How to Start a Childcare Business: 7 Steps to Opening Day

Starting a childcare business isn’t just about opening a nursery or after-school club – it’s about shaping the next generation, supporting families, and building a business you can be proud of.

The modern lifestyle, with busy work schedules and parents juggling responsibilities, has driven demand for high-quality childcare in the UK to an all-time high.

Whether you dream of running a home-based setup, a bustling daycare, or a specialised early learning centre, this step-by-step guide on how to start a childcare business will help you turn your love for children into a thriving business.

Key takeaways

• Understand the childcare market in 2026
  The demand for high-quality childcare in the UK is growing, driven by working parents, dual-income households, and government funding.
• Comply with legal and safety requirements
  Completing the necessary regulatory checks, staff training, and quality standards is mandatory before opening a childcare service.
• Choose the right business structure
  Decide whether to operate as a sole trader, limited company, or partnership. The choice impacts liability, tax efficiency, administration, and credibility with parents.
• Plan finances carefully
  Understand startup costs, ongoing expenses, and funding options. Budget for renovations, safety equipment, staff wages, insurance, and marketing.
• Hire qualified staff and market effectively
  Recruit staff with proper qualifications, training, and DBS checks, and maintain required staff-to-child ratios. Build trust with parents through transparent policies, online visibility, community engagement, and referral incentives.

Why start a childcare business in 2026?

The demand for high-quality early-years care is strong, driven by working parents, dual-income households, and policy support, such as funding for free early education hours.

This business is ideal for all kinds of entrepreneurs:

• Freelancers or side-hustlers running small-scale, home-based childcare or out-of-school clubs
• Full-time entrepreneurs founding a nursery or multi‑site childcare business
• Passionate educators blending professional care with early years education

The childcare sector in the UK is well-established, offering opportunities for new providers to meet rising demand.

Here’s a quick snapshot of the market:

• As of 31 March 2025, there were 60,400 Ofsted-registered childcare providers across the UK.
• The total number of early years childcare places rose to 1.29 million by March 2025, a 1% increase year-on-year.
• In England, there were 1.28 million early years childcare places as of August 2024.

How to start a childcare business: From idea to reality

Whether you want to open a home-based setting, a full nursery, an after-school club, or a specialist early learning service, the UK childcare sector requires strict compliance, careful planning, and a structured setup.

Here’s everything you need to do to start a compliant childcare business:

Step 1: Choose the type of childcare business you want to run

Before you apply for licences or prepare your space, you must define the exact type of business you plan to operate.

In the UK, different childcare models have different legal requirements, staffing ratios, safety expectations, and registration processes. Being clear on your model will help you follow the correct regulations and prevent expensive setbacks:

Step 2: Choose your company structure

Registering your business adds credibility, helps you manage finances properly, and gives you essential legal protection as you grow.

Here are the most common company structures you can choose from at a glance:

After you choose your company structure, you can start meeting the legal and regulatory requirements.

Step 3: Register with Ofsted

Childcare is one of the most heavily regulated sectors in the UK. Before you can legally look after children, you must meet Office for Standards in Education, Children's Services and Skills (Ofsted) requirements, provide the correct documentation, and complete inspections.

Use this list to stay compliant from day one:

• Register with Ofsted if you care for children for more than two hours a day and are paid to do so.
• Apply for a Disclosure and Barring Service (DBS) check for all staff, assistants, and owners.
• Complete paediatric first aid training approved by Ofsted.
• Complete safeguarding training for protecting children from harm.
• Write essential childcare policies, including safeguarding, health and safety, accidents, data protection, and complaints.
• Prepare an Early Years Foundation Stage (EYFS)-compliant curriculum if you’re working with children under five.

You can start the registration process before all compliance items are fully completed, but you must demonstrate that you meet (or will meet) all requirements when inspectors visit.

The steps to registering are:

• Creating a Government Gateway account: Accessing Ofsted application forms
• Submitting your Ofsted application: Providing detailed information and paying the registration fee
• Completing DBS and identity checks: Checking every adult in your household (if childminding)
• Preparing your premises for inspection: Ensuring safety, hygiene, fire exits, and learning areas meet required standards
• Booking an Ofsted pre-registration visit: Allowing inspectors to assess readiness and compliance with all requirements (training, policies, curriculum, premises, etc.)
• Receiving your approval and registration certificate: Opening after obtaining the certificate

What do I need to stay compliant with Ofsted?

These are the different requirements based on your business type:

After completing the Ofsted registration, you can focus on making sure your space is safe and comfortable.

Step 4: Prepare your premises and meet safety standards

Whether you operate from your home or a commercial setting, you must follow strict safety and environmental rules.

