How to Start a Home Daycare in Texas: Permits, Zoning, and Taxes

To start a home daycare in Texas, you need a permit from the Texas Health and Human Services Commission (HHSC) before you accept a single paying child who isn’t related to you.¹ There are three permit types depending on how many children you plan to care for, and the full path from your first training course to an issued permit generally runs 60 to 90 days. Along the way you’ll complete 24 hours of pre-service training, arrange background checks for everyone in your household age 14 and up, pass a home inspection, and get your business set up for taxes. Operating without a permit can trigger administrative penalties or a cease-and-desist order, so the sequence matters.

Pick the Right Permit for Your Plans

Texas recognizes three categories of home-based childcare, and the one you choose sets your capacity, your paperwork, and how often the state visits.

Listed Family Home

This is the lightest option. If you’ll care for three or fewer unrelated children age 13 or younger, you qualify as a listed family home.² The total number of children in your home, including your own, cannot exceed 12. The listing requirement kicks in once you provide care for at least four hours a day, three or more days a week, for three or more consecutive weeks (or 40-plus days in a 12-month period).

Registered Child Care Home

A registered home caps at 12 children at any one time, counting your own. How many you can actually enroll depends on how many infants you accept. With no infants, you can serve up to six children under age five plus six school-age children. One infant drops your total to 10; four infants caps you at six children total.³ A registered home cannot expand capacity by adding a second caregiver.

Licensed Child Care Home

Licensed homes also cap at 12 children total, but you can bring in a second caregiver and hold that full capacity even with several infants in the mix. Solo caregivers in a licensed home follow age-based ratio charts similar to registered homes, with slightly more flexibility for older toddlers.³ In exchange, inspections are more frequent and the qualification bar for the primary caregiver is higher. All three permit types require you to actually live in the home where care is provided.

Check Zoning and HOA Rules Before You Spend Money

Confirm your city or county allows home-based childcare in your zoning district before you pay for training or start renovations. Many Texas cities require a home occupation permit for residential businesses, and those fees typically run between $20 and $200. Some zoning codes limit non-resident vehicles parked outside or restrict signage, which affects how drop-off and pickup can work.

If your neighborhood has a homeowners association, read the covenants, conditions, and restrictions for any ban on commercial activity. HOA rules can be stricter than city zoning and are enforced separately. Finding a conflict after you’ve completed the permit process is expensive to unwind.

Complete Your Training and Background Checks

Applicants for a registered or licensed home must complete 24 hours of pre-service training before submitting an application. Coursework covers child development, age-appropriate activities, guidance and discipline, health and safety practices, and SIDS prevention.⁴ Several Texas-approved providers offer this online, so you can work through it on your own schedule.

You’ll also need current certification in pediatric first aid and CPR before the state will accept your application, and both certifications have to stay current for as long as your permit is active. Once you’re operating, plan on at least 15 hours of continuing education each year.

Every person aged 14 or older who lives in your home or is regularly present there must undergo a background check that includes FBI fingerprinting.⁵ The state screens for criminal history and any prior findings of child abuse or neglect. Talk to adult household members about this before you start; a disqualifying record on someone who lives with you can stop the whole process.

Get Your Home Ready

Texas sets firm minimums on the physical space. You need at least 30 square feet of indoor activity space per child, and that measurement excludes kitchens, bathrooms, and hallways. Outdoor play areas need at least 80 square feet per child and must be enclosed by a fence at least four feet high, unless you only care for children age five and older.³

The state minimum standards don’t require a fire marshal inspection on their own, but your local city or county may. If you plan to care for children on any floor other than the ground floor, you must get written approval from the state or local fire marshal before doing so.³ The inspector who visits will also look at outlet covers, safe storage of cleaning products and medications, working smoke detectors, and proper placement of safety gates.

ADA Accessibility

Home-based daycares are not exempt from federal disability law. Even a small operation must comply with Title III of the Americans with Disabilities Act.⁶ In an existing home, that means removing barriers to access when doing so is “readily achievable,” meaning it can be done without much difficulty or expense. Offset hinges to widen a doorway or grab bars in a bathroom are common examples. Major structural work isn’t required, but you can’t refuse to enroll a child solely because of a disability without first considering reasonable modifications.

File the Application and Pass the Inspection

Texas requires a pre-application interview before you formally submit paperwork. A Child Care Regulation representative walks you through the state’s expectations, your responsibilities as a permit holder, and the documents you’ll need. You’ll receive a certificate of completion afterward.⁷

After that interview, you submit the formal application through the HHSC online provider portal.⁸ Licensed homes use Form 2910; registered and listed homes have their own application forms.⁹

Once your application is in, an inspector schedules a visit to confirm your home matches what you described. That’s a thorough walkthrough: indoor and outdoor space measurements, safety equipment, hazardous material storage, fence integrity, general cleanliness. If everything checks out and background results are clean, the full path from application to issued permit typically runs 60 to 90 days. Watch your provider portal during this window. The state often requests additional documentation, and most delays at this stage come from slow applicant responses rather than processing backlogs.

Set Up the Business Side

Get an EIN and Choose Your Entity

You’ll need a federal Employer Identification Number for tax reporting. The IRS issues EINs online for free within minutes.¹⁰ If you plan to form an LLC through the Texas Secretary of State, do that first so the EIN application can capture your entity details.

