Varies — contact agency • Renewal: Annual
Child Care Center License — Minnesota Department of Human Services — Child Care Licensing
Cost: Varies — contact agency • Renewal: Annual
On-Sale Intoxicating Liquor License — Minnesota Department of Public Safety — Alcohol and Gambling Enforcement or Local Authority
Cost: Varies — contact agency • Renewal: Annual
Cannabis Retailer License — Minnesota Office of Cannabis Management
Cost: Varies — contact agency • Renewal: Annual
Pesticide Business License — Minnesota Department of Agriculture
Cost: Varies — contact agency • 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 one of the more affordable states for launching a Daycare Center, with a cost-of-living index of 93.6 (national average is 100). Compared to neighboring Wisconsin ($163,800 median startup cost), Minnesota has higher costs for a Daycare Center.

State	Est. Cost	LLC Fee
Minnesota (current)	$169,200	$155
Wisconsin	$163,800	$130
Iowa	$149,400	$50
South Dakota	$149,400	$150
North Dakota	$147,600	$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 a low single-digit ratio for infants and toddlers
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 meaningful waitlist of 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; premiums scale with enrollment capacity
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 spans a wide range driven primarily by capacity. A small home-based daycare for a handful of children can launch in the low five figures. A licensed commercial daycare center for several dozen children requires meaningfully more — well into the six figures. A large full-service childcare center for 100+ children requires materially more capital. Use the calculator on this page to model your specific scenario.

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 multi-thousand-square-foot facility can serve dozens of children once ratio requirements are factored in. Most states cap home daycares at a small number of children.

Daycare centers can net low-double-digit percentage margins at full capacity. A multi-dozen-child center charging the local average monthly tuition grosses meaningful annual revenue. After staff labor (a substantial share of revenue), rent, supplies, and insurance, healthy net profit is achievable. The key is maintaining high occupancy consistently.

Requirements vary by state and staff role. Lead teachers typically need a CDA credential, an associate's degree in early childhood education, or a bachelor's degree. Aides may need only adult age and a high school diploma plus CPR certification. All staff must pass a background check.

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Start a Daycare Center in Other States

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