It depends on where you live and how many children you have at once if you have to get licensed or not. Here in Arizona, you can care for 4 children at once for compensation but that also means you could have 8 kids as long as there’s never more than 4 in your care at once.
Yard sales or thrift shops would be a great place to start looking to stock your childcare. And, yes, you would claim your income. There’s a plethora if deductions in terms of childcare.