Establishing Your Childcare Business in Montgomery County

You’re no novice to caring for kids. Healthy snacks, educational games and nap time routines — you’ve got them all down. But now you’re ready to take the next step. You want to open a childcare business and the timing finally feels right.
Maryland Women’s Business Center (MWBC) supports childcare businesses in the Capital Region (Montgomery County, Frederick County and Prince George’s County) by providing tools, information and business-related classes. In addition, MWBC provides direct support to programs through the Montgomery County Child Care Resources & Referral Center.
To help you get started, we sat down with Martha Jimenez, a Business Counselor at Maryland Women’s Business Center, to answer questions on how to open a childcare business in Montgomery County. 

What steps should I take to start a childcare business in Montgomery County?
You’ll need to connect with Montgomery County Childcare Resource Center in order to get the licensing and training to become a Childcare Center Owner. After completing the training and requirements to receive your license, it’s time to begin getting your business set-up. We recommend finding a mentor with strong knowledge about the childcare business such as the specialists at Maryland Women’s Business Center. They’ll help you establish your business name, the business’ entity (such as a LLC, Sole Proprietorship, or Corporation),  a business tax ID, and assist with getting  liability insurance. Once you have these, you’ll need to create a business plan for your childcare business. 

I need to build my budget for my childcare business. Can you help?
Sure! MWBC has great experience assisting Family Child Care Providers and Child Care Center in all financial aspects, including Budgeting. Make sure to check out our upcoming training events, and make an appointment to discuss your situation in particular.

As a childcare provider, do I need to pay my Social Security?
Yes, you are responsible for your social security taxes.

As a Childcare provider, do I need to pay my personal taxes separately from those of my business?
This depends on many factors including your business structure. One of our Counselors can provide smart advice and ways to report your taxes, after a deep analysis of your current situation.

What kind of insurance should a childcare business carry in order to be in compliance?
You are required to carry at least a General Liability Insurance. By law, if you have employees, you must also carry Workers Compensation Insurance.  You should talk with your insurance broker about other available products. 

As a childcare provider, do I need to develop a business plan?
Yes, you should. A business plan is always going to be the best GPS to manage a business in the right direction to success. It will also help you prepare for the future and position yourself for success.

Growing a Childcare Business

I am struggling with accounting for my childcare business. I don’t have a business structure. Can Maryland Women’s Business Center assist?
Yes, Maryland Women’s Business Center has experience in all business matters, and we are happy to help with your structure. We suggest reaching out to your accountant or attorney, or get in touch with MWBC and we’ll help you get started with accounting and bookkeeping. 

How can I grow my childcare business?
There are many ways to grow your childcare business. Ask for a free Business Counseling session with Maryland Women’s Business Center – we’ll do an assessment and help you tailor a marketing plan based on your own experience.

How do I write a marketing plan? Can Maryland Women’s Business Center help?
Yes, Maryland Women’s Business Center can provide updated information and all the resources you need to write a strong marketing plan. Visit to see a list of upcoming events that will help cover the basics of writing a marketing plan, or if you have one started and you’re looking for feedback, contact a specialist and we can help.

Managing Your Staff at a Childcare Business

What is the difference between independent contractors and employees?
We suggest visiting the IRS website to learn about it, and contact one of our Business Counselors to clarify your understanding. Visit: 

What’s the difference between a 1099 and a W2?
When you offer employees a W-2, your business becomes responsible for collecting and filing their withholdings and Social Security taxes. A 1099 is the form that you should provide for independent contractors to report their own withholdings and taxes to the Internal Revenue Service (IRS).

How can I better manage my childcare staff?
It will depend on your business structure and your Human Resources composition. One of the specialists from our Childcare Business Development Program would be happy to talk through your situation with you.

Do I need payroll?
Whether you need a formal payroll will depend on your business model. If you have an accountant, they will be able to advise you based on your current structure. Or contact a specialist for analysis and recommendations about payroll. 

Do I need to offer workers’ compensation?
In the state of Maryland, if you have at least one employee, by law you must carry Workers’ Compensation Insurance.

If you’re ready to take that first step now that you know how to start a childcare service in Maryland, contact us to learn how we can be a resource partner for you as you grow your business.