Start a charter school by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your charter school. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a charter school?
The exact cost of opening a charter school can vary significantly based on the cost of the land, the size of the complex, and the number of students and teachers. For instance, if you anticipate 140 students, you may need a building as large as 20,000 feet. Getting an architect to design such a structure from the ground up may cost as much as two million dollars. A small staff comprised of seven standard teachers, one special education teacher, three teacher's aides, a librarian, and a principal will cost a little over $700,000 per year depending on their salaries. Buying a stock of medical supplies, hardware supplies, toiletries, and various odds and ends may cost as high as $20,000. Stocking a small library with 20,000 books may cost nearly $120,000, and getting the relevant shelving you'll need may cost $5,000. Purchasing computers for the school can cost over $37,000, and furniture (ranging from the standard desks and tables to examination tables and gym wall pads) can easily cost $25,000. Larger appliances such as refrigerators, stoves, dishwashers, and food bars will cost $13,000 or more.
What are the ongoing expenses for a charter school?
Your primary ongoing expenses include your monthly loan payment for the school, your teacher's salaries (using our staff estimates above, you would be paying about $60,714 a month), supply costs (whose cost will vary based on needs, but are likely to be $2,000 a month or more), and utilities (which will also be about $2,000 a month or more).
Who is the target market?
While almost anyone can make a great charter school student, the target market is typically upper-middle class or wealthy parents who want to offer their child the best preparation possible for higher education.
How does a charter school make money?
The bulk of the money that a charter school makes comes from the public funds of their state. The school may also receive grants, subsidies, and access to various federal programs. In terms of profit, the executives overseeing charter schools receive a portion of money per student enrolled. Note that your charter school must abide by state laws which can dictate whether your business can legally be for-profit or if it must be a non-profit, although the latter can still yield substantial income.
How much can you charge customers?
Charter schools do not follow an exact customer/provider model. For the students, the charter school is free. However, the school is funded by both the district and the state on a per-pupil model. Your area may vary, but nationally, charter schools are paid $7,131 per pupil.
How much profit can a charter school make?
The exact amount of profit you can make depends ultimately on the number of students, how much you receive per student, and any money that might come from charitable donations and wealthy patrons. Overall, though, for-profit education is a market valued at over $1.3 trillion. Combined with the growth of charter schools themselves and their support from the latest Secretary of Education, this venture may prove quite profitable.
How can you make your business more profitable?
One of the downsides to income per pupil being determined by districts and states is that it makes it difficult to increase profits. There are essentially two avenues to become more profitable: expanding the school or securing more donations from parents and various wealthy patrons. The first option will require significant investment, but will ultimately increase the number of students your school serves, thereby increasing your profit. For the second option of soliciting donations, if you have the budget, it may be worth hiring an individual or team whose primary job is securing donations, grants, and other types of funding for your school.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Charter School Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your charter school is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a charter school business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market a charter school
Marketing a charter school is a little more nuanced than marketing a traditional product. Typically, it involves using a mixture of traditional advertising (via newspaper, radio, and television ads) and social media (such as Facebook, Twitter, and Instagram). In simple terms, the traditional advertisement helps to reach the parents while the social media advertising helps to create a friendly online presence for students to relate to.
How to keep customers coming back
Because your charter school can only accommodate so many students, your advertising should play up that the school is state-of-the-art, boasts a great teacher/student ratio, and that it offers electives and other opportunities the community cannot find anywhere else. After school has started, form a team of ambassadors that can help to represent your school at various community events and spread positive word of mouth. Finally, keep solid records of the achievements of your past students (in terms of college admissions, jobs, and other metrics of your choice) and integrate this into your advertisement, as there is nothing more persuasive than a good success story.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Charter School In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This business is perfect for someone with previous experience in public education. Those who have been teachers, principals, or other administrators in a public school are often able to take what they learned from previous experiences in order to help their charter school thrive.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a charter school?
The daily activities of a charter school are very similar to the daily activities of a traditional public school. Teachers spend their days preparing for classes, attending meetings, teaching classes, and taking care of any after-school activities. Administrators help coordinate with teachers, the board of directors, and other relevant individuals and agencies that help promote the school's success.
What are some skills and experiences that will help you build a successful charter school?
As mentioned before, any prior experience as a public school educator or administrator is invaluable for this role. To this end, a formal degree in education or a related field is very helpful, as is any networking experience that you may have within your community. Many of the biggest charter schools thrive on donations from wealthy patrons, and your ability to tap into an existing network for potential funding can help your school succeed much more quickly.
What is the growth potential for a charter school?
The growth potential of charter schools is very steady, having risen from four to seven percent between 2004 and 2014.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a charter school?
One of the best things to do before opening a charter school is to listen to comments parents have been making about the local schools. This lets you learn from others' mistakes and ensure that your school offers an experience the community is otherwise lacking. Make sure not to create a bigger school than you truly want: for many private schools, the small classrooms are considered a very attractive feature because students get more time with teachers, and a really crowded campus can undercut that benefit.
How and when to build a team
Unlike small businesses, a charter school must have a solid team of teachers, aides, administrators, and librarians from the very beginning.