Decide which age range you want to write for. A story for 5 year-olds is quite different than a story for 9 year-olds. You need to know which age range to pick so that you know what type of humor your audience can understand.
Come up with a premise your audience would find intriguing and funny. Whether it's a story about a bear learning how to dance or about a fairy who can't fly, you want to make sure the basic idea of your story is something the children would find intriguing. Typically, a short story centers around one conflict the main character must resolve by the end of the story.
Create characters your young readers can identify with and laugh about. Usually younger characters about the age of your intended audience help your young readers relate to the story as soon as they begin reading. You want to have one main character to center your story around. Remember that because you are writing a short story for children, your characterizations do not need to be complex. Make your characters simple but write them with some meaningful purpose.
Start your story with action. You want to set up your main character's conflict right off the bat. So, if you want to write about a boy looking for a leprechaun's pot of gold, tell your audience just that. Set up the scenery as simply as possible and get right into humorous dialogue and action.
Build the action to a climax, or a moment when the purpose of your story becomes evident. For a story about a flower who wants to find a flower friend, that climax would be a moment when the the flower finds her flower friend or realizes that she had a flower friend all along. Whatever you choose, you have to give your audience a scene when your story takes on a special meaning.
End the story by somehow expressing to your audience the purpose or theme of your tale. This could be anything from the importance of friendship to the importance of learning from your mistakes. By showing your young audience the purpose behind the story, you help them learn a lesson through your main character's conflict and resolution.