How to Start a Child Care Business in Vermont: Registered Home (6 Children Under Six) Versus Licensed Program, and the 0.44% Employer Contribution

Vermont's child care sector is already well established. The 2023 Census counted 272 child day care employers with 2,780 employees, along with 955 nonemployers. Before you buy supplies, sign a lease, or list your home with a parent network, answer the question that determines every later step: will you care for children in your own private home, and how many will you care for?

This guide explains how to start a child care business in Vermont. It covers the difference between a registered family child care home and a licensed program, the business registration and tax steps, and the Child Care Contribution that employers and self-employed owners must pay. It is informational only and is not legal or tax advice.

What You Need Before You Start

Gather these items before your first filing:

• Your legal name, your home or proposed facility address, and a realistic plan for the number and ages of children you will serve
• A deed or lease for the building, plus written permission from the owner or landlord if you rent
• The business name you want, checked in the Secretary of State's business search
• If you form an LLC, a Vermont registered agent: either an individual Vermont resident or a business organization with a place of business in Vermont and authority to do business here (11 V.S.A. 1655)
• A federal Employer Identification Number from the IRS, needed for payroll and most tax filings
• The year your building was constructed, because buildings built before 1978 trigger lead-safety rules
• A staffing plan, because employing anyone brings in withholding and the Child Care Contribution
• A calendar for annual report and quarterly tax deadlines

Step 1: Choose Between a Registered Home and a Licensed Program

This decision drives everything else. Vermont's Child Development Division regulates child care under 33 V.S.A. 3502, and the category you fall into depends on where you operate and how many children you serve.

A registered family child care home is operated in the caregiver's own private home. It may care for no more than six children under age six, plus up to four school-age children. Of the children under six, only two may be under age two. Anything operated outside a private home, or larger than a registered home allows, must be licensed.

Factor	Registered family child care home	Licensed child care program
Location	Caregiver's own private home	Outside a private home, or larger than a registered home allows
Capacity	Up to six children under age six, plus up to four school-age children, with no more than two under age two	Set through the DCF licensing process
Zoning	Six or fewer children: permitted single-family residential use. Up to six full-time and four part-time children: permitted, but may need site plan approval	Larger facilities may be subject to all municipal bylaws

A person licensed for a facility cannot also run a registered home (33 V.S.A. 3502(c)). If you expect to grow past a home setting or want a commercial space, plan for licensing from the start.

Some arrangements fall outside both categories. Caring for the children of no more than two families other than your own is exempt. Count families carefully, because caring for children from a third family takes you out of the exemption.

Step 2: Confirm Zoning With Your Town or City

Zoning is local in Vermont. Towns, cities and villages set their own bylaws, and those bylaws differ widely. Vermont's 14 counties have no licensing or zoning role. Your town handles land use. It does not issue your child care registration, which comes from the state.

Under 24 V.S.A. 4412(5), a family child care home serving six or fewer children is a permitted single-family residential use. A home serving up to six full-time and four part-time children is a permitted use that may need site plan approval. Larger facilities may be subject to all municipal bylaws.

Call the zoning administrator before you sign a lease or buy equipment. Ask whether your planned use is permitted in your zone, whether site plan approval applies, and whether parking, signage or hours restrictions apply. Get the answers in writing.

Step 3: Choose Your Entity and File With the Secretary of State

Vermont has no general state business license. Your core state filing is with the Secretary of State's Business Services Division, and child care licenses or registrations are added on top of it. Many home-based providers operate as sole proprietors and skip an entity filing. An LLC or corporation separates business obligations from your personal assets, which matters once you employ staff or sign a facility lease, though it does not protect you from every liability. Discuss the choice with a Vermont attorney or CPA.

If you form an LLC:

• File Articles of Organization. The filing fee is $155. Online filing through the Online Business Service Center is normally processed in less than one business day. Mail filings take 7 to 10 business days. The fee schedule lists no expedited processing fee, so online filing is the fast path.
• Make the name end in a required designator: Limited Liability Company, LLC, Ltd. Liability Co., Limited Company, LC or Ltd. Co. You can reserve a name for $25 for 120 days, and the reservation is renewable.
• Calendar the annual report. It costs $45 and is due by March 31 for a calendar-year LLC.
• Understand the consequence of a missed report. Vermont does not use administrative dissolution, but a missed annual report terminates the entity. Reinstatement is possible, but it is cleanup you want to avoid.
• Check the minimum entity tax. An LLC taxed as a partnership or S corporation owes a $250 minimum annual entity tax, paid with Form BI-471 or BI-476. A disregarded single-member LLC does not owe it.

