How to Start a Childcare Business in Australia: A Step-by-Step Expert Guide

Starting a childcare business in Australia can be a highly rewarding venture, but it’s not without its challenges. Many aspiring providers feel overwhelmed by the complex regulatory environment, licensing requirements, and operational considerations involved in launching a successful business.

That said, demand for childcare services is steadily increasing, so there’s significant potential for entrepreneurs willing to navigate the legal and business landscape. 

If you’re one of them, then this guide is for you! We will cover everything from understanding industry options and complying with regulations to funding, staffing, marketing, and managing risks.

By the end of this article, you’ll have a clear roadmap for transforming your vision into a thriving childcare business in Australia.

Understanding the childcare industry in Australia

The Australian childcare sector includes several key service types, each catering to different needs. These also fall under different regulatory frameworks, so it’s important to determine the kind of services you’ll provide from the start. 

• Long day care: This is the most common form of childcare for working families, providing full-day care (typically from 7 am to 6 pm) for children from birth to school age. It’s regulated under the National Quality Framework (NQF).
• Family daycare: Approved educators can run this type of business from their own home. Family daycare offers a flexible, home-based option. It caters mainly to children from birth to five years old.
• Outside School Hours Care (OSHC): These services provide care before and after school and during school holidays for school-age children.
• Occasional care: Flexible, short-term care for children, often used by parents needing occasional respite or trial periods.
• Early learning centres: These are highly regulated, structured centres that provide early childhood education aligned with the Australian Early Development Census.

It’s important to note that long day care and early learning centres aren’t quite the same. The former provides extended hours of care, usually targeting working families. Meanwhile, early learning centres deliver early learning programs that follow very specific national regulations and standards. 

Demand factors

According to the Australian Bureau of Statistics (ABS), the demand for childcare services continues to grow. There are several reasons for this. 

• Dual-income families: More parents working full-time increases reliance on regulated childcare.
• Government subsidies: The Child Care Subsidy (CCS) makes childcare more affordable for families, encouraging higher utilisation.
• Population growth and urbanisation: Expansion in major cities fuels demand for diverse childcare options.

As a result of these social and regulatory changes, parents are seeking childcare providers. As such, if you love kids, have a vocation for care-taking, and possess the correct qualifications, it’s a great time to get into this growing business space. 

Legal and regulatory requirements

When starting any business, you should always check if you require any licences or permits. Childcare businesses in particular are highly regulated at several levels. You’ll need to comply and get approvals from the NQF, along with specific regulations at the local and state levels. 

At the national level, you have the NQF, which sets the foundation for quality and safety in Australian early childhood services. Administered by the Australian Children’s Education & Care Quality Authority (ACECQA), it comprises the National Quality Standards (NQS), which outline expectations around educational program, health and safety, staffing, and relationships.

Each state or territory government also has its own regulatory authority responsible for implementing childcare laws and licensing requirements. 

The entire approval process typically involves:

• Provider approval: Provider approval enables applicants to operate one or more services and is recognised nationally. You must demonstrate suitability by providing criminal history checks, evidence of financial capacity, and proof of a compliant management team. In most states, this process takes around 60 days after lodgement of a complete application.
• Service approval: Once you’ve secured your provider approval, you must apply for a separate service approval for each service location. This application reviews your premises, policies, nominated supervisors, legal right to occupy, site safety (including soil and contamination assessments), and development consents. Service Approvals often require a pre-approval inspection and are processed within approximately 90 days, depending on the completeness of the documentation and state protocols.
• Local council approvals: For new premises or home-based care, council building permits, development consent, and adherence to local planning and zoning regulations may also be necessary.

Every state authority can set extra conditions on approvals, which may include insurance minimums, child safety standards, or timelines for launching the service. You must display all approvals publicly at your service premises, and ongoing compliance is monitored through periodic inspections and audits.

Ongoing compliance requirements

Childcare providers must adhere to strict compliance and staff requirements, including:

• Working With Children Checks (WWCC) and national police checks for all educators, managers, and volunteers.
• Qualification checks: All educators must hold minimum qualifications (Certificate III or higher) relevant to their role and the age group supervised.
• The NQF and state law prescribe staff-to-child ratios, which are critical for both licensing and insurance.
• Documented health, safety, and educational policies tailored to the service model and local law.

