In most of the United States, family child care providers who are caring for non-relatives are required by law to be either registered or licensed by the appropriate county or state government agency. Many states exempt certain providers based on the number of children that will receive service. Regulations vary from state to state regarding such things as maximum number of children, maximum number of each age for the children, and training required. Providers that are non-regulated (not licensed or registered) because they are exempt are not illegal. Those who are required to be licensed or registered and do not comply are illegal.
"A license permits a group or individual meeting certain requirements to do something that is otherwise forbidden. The authority to issue a license is granted by statute while specific licensing requirements are set out in regulations or rules that have the force of law. To acquire and keep a license, a licensee must meet licensing requirements that are enforced by staff of the agency that issued the license. Enforcement includes actions taken to move a group or individual into compliance with the requirements of the law. To enforce has also been said to be simply to cause laws and regulations to be put into operation. As clear as these definitions seem to be, each is very general and leaves much to be explained." From the NARA Public Information RoomLicensing often only insures that minimum standards of a basic level of care are being met. Therefore, licensing does not automatically lead to quality. The National Association for Family Child Care has a voluntary accreditation program where recipients have shown they meet further standards of quality care.
Check with your local laws and regulations. If you operate a family childcare that is not exempt from regulations and you are not in compliance you could be considered illegal and may face some stiff penalties. If you are exempt, you may have the option to choose to be regulated; there are many benefits to doing so.