How to Start a Daycare in Arizona: ADHS Child Care Licence, Ratios and Costs

If you plan to open a daycare in Arizona, the state license sets your timeline. A child care facility may not receive children until it is licensed (A.R.S. 36-882), and the Arizona Department of Health Services (ADHS) inspects the space and standards of care before it issues the initial license. Your opening date follows that inspection, not the other way around.

This guide covers how to start a daycare in Arizona in the order that works in practice: choose the license type, form the business, handle the state and city filings, plan staffing around the ratio rules, then apply to ADHS. It separates the costs you can confirm today from the ones you must check directly with the agency. Arizona has no general state business license, so you will complete several separate filings, and each one has its own rules and processing time.

Disclaimer: This is informational content, not legal or tax advice. Child care licensing, entity formation and tax treatment depend on your specific facts. Talk to a qualified Arizona attorney and a CPA before you sign a lease or commit funds.

What you need before you file

Collect these items before you submit anything. Filing out of order is a common reason first applications stall.

• A license category: child care center or child care group home. ADHS licenses both under A.R.S. 36-881 to 36-897 and Arizona Administrative Code Title 9, Chapter 5.
• A business name that meets Arizona entity naming rules, and a chosen entity type: limited liability company (LLC) or corporation.
• A statutory agent with a permanent Arizona address who will accept the appointment in writing on Statutory Agent Acceptance form M002.
• A commercial site your city allows for child care, with a floor plan you can walk an inspector through.
• A staffing plan showing each caregiver's qualifications and training records, sized to the ratios in Step 5.
• A budget that covers filing fees, the ADHS licensing fee, build-out, insurance and several months of operating costs before enrollment fills.

Step 1: Choose your license type and read the rules

ADHS Bureau of Child Care Licensing licenses child care centers and child care group homes. The governing law sits in A.R.S. 36-881 to 36-897 and A.A.C. Title 9, Chapter 5. Read the rules on staff qualifications and training (R9-5-401 and R9-5-403) and on staff-to-child ratios (R9-5-404) before you finalize a floor plan or a budget. Those rules determine how many rooms you can use and how many people you must pay.

If you are considering a small, home-based operation, confirm with ADHS which category applies before you buy equipment or sign a lease. The category determines which rules you follow, and changing it after a build-out is expensive.

Step 2: Form the entity with the Arizona Corporation Commission

The Arizona Corporation Commission, Corporations Division, files LLC and corporation formation documents. An LLC is the structure most owners compare first. Arizona levies no LLC franchise tax and no LLC annual report fee, and income passes through to the members, who pay the flat 2.5 percent individual income tax. Whether that suits your situation is a question for your CPA.

For an LLC, file Articles of Organization (Form L010, instructions L010i). The filing fee is $50. Expedited review adds $35, making an expedited Articles of Organization $85 total. Separate accelerated service tiers sit on top of the filing fee: $100 for next day (received by 5pm), $200 for same day (received by 10am) and $400 for two-hour service (available 8am to 3pm). Accelerated service guarantees an examination within the stated window, not an approval, so plan for a possible correction.

Corporations file Articles of Incorporation for $60, submitted with a Certificate of Disclosure. For-profit corporations must file an annual report each year at $45. Nonprofit corporations pay $10 instead.

The Corporations Division processing times sheet, posted as of December 29, 2025, shows about 9 to 11 business days for regular LLC processing and 2 to 4 business days for expedited processing. Check the current sheet before you set an opening date, because processing times change.

Naming rules

Under A.R.S. 29-3112, an LLC name must include 'limited liability company' or 'limited company', or one of the abbreviations L.L.C., L.C., LLC or LC. It may not include 'association', 'corporation', 'incorporated' or an abbreviation of those words. The name must be distinguishable from existing entity names, reserved names and registered trade names on the record. Names with banking or trust terms, such as bank, credit union, deposit, savings association or trust, need prior written approval from the Arizona Department of Financial Institutions. A name reservation costs $10 and holds the name for 120 days.