Here is an overview of all compliance requirements for childcare businesses. 

Level	Approval Type	Responsible Authority/Body	What’s Required	Time to process	Notes
National	National Quality Framework (NQF)	ACECQA & Federal Government	Meet National Quality Standard (NQS): Educational program, health & safety, staffing, relationships	Ongoing/continuous	All services must comply with the NQF for legal operation
National	Provider Approval	State/Territory Regulatory Authorities; ACECQA endorsement	Suitability checks, business management, financial capacity, and criminal history checks	~60 days (after application submission)	Required to operate or be involved in any childcare business
State/Territory	Service Approval	State/Territory Departments of Education or Children (e.g., NSW Dept of Education, VIC Dept of Education)	Site safety, nominated supervisor, documented policies, occupancy rights, compliance with planning/zoning	~90 days (varies by state)	Separate application per premises; pre-approval inspection is often required
Local Government/Council	Development Consent, Zoning, Building Permits	Local Council	Comply with building codes, planning schemes, neighbourhood amenity, health & fire safety.	Varies: 2–12 weeks	May be required before service approval. Essential for new builds or home-based care
All Levels	Ongoing Compliance	State, Local, and National Authorities	Working With Children Checks (WWCC), police checks, educator qualifications, ratios, insurance, documented policies	Ongoing/annual renewals as required	Subject to inspection and renewal; penalties for non-compliance

Business structure and registration

Besides regulations specific to childcare, you’ll still need to adhere to legal frameworks set out for all businesses operating in Australia. For starters, you’ll need to decide on your business structure. Options include:

• Sole Trader: Simple to set up, full control, but personal liability applies.
• Partnership: Shared responsibility and assets.
• Company: A Separate legal entity that offers liability protection but involves more complex registration.

To decide which option is right for you, consider aspects like the scope of your business, the personal liability you’re willing to take on, and how much you expect to grow over time. 

Once you have determined your business structure, begin with key registrations. 

• ABN (Australian Business Number): Necessary for tax purposes for all types of businesses. 
• ACN (Australian Company Number): Needed if operating as a company.
• GST Registration: Required if your turnover exceeds AUD 75,000 annually.

Lawpath can help you register your business and ensure compliance with registration and ongoing obligations.

Financial planning and childcare business costs

Sound financial planning is essential when launching a childcare business in Australia. 

Your main startup costs will typically include:

• Leasing or purchasing property
• Obtaining the necessary licences, paying for insurance
• Hiring and training staff
• Fitting out your centre with equipment
• Stocking up on supplies
• Marketing and compliance
• Insurance 

In some cases, buying land or constructing a new building can be your largest single expense, but leasing also represents a substantial annual outlay, particularly in metropolitan areas.

Once operational, ongoing expenses revolve around staff wages, which are your biggest recurring cost. You’ll also need to consider: 

• Utilities
• Regular maintenance
• Marketing and administration
• Replenishing curriculum materials and supplies
• Regulatory compliance
• Insurance renewals
• Ongoing staff development 

While this feels like a lot, remember that you can claim most expenses from running your business as tax deductions. This can significantly lower your tax bill — just make sure that you are properly keeping records to declare these expenses. 

Cost Breakdown Table

Cost Type	Approximate Range
Property	AUD 200,000 – 1,000,000+ (purchase or lease)
Licensing & registration	AUD 2,000 – 10,000
Staff wages	AUD 50,000 – 80,000 per staff member annually
Insurance	AUD 2,000 – 10,000 annually
Fit-out & equipment	AUD 20,000 – 100,000+
Supplies	AUD 1,000 – 10,000 annually

Childcare business revenue

Remember that you’ll be balancing these costs against projected income streams. Revenue for your childcare business will mostly come from parent fees. You can set these per hour, per day, or as a fixed fee structure. You can also generate additional income through special programs, holiday care, or extra services that meet community needs. 

