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

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Starting a Daycare Center in Tennessee typically costs between $55,200 and $460,000, with a median estimate of $165,600. Tennessee’s cost of living is 8% below the national average, which helps reduce operating expenses like commercial rent and labor. LLC formation in Tennessee costs $300 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 Tennessee?

Low

$55,200

Medium

$165,600

High

$460,000

National average: $60,000 – $500,000

Interactive Startup Cost Calculator

Startup Cost Calculator

Daycare Center in Tennessee

Budget:

Facility Lease & Build-Out

$73,600

Playground Equipment

$18,400

Indoor Furniture & Learning Materials

$27,600

State Licensing & Inspections

$4,600

Staff Hiring & Training

$18,400

Insurance

$9,200

Childcare Management Software

$1,840

Marketing & Community Outreach

$4,600

Working Capital Reserve

$36,800

Options

Include 3 months working capital (+$69,000)

Employees:Just Me1–34–10

Startup Costs

$195,040

Monthly Costs

$23,000

First Year Total

$471,040

Full Cost Breakdown

Cost Category	Low	Medium	High	Notes
Facility Lease & Build-Out	$18,400	$73,600	$230,000	Daycare facilities must meet strict state square footage requirements per child (35-50 sq ft indoor + 75 sq ft outdoor).
Playground Equipment	$4,600	$18,400	$55,200	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	$9,200	$27,600	$73,600	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	$920	$4,600	$13,800	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	$4,600	$18,400	$55,200	Most states require lead teachers to have CDA (Child Development Associate) credentials or a degree in early childhood education.
Insurance	$2,760	$9,200	$27,600	Abuse/neglect liability insurance is mandatory for childcare centers and is the most critical add-on; premiums scale with enrollment capacity.
Childcare Management Software	$460	$1,840	$5,520	Brightwheel, Procare, and HiMama are popular daycare management platforms billed on a monthly per-child subscription model.
Marketing & Community Outreach	$920	$4,600	$13,800	Word of mouth from satisfied parents is the most effective marketing. Pediatrician referrals are also valuable.
Working Capital Reserve	$13,800	$36,800	$110,400	Daycares typically fill to a majority of capacity in year 1 and reach near-full occupancy by year 3.
Total Startup Cost	$55,660	$195,040	$585,120	Required costs only

Licenses & Permits in Tennessee

General Business License

Tennessee requires most businesses to obtain a Standard Business License or Minimal Activity License through the Tennessee Department of Revenue. A Standard Business License is required for businesses with annual gross receipts over a state-defined annual revenue threshold while a Minimal Activity License covers businesses with receipts in a smaller state-defined revenue band. Businesses must also register their entity with the Tennessee Secretary of State. Tennessee has no state income tax on wages, which is a significant business advantage. Individual cities and counties also issue local business licenses.

Industry-Specific Licenses

Food Service Establishment Permit — Tennessee Department of Health — Division of Environmental Health
Cost: Varies — contact agency • Renewal: Annual
Contractor License — Tennessee Board for Licensing Contractors
Cost: Varies — contact agency • Renewal: Annual
Cosmetology Salon License — Tennessee Board of Cosmetology and Barber Examiners
Cost: Varies — contact agency • Renewal: Annual
Real Estate Broker License — Tennessee Real Estate Commission
Cost: Varies — contact agency • Renewal: Annual
Child Care Agency License — Tennessee Department of Human Services — Child Care Services
Cost: Varies — contact agency • Renewal: Annual
Wine and Beer License — Tennessee Alcoholic Beverage Commission
Cost: Varies — contact agency • Renewal: Annual
Talent Agency License — Tennessee Department of Commerce and Insurance
Cost: Varies — contact agency • Renewal: Annual
Medical Practice License — Tennessee Board of Medical Examiners
Cost: Varies — contact agency • Renewal: Annual

Home-Based Business Rules

Tennessee municipalities regulate home-based businesses through local zoning ordinances. Nashville-Davidson County allows home occupations in residential zones with restrictions on customer visits, commercial signage, and non-resident employees. Tennessee's many rural communities are generally very accommodating of home-based businesses. Tennessee's cottage food law, with its comparatively high annual sales cap, is particularly supportive of home-based food businesses.

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 Tennessee Compares to Neighboring States

Tennessee is one of the more affordable states for launching a Daycare Center, with a cost-of-living index of 92.1 (national average is 100). Compared to neighboring Virginia ($192,600 median startup cost), Tennessee offers lower costs for a Daycare Center.

State	Est. Cost	LLC Fee
Tennessee (current)	$165,600	$300
Virginia	$192,600	$100
North Carolina	$172,800	$125
Georgia	$169,200	$100
Alabama	$145,800	$200
Mississippi	$138,600	$50
Arkansas	$145,800	$45
Missouri	$149,400	$50
Kentucky	$151,200	$40

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 Tennessee childcare facility license from the Tennessee Department of Children and Family Services before accepting children
2
Register your Daycare Center as an LLC with the Tennessee Secretary of State ($300 filing fee)
3
Pass the Tennessee fire marshal inspection — exits, smoke detectors, extinguishers, and evacuation plans are required
4
Complete criminal background checks on ALL staff per Tennessee childcare licensing requirements
5
Meet Tennessee 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 Tennessee.