How to Start a Charter School

A charter school is like an independent school, but it is publicly-funded. They are attractive to educators and parents because they offer a bit more freedom than traditional public schools while still being accountable for producing good results from students and stable financial management from the school itself. Charter schools are an attractive feature in many communities because they give parents and students more of a choice regarding where the students go to school.

Ready to turn your business idea into a reality? Tailor Brands is our top recommendation because it guides you through every step of the formation process with hands-on support — from paperwork and compliance to devising a detailed plan to help you achieve your business goals.

Tailor Brands ($0 + State Fees)

Start a charter school by following these 10 steps:

  1. Plan your Charter School
  2. Form your Charter School into a Legal Entity
  3. Register your Charter School for Taxes
  4. Open a Business Bank Account & Credit Card
  5. Set up Accounting for your Charter School
  6. Get the Necessary Permits & Licenses for your Charter School
  7. Get Charter School Insurance
  8. Define your Charter School Brand
  9. Create your Charter School Website
  10. Set up your Business Phone System

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.

Exploring your options? Check out other small business ideas.

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:

Luckily we have done a lot of this research for you.

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

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

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.

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 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 children 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 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.

Want a more guided approach? Access TRUiC’s free Small Business Startup Guide – a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

One crucial aspect that cannot be overlooked when starting your charter school is the importance of establishing a solid business foundation. While sole proprietorships and partnerships are the most common entity types for small businesses, they’re a far less stable and advantageous option than LLCs.

This is because unincorporated business structures (i.e., sole proprietorships and partnerships) expose you as an owner to personal liability for your business’s debts and legal actions, while LLCs protect you by keeping your personal assets separate from your business’s liabilities.

In practice, this means that if your charter school were to face a lawsuit or incur any debts, your savings, home, and other personal assets could not be used to cover these costs. On top of this, forming your business as an LLC also helps it to appear more legitimate and trustworthy.

Ready to Turn Your Business Idea Into a Reality?

Tailor Brands is our top recommendation because it guides you through every step of the formation process with hands-on support — from paperwork and compliance to devising a detailed plan to help you achieve your business goals.

FORM YOUR LLC

Note: If you’re interested in more information before getting started, we recommend having a look at our state-specific How to Start an LLC guide (DIY) or our in-depth Best LLC Services review (for those opting for a professional service).

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 through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?

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.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

  • Separates your personal assets from your company’s assets, which is necessary for personal asset protection.
  • Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

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.

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.

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.

Find out what types of insurance your Charter School needs and how much it will cost you by reading our guide Business Insurance for Charter School.

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 already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

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, traditional advertisement helps to reach parents while 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 who 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.

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.

Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPressWIXWeeblySquarespace, and Shopify.

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. Check out our review of the Best Business Phone Systems 2024 to find the best phone service for your small business.

Recommended Business Phone Service: Phone.com

Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it’s fair pricing.

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!

Entrepreneurship Quiz

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.

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:

  • Funding
  • Events
  • Guides
  • Support

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.

Useful Links

Further Reading