Government support, such as the Child Care Subsidy (CCS), plays a major role in boosting affordability for parents and maintaining steady enrolment. Consider the CCS available in your region when planning your cost structure. 

Staffing and qualifications

You and any staff you hire will need the appropriate qualifications to work with children. Here are some key qualifications to look out for: 

• Early Childhood Teachers (ECTs): Must hold an approved Diploma or Bachelor of Early Childhood Education.
• Assistants: Often require a Cert III qualification.

You’ll also need to make sure that you have the right ratio of staff to children. These vary by age but are generally 1:4 for infants and 1:11 for preschoolers.

As an employer, you’ll also have specific obligations. You must: 

• Follow Fair Work regulations for wages and contracts.
• Conduct WWCC and police checks.
• Sign legally-binding employment agreements. 
• Follow payroll management and taxation compliance regulations. 

Policies, procedures, and compliance

Ensuring robust policies and procedures is fundamental to running a compliant and trusted childcare business.

• Health and safety policies: Have emergency response plans, first aid procedures, child protection strategies, and protocols in place to ensure the safety and well-being of children at all times.
• Food handling procedures: Prepare guidelines for safe food preparation, storage, and allergy management to prevent food-related illnesses and protect children with special dietary needs.
• Record-keeping requirements: Maintain confidential and accurate records, including children’s files, daily attendance logs, and incident reports, to comply with legal and regulatory obligations.
• Staffing and conduct policies: Elaborate clear codes of conduct that define staff responsibilities, behaviour expectations, and protocols for supervision, ensuring a professional and safe environment.
• Governance and management protocols: Document procedures for enrolment, orientation, fee payment, complaints handling, and confidentiality to ensure smooth operation and transparency.
• Excursion and transport policies: Detail the rules and risk assessments for taking children offsite, including supervision ratios and parental consent requirements.

Lawpath offers hundreds of free and low-cost templates to set up your business’s legal frameworks and protect you, your staff, and the children you care for. 

Marketing your childcare or daycare business

Now that you’ve set up your legal details, you need to start thinking about what type of customer you are targeting. For a daycare business, your target market will usually be young working families who are looking for childcare. 

You should consider how you are going to reach these parents. For example, a digital marketing strategy is crucial, such as setting up advertisements on Google and Facebook. Another simple and effective approach to reaching new customers is through word of mouth and by building community trust. 

Parental forums indicate that parents value safety, qualified staff, educational programs, and flexible hours when choosing a childcare provider. Make sure that you highlight these details in your online and offline advertising. 

Challenges and risks

While opportunities abound, challenges such as staffing shortages, compliance burdens, and intense competition exist. Recent incidents highlight the importance of maintaining high safety and care standards to avoid penalties and licence loss.

Non-compliance or safety failures can have severe consequences. As such, the most important part of starting your daycare business is to adopt rigorous safety protocols, proper staff training, and transparent operations. These will help navigate these risks while building a reputable company.

Checklist for starting a childcare business

•  Conduct market research.
•  Choose your business structure.
•  Register your business (ABN/ACN/GST).
•  Obtain provider and service approval from ACECQA.
•  Find suitable property or premises.
•  Develop policies and safety procedures.
•  Hire qualified staff, ensuring ratios.
•  Set up financial systems.
•  Prepare marketing materials.
•  Launch your childcare service.

FAQ

What is the difference between childcare, daycare, and early childhood centres?

Childcare centres focus mainly on supervising and caring for children, while daycare usually means long-day care facilities offering full-day supervision. Early childhood centres provide structured educational programs focused on child development and learning.

Do I need a licence to open a daycare in Australia?

Yes, you must obtain service approval and meet licensing requirements under the National Quality Framework to legally operate a daycare or childcare service.

Can I run a family daycare from home?

Absolutely, family daycare is a popular option where an approved educator cares for a small group of children in their own home, following strict regulatory standards.

Starting your childcare business with Lawpath

Launching a childcare business involves careful attention to compliance, choosing the right structure, obtaining licences, and effective marketing. Lawpath supports your journey with expert services for ABN/ACN registration, legal document preparation, compliance templates, and more.

Get started with Lawpath today to navigate the complexities and build a trusted, successful childcare business.