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Speaking of pets. I've got 3 cats (and one is really old). They will not be allowed in the daycare....but we're thinking of changing our carpet upstairs to hardwood floor.
I wonder about pee...

Area rug - that's even better! I was basing my suggestion from one of my employers as a nanny. They used mats in their living room while they renovated the basement.

My daycare will all be in...

Hardwood. But, I'll have interlocking foam mats on it as protective cushion for children at play. Protects your floor too.