A Roadmap For Starting A Private School

Disclaimer: I am not an attorney. I offer this information solely to give you an idea of the kind of questions and issues you need to be discussing with professionals such as your attorney and your accountant. Finally, there are about 11,000 private schools that are not members of any private school association. You won't have to reinvent the wheel when you belong to a private school association. Hopefully, my suggestions in this article will encourage you to take advantage of the wealth of knowledge and experience in these associations. ~Rob Kennedy

Chapter 1: Choosing Your School's Legal Structure

Been there. Done that. Yes, I was actually involved in starting a private school. R-E-S-P-E-C-T Academy in Nassau, The Bahamas, was the brainchild of Senator Elliston Rahming. He hired me to be his assistant principal or deputy director as the position was styled. He charged me with organizing the admissions and academic side of the operation in four months so that we could open the school in the fall of 1994.

Starting a school requires one of your earliest decisions to be its legal structure. While you excel at education, this business decision needs professional legal guidance to protect your dream. Think of legal fees as an investment in your school's future. A qualified education law attorney will help you navigate complex regulations and prevent costly mistakes that could threaten your school's survival.

Now, let's look at the two forms of incorporation commonly used by private schools.

The Non-Profit Model

Here's a look at the non-profit business model from 10,000 feet. Please thoroughly discuss each item on this overview with your advisors. Understand that transparency will be key to your school's success. That's a major difference between the Non-profit and For-Profit business models. The For-Profit model can keep its operations private. The Non-Profit has to be transparent.

A. Benefits

This structure often aligns well with educational missions:

1. Tax exemption reduces operating costs
2. Donors can make tax-deductible contributions
3. Access to educational grants
4. Enhanced credibility in many communities

B. Challenges

You'll share control of your vision:

1. The board of directors must approve major decisions
2. 501 (c) (3) tax status with the IRS
3. Cannot sell or transfer ownership
4. The setup process takes longer
5. Transparent financials and IRS Form 990

C. Making Your Decision

Consider these key questions:

1. Do you want complete control or shared governance?
2. How will you fund startup costs?
3. What's your long-term vision for the school?
4. Are donations likely to be a significant funding source?

Explanation

Setting up a non-profit organization offers several key advantages that make it an attractive option for educational institutions. When properly structured, your school won't have to pay federal, state, and local taxes.

One of the most significant benefits is the ability to receive tax-deductible donations. This benefit means that individuals and companies can deduct their contributions to your school from their taxes, making it more appealing for them to support your institution. Additionally, non-profit status opens doors to public and private grants typically restricted to charitable organizations.

Your non-profit school will operate as a separate legal entity from you as the founder. This structure provides limited liability protection, shielding you and other board members from personal responsibility for the school's debts and obligations. The organization exists independently and can continue operating regardless of changes in leadership.

However, non-profit status comes with specific responsibilities and challenges. You'll need to establish a board of directors to oversee operations and maintain strict oversight of finances. The board must ensure transparency in all financial matters and operations, as non-profits are subject to public scrutiny. Regular reporting and documentation of all activities are required to maintain tax-exempt status.

Practical benefits include potential discounts on postal rates and eligibility for certain state-specific advantages. However, there are also ongoing compliance requirements, including annual filings with the IRS and state authorities. While these requirements may seem burdensome, they help maintain the integrity and credibility of your educational institution.

Remember that all surplus funds must be reinvested in the school's mission - there are no private shareholders to receive profits. This structure fits perfectly with a private school's educational mission, as it demonstrates to parents and the community that the focus is on providing quality education rather than generating profits.

Understanding For-Profit Schools

The goal of a For-Profit school is two-fold: to offer a superior educational product and to reward its investors financially. I can't find any statistics on the NCES website, but I believe that about 5% of the 30,500 private schools in the U.S.A. follow the for-profit model. Once again discuss the For-Profit business model thoroughly with your advisors if you plan to incorporate your school using this model.

A. Benefits

You maintain control of your educational vision while building a sustainable business. As an owner, you can:

1. Make quick decisions without board approval
2. Accept investments from supporters
3. Sell the school or pass it to family members
4. Adapt quickly to market changes

B. Challenges

Running a for-profit school requires careful balance:

1. Parents may question whether profits come before education
2. You'll pay taxes on income
3. Most grants and donations aren't available
4. Operating costs tend to be higher

This video offers a template for starting your own school.

Chapter 2: Managing School Personnel

Since parents are paying a lot of money for the best possible educational experience for their children, hiring well-qualified, experienced teachers is essential. Together with hiring qualified personnel, managing your teachers effectively is critical to operating your school successfully.