Carry Liability Insurance

Texas doesn’t technically require home daycare providers to carry liability insurance, but operating without it is a real financial gamble. A single injury claim can exceed personal savings. General liability covers physical incidents like a child falling on your property; professional liability covers allegations of negligence or improper supervision. Combined policies commonly run $500 to $1,500 per year depending on the number of children you serve and your location. Look for policies that also include abuse and molestation coverage and accident medical coverage. A standard homeowner’s policy almost never covers business-related injuries, so don’t assume you’re already protected.

Plan for Self-Employment Tax

Home daycare income is self-employment income, meaning you owe both income tax and self-employment tax on your net profit. The self-employment tax rate is 15.3%, covering 12.4% for Social Security and 2.9% for Medicare.¹¹ You must file Schedule SE if your net earnings exceed $400 for the year. Because no one is withholding taxes for you, plan on quarterly estimated tax payments to avoid an underpayment penalty at filing time.

The Home Office Deduction You Actually Qualify For

Daycare providers get a break that other home-based businesses don’t. Normally, the home office deduction only covers space used exclusively for business. Daycare providers can deduct space used regularly for childcare even when the same space serves personal purposes outside business hours.¹² To qualify, you must hold a valid license, registration, or listing under state law (or be exempt from needing one).

You have two ways to calculate the deduction. The simplified method gives you $5 per square foot of daycare space, reduced proportionally for hours the space does double duty. The actual expenses method deducts a percentage of real housing costs (mortgage interest or rent, utilities, insurance, repairs) based on both square footage and the fraction of hours the space is used for daycare. Actual expenses usually produces a larger deduction but requires better records. Food you provide to the children is deductible separately on Schedule C at 100% of actual cost, and the IRS’s standard meal and snack rates are a simpler alternative to tracking real costs. Supplies, toys, and equipment are deducted directly on Schedule C regardless of which home office method you use.¹²

Stay Compliant Once You’re Open

Your permit comes with continuous obligations. Keep enrollment records, current immunization documentation for every child, and daily attendance logs that show you’re staying within capacity.¹³ These records need to be on-site at all times because inspections are unannounced.

Licensed homes receive at least one unannounced inspection per year. Registered homes are inspected at least once every two years.¹⁴ A history of violations increases inspection frequency. For homes serving 20 or fewer children, administrative penalties max out at $50 per incident, but the dollar amount matters less than the compliance record. A pattern of violations can lead to suspension or revocation.

Mandatory Reporting

As a childcare provider you are a mandatory reporter of suspected child abuse or neglect. Under Texas Family Code Section 261.101, anyone who suspects a child has been abused or neglected must report it within 24 hours.¹⁵ Reports go to the Texas Department of Family and Protective Services or local law enforcement. Failing to report is a criminal offense, and the duty applies to any child you encounter, not just children in your care.

Food Program Reimbursements and Hiring Help

Home providers can enroll in the USDA’s Child and Adult Care Food Program (CACFP) to receive federal reimbursement for meals and snacks. The program reimburses at two tiers based on the provider’s location or income, and rates are set annually.¹⁶ The money adds up: a Tier I provider serving breakfast, lunch, and an afternoon snack to six children five days a week receives roughly $175 per week. You enroll through a local CACFP sponsor organization, which handles the paperwork and processes your claims. You’ll need to keep daily meal count records and serve meals that meet USDA nutritional guidelines.

If you grow to the point of needing an assistant, federal wage and hour rules apply. The Fair Labor Standards Act requires at least the federal minimum wage of $7.25 per hour (Texas follows the federal rate) and overtime at one and a half times the regular rate for any hours over 40 in a single workweek.¹⁷ The 40-hour threshold resets every seven days; you cannot average it across a two-week pay period. Any employee with direct child contact must pass the same background check process required for household members. You’ll withhold payroll taxes, arrange workers’ compensation coverage if your situation requires it, and file employer tax returns. The paperwork load jumps significantly when you add staff, which is why many providers keep capacity small enough to work solo as long as possible.

1
Texas Health and Human Services. Child Care Regulation
2
Texas Health and Human Services. Minimum Standards for Listed Family Homes
3
Texas Health and Human Services. Minimum Standards for Licensed and Registered Child-Care Homes
4
Texas A&M AgriLife Extension. Texas Child Care Training Courses
5
ACF/HHS. HHS Child Care Licensing Background Check Rules
6
ADA.gov. Commonly Asked Questions About Child Care Centers and the Americans with Disabilities Act
7
Texas Health and Human Services. Processing the Application for a License, Certificate, Registration, or Listing
8
Texas Health and Human Services. Log In – Texas Health and Human Services
9
Texas Health and Human Services. Child Care Home Provider Application Forms
10
Internal Revenue Service. Get an Employer Identification Number
11
Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
12
Internal Revenue Service. Publication 587 – Business Use of Your Home
13
LII / Legal Information Institute. Texas Administrative Code 25-97.63 – Immunization Requirements in Child-Care Facilities
14
Texas Health and Human Services. What Are CCR Reports, Inspections, and Enforcement Actions
15
Texas DSHS. Child Abuse Reporting Requirements
16
Food and Nutrition Service. CACFP Payment and Reimbursement Rates for the Period July 1, 2025, Through June 30, 2026
17
U.S. Department of Labor. Fact Sheet 46 – Daycare Centers and Preschools Under the Fair Labor Standards Act