Publication notice

An LLC must publish notice unless its statutory agent's county is Maricopa or Pima. Publication costs vary by newspaper and county and are not included in the fees listed in this guide. Confirm the current publication rules and cost with the Corporation Commission before you file.

You can file online through the Arizona Business Center at https://arizonabusinesscenter.azcc.gov/. Check name availability with the business search at https://arizonabusinesscenter.azcc.gov/businesssearch, and find current forms on the Commission's corporations page at https://azcc.gov/corporations.

Step 3: Appoint a statutory agent

Arizona calls this role a statutory agent. The agent accepts service of process and receives official notices from the Commission. An individual agent must be a permanent, full-time Arizona resident with a permanent, full-time physical or street address in Arizona, and any mailing address must also be in Arizona. The agent can be an entity, including a foreign corporation or LLC authorized to transact business in Arizona. An LLC cannot serve as its own statutory agent. The agent must accept the appointment in writing on Form M002.

Keep the agent on record at all times. Under A.R.S. 29-3708, an entity without a statutory agent who has a valid address on record can face administrative dissolution, which is the last thing you want while a license application is pending. Changing the statutory agent or principal address costs $5 for an LLC.

Step 4: Handle trade names, state tax and city licensing

If you will operate under a name different from your entity's legal name, you can register a trade name with the Arizona Secretary of State, Business Services Division. Trade name registration is optional and is separate from the Corporation Commission filing. Check the current fee at https://azsos.gov/business/tntm.

Arizona has no general state business license. The main state filing for most businesses is the Transaction Privilege Tax (TPT) license from the Arizona Department of Revenue, which costs $12 per location. Whether your daycare must hold a TPT license depends on the taxable activities it carries on. Confirm that with the Department of Revenue at https://azdor.gov/business/transaction-privilege-tax/tpt-license before you assume either way.

Counties issue no general business license. Cities and towns commonly require their own business license or TPT license on top of the state filing, and zoning rules for child care sit at the city level too. Check with your city before you sign a lease. If your build-out involves licensed trades, the Registrar of Contractors licenses contractors. Confirm which work requires a licensed contractor with the Registrar before you sign a construction contract.

Step 5: Plan staffing around the ratio rules

ADHS sets the minimum staff-to-children ratios in A.A.C. R9-5-404. The ratio is based on the youngest child in the group, so a mixed-age room is staffed to its youngest child.

Age of youngest child in the group	Staff to children
Infants	1:5
1-year-olds	1:6
2-year-olds	1:8
3-year-olds	1:13
4-year-olds	1:15
School-age and 5-year-olds	1:20

Two examples show how this works. A room with three infants and four 2-year-olds is staffed at the infant ratio, because the youngest child is an infant. Seven children at 1:5 require two caregivers. A room with six 3-year-olds falls under a 1:13 ratio, which one caregiver could cover on the ratio alone. But when six or more children are present, the rule also requires at least a director or designee plus one additional staff member. In that case, plan for two staff.

Build your schedule around the moments with the lowest staffing, not the daily average. Drop-off, nap time and room transitions can change which children are present, so include a staffing buffer and confirm the exact counting rules with ADHS.

Step 6: Qualify your staff and prepare the space

Staff qualifications and training are set in R9-5-401 and R9-5-403. Collect each person's records before you hire, including education, training and any clearances the rules require. Confirm the requirements for the director, for caregivers and for any aides with ADHS, because they can differ by role, and your staffing plan should reflect each one.

ADHS inspects the space and the standards of care before it issues the initial license, so design for the inspection, not just for appearance. Ask ADHS for the current space requirements for your license category in writing before you sign a lease. A site that fails inspection after build-out costs far more to fix than a site you vetted first.

Step 7: Apply to ADHS for the license

A facility may not receive children until it is licensed (A.R.S. 36-882). Start the ADHS application only after your entity, site and staffing plan are in place, because the inspection checks the actual space and the staff you will use. Expect that the inspection may produce corrections, and build a cushion into your opening date.

