How to Start a Daycare in Arkansas: License Fee $15, $50 or $100 by Capacity, Liability Insurance and Church-Exempt Status

If you want a daycare license in Arkansas, understand first that this is a child care licensing matter, not a general business license. Arkansas has no general state business license, and the Secretary of State does not issue business licenses. A child care center is licensed under the Child Care Facility Licensing Act (A.C.A. 20-78-201 et seq.). The annual license fee depends on the combined number of children on the premises, and your child care liability insurance must be in place before the license is approved.

This guide follows the order we would use: set your capacity, form your business, register with the state and your city, buy the required insurance, and apply for a provisional license. Treat every figure here as a starting point and confirm it with the agency named before you spend money.

Materials and information you need before you start

• A written capacity plan showing the most children you may have on the premises at one time
• A site address and confirmation that the building is zoned for child care, which you can get from your city or county planning office
• A proposed business name, searched on the Secretary of State business search
• A registered agent with a street address in Arkansas (a P.O. Box will not work)
• A federal Employer Identification Number, which the IRS issues free of charge
• An insurance quote for child care liability coverage at the limit your capacity requires
• A copy of the Minimum Licensing Requirements from the child care licensing unit
• A budget for filing fees, the first year license fee and a sales and use tax permit if you need one
• The licensing unit phone number: 501-682-8590

Step 1: Set your capacity and confirm your licensing category

Your capacity drives three things: your annual license fee, your liability insurance limit and the standards you must meet. Arkansas counts combined capacity on the premises, so count every child you could have in care at one time, not just the names on your enrollment list.

The Minimum Licensing Requirements set a tiered annual license fee: $15 for up to 17 children, $50 for 17 to 99 children, and $100 for 100 or more children. That schedule comes from a rule version effective in 2014, so ask the licensing unit whether the current schedule is the same. Also ask how the 17 child boundary is applied, because the first two bands share that number.

Decide now whether you are opening a child care center or a family home child care operation. Family home child care follows separate rules. Do not apply the center figures in this guide to a home operation until the licensing unit confirms them.

Step 2: Choose your legal entity and file with the Secretary of State

Many daycare owners choose an LLC or a corporation, though some operate as sole proprietors. Each structure has different filings.

• LLC: File the Certificate of Organization for Limited Liability Company (Form LL-01). The filing fee is $45 online or $50 on paper. The name must contain Limited Liability Company, Limited Company, or an abbreviation such as LLC, L.L.C., LC or L.C. Each year you must file the Annual LLC Franchise Tax Report with a flat $150 tax, due on or before May 1.
• Corporation: File Articles of Incorporation for Domestic For-Profit Corporation (Form DN-01). The filing fee is $45 online or $50 on paper. The Annual Corporation Franchise Tax Report is due on or before May 1, with a minimum tax of $150, or 0.3 percent of outstanding capital stock if that is greater. A corporation without authorized stock pays $300.
• Sole proprietor: You do not file with the Secretary of State. You record your business name with your county clerk.

Start by searching the name on the Secretary of State business search. The Secretary of State issues names that are distinguishable on its records, but issuing a name does not by itself give you an exclusive right to use it. If you need time to finish paperwork, you can reserve a name for 120 days for $22.50.

File online through the Corporations Online Filing System. The Secretary of State lists anticipated processing of 3 to 5 business days for all filings, whether mailed, dropped off or filed online. Its FAQ says most filings such as articles of incorporation are completed within two business days of receipt. In-person drop offs currently carry a 48 hour turnaround. The Secretary of State does not publish an expedited service or expedite fee for business entity filings.

Step 3: Appoint a registered agent

Every entity must appoint and keep a registered agent to accept legal papers and official notices. The agent must have a street address in Arkansas and must actually be located there. A P.O. Box is not acceptable, and an incomplete filing will be returned for correction. The agent can be an individual or a commercial registered agent that is registered with the Secretary of State and regulated under the Model Registered Agents Act of 2007. If you later change agents, that filing carries no fee.

Step 4: Register your trade name if it differs from your legal name

If you open as Sunny Days Learning Center but your LLC is named something else, you need a fictitious name filing. Corporations and LLCs file the Application for Fictitious Name with the Secretary of State for $22.50 online or $25 on paper. A domestic corporation must also file an approved form with the county clerk in the county where its registered office is located, unless that office is in Pulaski County. Sole proprietors record the name only with the county clerk. Each county sets its own recording fee, so confirm the amount with your clerk.

Step 5: Register for state tax and payroll

Most daycares have employees and collect money from families, so plan for these registrations:

• Sales and use tax permit: Costs $50 and is applied for through the Arkansas Taxpayer Access Point (ATAP) at the Department of Finance and Administration. You need one if you sell tangible personal property or taxable services. Whether your tuition or any item you sell is taxable is a question for the Department of Finance and Administration or a CPA. The state sales tax rate is 6.5 percent.
• Withholding: Register for employee withholding through ATAP.
• Unemployment insurance: Register with the Division of Reemployment.
• Income tax: The Department of Finance and Administration administers both corporate and personal income tax. Corporate income tax is graduated, with a 4.3 percent rate on net income over $11,000 for tax years beginning on or after January 1, 2024.

Step 6: Check your city business license

Arkansas has no county business license and no general state business license, but many cities impose their own license, privilege license or registry, and each uses a different base. Little Rock and North Little Rock charge a base amount plus an amount tied to employees. Bentonville runs a free registry, and Conway imposes none. Arkansas has 75 counties and 500 municipalities, so check with your city clerk even if your town is not on this list. Ask for the current schedule before you open.