If you form a corporation: the Articles of Incorporation carry the same $155 filing fee. The annual report costs $60 and is due by March 15 for a calendar-year corporation.

Step 4: Open Your Tax Accounts

Register for a business tax account with the Department of Taxes if you collect sales or meals tax, or if you withhold from employee wages. Start at tax.vermont.gov/business/register.

Tuition is a service, and Vermont's 6% sales tax reaches goods and a short list of items, with almost no services taxed. Meals are different. Prepared food eaten on the spot falls under the separate 9% meals and rooms tax. If you sell meals or food separately from tuition, confirm with the Department of Taxes whether that tax applies to you. Confirm the tuition treatment with the department as well rather than relying on this summary.

Step 5: Understand the 0.44% Child Care Contribution

Vermont's Child Care Contribution, created by Act 76 of 2023, applies from July 1, 2024. Here is how it works for a child care business:

• Employers owe 0.44% of Vermont wages.
• Employers may withhold up to 0.11% from employees' wages to recover part of the cost.
• Self-employed owners owe 0.11% of net self-employment income.
• Employers report the contribution quarterly on Form WHT-436.

Here is an example. If you pay one employee $40,000 in Vermont wages in a year, the 0.44% contribution totals $176. You may withhold up to $44 of that from the employee's pay, which leaves at least $132 as your cost. Before your first quarterly filing, confirm the wage base and withholding mechanics with the Department of Taxes, and make sure your payroll system can produce the figures WHT-436 requires.

Step 6: Meet Health, Safety and Lead Requirements

DCF sets the health, safety, training and background check requirements for your category. Those requirements change, so ask the licensor on duty for the current checklist rather than building one from secondhand sources.

Lead is a separate track. If your building was constructed before 1978, child care facilities must follow RRPM lead-safe practices. If you are a provider working on your own facility, you can use a free Uncompensated Child Care Operator certificate from the Health Department. The lead-in-water testing law in 18 V.S.A. chapter 24A also applies. Confirm with the Health Department which steps apply to your building and what testing schedule you must follow.

Step 7: Apply Through DCF

Start with the steps and forms at dcf.vermont.gov/cdd/providers/become. For questions, call the Licensor on Duty at 800-649-2642, option 3, or email [email protected].

Ask DCF for the current licensing or registration fee and the processing timeline before you set an opening date. A fee schedule for child care licensing and registration was not located in the statute or on DCF's pages when this guide was researched, so treat any number you have seen elsewhere as unconfirmed until DCF provides it.

Step 8: Build a Compliance Calendar

Once you open, most of your deadlines recur. Put these on one calendar:

1. The annual report: by March 31 for a calendar-year LLC, or by March 15 for a calendar-year corporation.
2. Quarterly Child Care Contribution filings on Form WHT-436, if you employ anyone.
3. Withholding and tax filings for any Department of Taxes accounts you hold, on the schedule assigned to you.
4. The $250 minimum entity tax with Form BI-471 or BI-476, if it applies to your entity.
5. Any DCF renewal or update requirements, which you should confirm with the licensor on duty.

Common Mistakes to Avoid

• Signing a lease before zoning is confirmed. A use that looks permitted can still need site plan approval.
• Assuming your town issues your child care registration. Zoning is local. Registration runs through DCF.
• Running a registered home while holding a facility license. The law does not allow both.
• Miscounting the exemption. The exemption covers children from no more than two families other than your own.
• Forgetting the Child Care Contribution. The 0.44% obligation applies once you pay Vermont wages, so do not discover it at your first quarterly filing.
• Overlooking lead rules in an older building. Pre-1978 buildings trigger RRPM requirements.
• Missing the annual report. A missed filing terminates an LLC.
• Using a name without the required designator. An LLC name must end in an approved designator.

What to Expect

Following these steps in order may help you avoid rework, such as a zoning problem found after a lease is signed. This process is not designed to guarantee any approval date, licensing outcome or enrollment level. Processing times and requirements can vary by town, building and agency workload, and enrollment depends on local demand and how you run your program. Your results will depend on your own circumstances.

Disclaimer and Next Steps

This article is informational only. It is not legal, tax or financial advice, and reading it does not create an attorney-client or CPA-client relationship. Rules and agency practices change, so confirm current requirements directly with the Department for Children and Families, the Secretary of State, the Department of Taxes and your town. For complex situations, such as multiple owners, a commercial lease, employee payroll or a building with lead issues, consult a qualified Vermont attorney or CPA. The Vermont Small Business Development Center also provides small business advising.