Discuss the following six points with your team to develop a consistent, well-documented approach to managing your staff. Doing so will help avoid issues with your employees. The results of your discussion can then become an Employee Manual that you can publish on your intranet.

A. Employment Structure

1. A clear distinction between teaching and non-teaching roles
2. Written job descriptions for all positions
3. Defined reporting relationships and accountability
4. Employment agreements tailored to school size and needs
5. Teaching Staff Excellence

B. Qualifications and Standards

1. Strong academic credentials in subject areas
2. Teaching experience or demonstrated aptitude
3. Professional development requirements
4. Cultural fit with the school mission

C. Teacher Responsibilities

1. Classroom instruction and curriculum development
2. Student assessment and progress monitoring
3. Parent communication
4. Extracurricular involvement

D. Non-Teaching Functions

1. Administrative Services
2. Payroll and benefits administration
3. Student records management
4. Facilities maintenance
5. IT support

E. Outsourcing Opportunities

1. Accounting and financial services
2. Facilities management
3. Transportation services
4. Food services

Professional Development

Encouraging your teachers to continue their post-graduate studies is a matter of stewardship. How these professionals teach and what they teach is the essence of why parents choose your school for their children's education. Professional development deepens knowledge of subjects and teaches new skills. Private school associations offer a wide variety of seminars and meetings for professional development.

A. Teacher Growth

1. Regular training opportunities
2. Mentorship programs
3. Subject area expertise development
4. Teaching methodology updates

B. Legal Considerations

1. Employment Policies
2. Clear anti-discrimination policies
3. Documentation of all personnel decisions
4. Regular policy reviews and updates
5. Compliance with state and federal laws

Taking the time to understand and implement policies and procedures for your staff may seem like a distraction when all you want to do is open your school and teach. However, writing an Employee Manual will help avoid misunderstandings in the future.

This video looks at professional development in a video entitled "The Science of Teaching, Effective Education, and Great Schools."

Chapter 3: Building a Professional School Operation

A well-structured school requires careful attention to both educational and operational excellence. Here's a comprehensive framework for managing your school's personnel and operations. Word of a well-run school spreads throughout the local community, which is your customer base. And word of mouth is always your best form of advertising.

Teaching Excellence

I put this first because the teaching is why parents will send their children to a private school.

A. Faculty Standards

1. Hire teachers with strong academic credentials and proven experience
2. Ensure cultural alignment with the school's mission
3. Establish ongoing professional development requirements
4. Create clear performance evaluation criteria
5. Publish faculty standards on your intranet.

B. Teacher Responsibilities

1. Curriculum development and classroom instruction
2. Written daily lesson plans reviewed weekly.
3. Regular student assessment and progress tracking
4. Structured parent communication
5. Participation in school community activities

Operational Infrastructure

The operational infrastructure allows your school to deliver its well-respected, excellent teaching. Don't be tempted to cut corners on the back end. After all, you are responsible for confidential student and employee information. That requires a professionally designed and implemented network to protect your confidential data. It also requires a robust network for the teachers and students. Yes, your school will have two networks. Rather than hire an IT professional, engage an IT professional on retainer. As your school grows and needs a full-time IT professional, you can deal with that decision later.

Secure Technology Systems

A. Administrative network for confidential data

1. Student records
2. Financial management
3. Personnel files

B. Seamless network for the classroom

1. Classroom technology
2. Student internet access
3. Educational resources
4. Distance learning platforms

Facility Management

A clean school is a safe school. A well-maintained school attests to your promise of excellence in the classroom. Do not stint on any of the following items.

A. Professional daily cleaning services with

1. 1. Documented sanitization protocols
   2. Regular maintenance schedules
   3. Emergency response procedures

B. Building systems maintenance

1. Grounds keeping
2. Security monitoring

Administrative Support

A. Business Operations

1. Outsourced accounting and payroll
2. Professional IT support
3. Food service management
4. Emergency notification system
5. Transportation coordination
6. Insurance compliance

B. Documentation Requirements

1. Secure student records management
2. Employment documentation
3. Vendor contracts and insurance certificates
4. Maintenance logs
5. Security Protocols

Conclusion

Starting your school requires advice from professionals such as attorneys and accountants. It also requires exquisite attention to detail so that you lay a solid foundation for future success. Print this article. Keep it handy for your planning meetings and discussions with your advisors.

If you are setting up a new private school, please leave a comment and let us know how things are going. I wish you much luck.

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