On the premises, you must have:

• Secure indoor areas with appropriate furniture
• Safe outdoor space or access to outdoor play spaces
• Childproofing measures including locks, guards, and barriers
• Fire safety measures including alarms and extinguishers
• Clean and hygienic facilities with separate areas for eating and toileting
• Adequate ventilation and lighting suitable for children

You should also conduct regular risk assessments and document them. Here’s a simple checklist you can follow:

• Slips and trips: Keep floors clear, dry, and free of hazards.
• Fire exits: Keep paths clear and exits easily accessible.
• Toys and equipment: Use safe, age-appropriate, non-toxic items.
• Storage: Store items securely and lock away chemicals.
• Food preparation: Keep surfaces clean and prevent cross-contamination.

Beyond physical safety, it’s also important to protect your business and the families you serve – through proper insurance.

Insurance: Covering risks in childcare

Business insurance is a critical part of running a responsible childcare service, helping you manage unexpected events so your operations can continue smoothly. Take a look at what you’ll need:

Tip: Consider bundling policies with one provider for simplicity and potential discounts.

Step 5: Have a financial plan

Having a clear budget helps you plan your fees, manage cash flow, and set realistic financial goals for your business. Understanding where your money goes is the first step toward building a sustainable childcare service.

Startup costs

These are one-time investments you’ll need before opening your doors:

Tip: Keep receipts and track every expense, as some may be tax-deductible.

Typical ongoing costs

Ongoing costs are recurring monthly or annual expenses that keep your business running smoothly:

Tip: Review your ongoing costs regularly to spot opportunities to save, and don’t forget to factor in seasonal fluctuations, such as heating in winter.

Government grants for childcare businesses

The UK government offers a variety of funding schemes and support to help new childcare providers get started. Key options include:

• Childcare Expansion and Early Years Grants: Funding for new or expanding childcare spaces, allocated via local authorities
• Early Years Financial Incentives (EYFI): Payments to help recruit staff and support early years expansion in selected areas
• School-Based Nursery Capital Grant: Grants for schools to set up or expand nurseries, up to £150,000
• Early Years Entitlement & Pupil Premium: Government payments for delivering funded hours and supporting disadvantaged children
• SEN Inclusion Fund (SENIF): Top-up grants for children with special educational needs, including resources and staffing
• Tax relief and business support: Allowances on equipment and premises, plus advice from HMRC, local councils, and National Day Nurseries Association (NDNA)

Tip: Always check your local authority’s funding programmes, as availability varies by region.

Step 6: Hire and train staff

If your childcare business goes beyond solo childminding, hiring qualified staff is essential. All childcare staff should have:

• Level 2 or Level 3 childcare qualification: providing the skills required for the role and setting
• Paediatric first aid certificate: handling emergencies confidently
• DBS check: verifying suitability to work with children
• Safeguarding training: recognising and responding to child protection concerns
• Food hygiene training: following proper procedures when preparing meals

The UK has strict staff-to-child ratios and qualification requirements to ensure every child receives safe, high-quality care.

Here’s how it works:

• Under 2: 1 adult to 3 children
• Age 2: 1 adult to 4 children
• Age 3 to 5: 1 adult to 8 children
• After school club: 1 adult to 8–10 children

Tip: Maintain these ratios at all times, including staff breaks and outings, to comply with Ofsted regulations.

Hiring and training qualified staff not only ensures compliance but also boosts your business’s credibility. Well-trained staff provide high-quality supervision, support children’s development, and give parents confidence in your service.

Step 7: Promote your new childcare business

Marketing in childcare relies on building trust, credibility, and visibility. Take a look at some marketing strategies that work for childcare businesses:

• Build online visibility: Make sure you have a professional website, local SEO, and Google Business Profile with photos and reviews.
• Use social media: Share activities, staff profiles, parenting tips, and seasonal posts.
• Promote offline: Use flyers, posters, open days, and community events.
• Partner locally: Connect with schools, nurseries, and local groups for referrals.
• Encourage word of mouth: Offer referral incentives and showcase testimonials.
• Be transparent: Clearly display staff qualifications, policies, and pricing.

By maintaining clear and professional communication, you can connect with families and build your childcare service steadily.

Ready to launch? ANNA is here to help

Starting a childcare business can feel overwhelming, but ANNA makes it simple. From company registration to day-to-day financial management, ANNA is there for you every step of the way.

Here’s how ANNA supports your business from day one:

• Fast company registration – Set up your limited company in minutes and start trading legally.
• Business account included – Keep your personal and business finances separate with ease.
• VAT and tax support – Track VAT, manage invoices, set money aside with smart pots, and stay on top of HMRC obligations.
• Self Assessment made simple – Review your information and submit your tax return without stress.
• Payroll and PAYE management – Handle staff salaries efficiently without extra admin.
• Automated bookkeeping – Record expenses, generate reports, and simplify end-of-year filing.
• Confirmation Statement reminders – Stay compliant with Companies House requirements.
• Friendly support whenever you need it – ANNA’s team is ready to answer questions and guide you 24/7.

With ANNA, you can focus on delivering high-quality childcare while leaving the business admin and compliance to our easy-to-use system trusted by over 100,000 UK businesses.