Step 7: Confirm whether other agencies license part of your operation

The child care licensing unit handles your core license. Other activities may need separate approval. If you prepare meals on site, ask the Department of Health whether a food establishment license applies. Industry boards license trades such as contractors, electricians and HVAC technicians, so if you hire outside contractors to build out the space, confirm that those contractors hold the required licenses.

Step 8: Buy child care liability insurance

Act 778 of 2009 requires child care liability insurance before your application is approved. The required limits are:

• Capacity of 1 to 74 children: $500,000 per occurrence
• Capacity of 75 or more children: $1,000,000 per occurrence
• If you transport children in vehicles: $100,000 vehicle coverage

You must provide proof of coverage. Premiums vary by insurer, so request quotes from agents who write child care policies. Capacity is a real cost decision here: moving from 74 to 75 children doubles your required per occurrence limit. Some owners plan an enrollment ceiling below 75 for that reason, but that choice should also fit your staffing and facility.

Step 9: Call the licensing unit and confirm the current office and forms

Call the licensing unit at 501-682-8590 before you complete forms. The Minimum Licensing Requirements still carry an older Department of Human Services division name. Reporting in 2025 on the LEARNS Act said the licensing unit now sits in the Office of Early Childhood at the Arkansas Department of Education. Ask which office is responsible, which application forms are current, and whether the annual fee schedule has changed since the 2014 rule version. Also ask what background check and training steps apply to you and your staff.

Step 10: Submit your application and pay the first year fee

Your first license is provisional and can last up to 12 months. You must pay the first year license fee before the license is issued. Include your proof of insurance with the application. Expect the licensing unit to review your paperwork and your facility before the provisional license is issued, and confirm the exact sequence with the unit. Before the provisional period ends, ask what you must complete to move to a full license.

Step 11: Consider church-operated exempt status, if it applies

A child care center operated by a church can qualify for exempt status. The church must own the tax ID and be exempt from Arkansas state income tax. Exempt status changes the ownership and tax picture, not the standards. All the same standards apply, so treat the exemption as a question of ownership and tax status, not a shortcut. Confirm your church's tax status with the Department of Finance and Administration or a tax adviser before you plan your budget around it.

Step 12: Calendar your recurring deadlines

Put these dates on your calendar the day you open:

• May 1 each year: franchise tax report for your LLC or corporation (late filing adds a $25 penalty plus interest)
• Each year: the annual child care license fee for your capacity band
• Each policy term: renewal of your child care liability insurance and proof sent to the licensing unit
• Continuously: a registered agent with a qualifying Arkansas street address

Common mistakes to avoid

• Counting enrollment instead of capacity. The fee and insurance tiers use combined capacity on the premises, so a waitlist of spaces you plan to fill still counts.
• Using a P.O. Box as your registered agent. The filing will be returned, which delays your timeline.
• Choosing an LLC name without the required words. The name must contain Limited Liability Company, Limited Company or an approved abbreviation.
• Assuming no city license applies. Arkansas has no general state or county license, but many cities do.
• Applying the center rules to a home operation. Family home child care follows separate rules.
• Buying insurance after you apply. Proof is required before approval, so get the policy bound early.
• Missing the May 1 deadline. A late franchise tax report adds a $25 penalty plus interest.
• Relying on an outdated name or fee schedule. Confirm the current licensing office, forms and fee tiers with the licensing unit.

What to expect

Most owners find that the entity filing is the fastest step. The Secretary of State lists processing of 3 to 5 business days, and its FAQ says most filings are completed within two business days of receipt, so a filing submitted early in your planning may be finished well before you need it. The licensing review usually takes longer because it depends on your application completeness, your insurance proof and inspection scheduling, so ask the licensing unit for its current timeline. A provisional license may allow you to begin operating while you work toward a full license, but confirm the conditions in writing. Results can vary with your location, your capacity and how complete your file is when you submit it, so plan for a schedule with some slack.

Fees at a glance

Item	Amount	Where to confirm
LLC Certificate of Organization (Form LL-01)	$45 filing fee online, $50 paper	Secretary of State
Corporation Articles of Incorporation (Form DN-01)	$45 filing fee online, $50 paper	Secretary of State
Name reservation (120 days)	$22.50	Secretary of State
Fictitious name (trade name)	$22.50 online or $25 paper	Secretary of State
Annual LLC Franchise Tax Report	$150, due May 1	Secretary of State
Annual Corporation Franchise Tax Report	Minimum $150, or 0.3 percent of outstanding capital stock if greater, due May 1	Secretary of State
Sales and use tax permit (if required)	$50	Department of Finance and Administration through ATAP
Child care annual license fee, up to 17 children	$15	Licensing unit, 501-682-8590 (confirm current schedule)
Child care annual license fee, 17 to 99 children	$50	Licensing unit (confirm the 17 child boundary)
Child care annual license fee, 100 or more children	$100	Licensing unit (confirm current schedule)
Child care liability insurance, 1 to 74 children	$500,000 per occurrence	Your insurer
Child care liability insurance, 75 or more children	$1,000,000 per occurrence	Your insurer
Vehicle coverage if transporting children	$100,000	Your insurer

Official resources

• Arkansas Secretary of State, Business and Commercial Services Division
• Arkansas Department of Finance and Administration
• SBA Arkansas district office information
• Arkansas Small Business and Technology Development Center, which can help with business planning

Disclaimer

This article is informational content, not legal, tax, insurance or child care licensing advice. Requirements, fees and deadlines change, and some figures here are tied to specific rule versions that the licensing unit and other agencies may have updated. Confirm every figure with the agency named before you file or pay. For a complex structure, a multi-owner arrangement, a church-operated program or a family home operation, consult a qualified attorney and a CPA before you commit.