ADHS sets licensing fees by rule, based on facility capacity (R9-5-206). ADHS has also waived or discounted some fees using federal child care funds, and those waivers can change. Do not budget from a figure you remember. Find the current amount on the ADHS child care licensing fee page on the ADHS website, and confirm it against the license category and capacity you are applying for.

Step 8: Decide whether to enroll in DES Child Care Assistance

Child Care Assistance is a subsidy program run by the Arizona Department of Economic Security (DES). It is a separate enrollment from your ADHS license. Enrolling your facility to accept subsidy families is a DES process with its own requirements and timing, so ask DES directly about current steps. Do not count subsidy revenue in your first-year projections until DES confirms your enrollment.

Step 9: Keep the business in good standing

• Keep a statutory agent with a valid Arizona address on record at all times.
• If you formed a corporation, file the annual report in the anniversary month the Commission assigns. A corporation may request a written extension of up to six months, filed on or before the due date. LLCs file no annual report.
• File TPT returns if your activities make you liable for them, and renew any city business license on its schedule.
• Follow the renewal and inspection terms on your ADHS license, and keep staff qualification and training records current.

Costs at a glance

Item	Amount	Where to confirm
LLC Articles of Organization	$50	Corporation Commission
Expedited LLC review	$85 total ($35 added)	Corporation Commission
Accelerated service tiers	$100 next day, $200 same day, $400 two-hour	Corporation Commission
Name reservation	$10 for 120 days	Arizona Business Center
Corporation Articles of Incorporation	$60	Corporation Commission
Corporation annual report (for-profit)	$45 per year	Corporation Commission
Nonprofit corporation annual report	$10	Corporation Commission
Statutory agent or address change (LLC)	$5	Corporation Commission
Transaction Privilege Tax license	$12 per location, if required	Department of Revenue
Trade name registration	Check the current fee	Secretary of State
LLC publication notice	Check the current cost	Corporation Commission
ADHS child care licensing fee	Set by rule by capacity, check current amount	ADHS
City business license and zoning	Check with your city	City or town
DES Child Care Assistance enrollment	Check with DES	DES

The state filing fees above come from the Corporation Commission, Secretary of State and Department of Revenue. This guide does not state a settled figure for the ADHS licensing fee, city licensing, publication notice or DES enrollment, so confirm each with its agency. Your largest costs will likely be the space, the staff and the months of operating expenses before enrollment fills. The state does not set those amounts.

Common mistakes to avoid

• Signing a lease before confirming the license category and city zoning.
• Counting ratios on the oldest child instead of the youngest. Mixed-age rooms are staffed to their youngest child.
• Forgetting that the six-child rule adds a director or designee plus one additional staff member, even when the ratio alone looks covered.
• Taking enrollment deposits or promising start dates before the ADHS license is issued, since no children may be received until then.
• Choosing a name with banking or trust terms without written approval from the Department of Financial Institutions.
• Letting the statutory agent's address lapse, which can lead to administrative dissolution.
• Assuming an LLC files an annual report. LLCs do not. For-profit corporations do.
• Treating the state filings as the whole job and skipping the city business license and zoning check.

What to expect

A realistic plan separates the steps you control from the ones you do not. Entity filings may take about two weeks on regular processing and less on expedited processing, based on the Corporations Division sheet. The ADHS timeline depends on how quickly you meet the space and staffing requirements and how the inspection goes, so a firm opening date is hard to promise. Owners who plan for corrections and a slower opening usually avoid the cash strain of an early target that slips.

When to get professional help

Consider an Arizona attorney for the entity choice, the statutory agent arrangement and any lease. Consider a CPA for the LLC tax treatment and the TPT question. The Arizona Small Business Development Center Network at https://www.arizonasbdc.com/ offers business planning help. These are informational resources, and your situation needs qualified review before you commit money or sign documents.