State & federal regulations for running your school
What regulations and guidelines do you need to comply with when running a school? Will your school operate as a for-profit or non-profit institution, and what are the implications of each?
In this article, we explore what you need to consider from a compliance perspective, including summaries and resources for each state in the US.
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The U.S. Department of Education does not regulate the private school establishment process, and you do not need any approval from the federal government to get started. Some federal funding programs require that schools meet certain requirements; these are on a case-by-case basis and are discussed in the funding section of this guide.
One of the most important – and sometimes complex – tasks when starting a school is determining your state requirements and ensuring your school is following the individual processes your state has in place. These may include registering with the state, accreditation requirements and sometimes reporting requirements.
Our state-specific pages (below) outline what each state requires — these will be your best resource for everything from accreditation requirements to policies and procedures for curriculum, school transportation, lunches – basically everything you might need to have in place. Some states have extensive guidelines to follow and others are much more hands-off with private schools.
Schools generally function as businesses, with employees, revenue, and expenses just like any other business. As such, you’ll need to register with your state as a business, either as a for-profit or non-profit entity.
Depending on the requirements and laws in your state, you may also have the option to operate as a homeschool provider, rather than pursue formal certification as a private school. Private schools typically require more stringent regulation and reporting, whereas homeschools often have more flexibility and fewer mandates. Again, these options vary greatly from state to state, so you’ll want to consult your state-specific resources (above) to learn more.
Organizing as a non-profit is not terribly different than starting any kind of business – some of the forms are different, but the general process is the same. There are some specific structural and reporting requirements, however, and you must apply for and be approved to receive tax-exempt status. Once certified as a not-for-profit entity, you may solicit and receive tax-exempt donations from your community.
The US Small Business Administration has a guide to starting a non-profit that includes the following major steps:
Have a plan and do your homework – Most of this step involves the planning items we’ve already gone over: making sure your objective and goals are clear, etc. One thing that we haven’t gone over yet is creating a business plan, but you’ll see more about that soon. This is also a good time to consider seeking out an attorney familiar with startup of non-profits. All the internet research in the world can set you up for success, but only a lawyer familiar with the intricacies of non-profit law can answer questions specific to your situation and guide you through the paperwork and processes you’ll need to complete.
Incorporate your nonprofit and establish governance – In order to set up your school as a non-profit and file for 501(c)(3) status, you’ll need to recruit a board of directors to help run your school. Your board, along with legal counsel, can help you determine what legal structure you want your school to form under. After that, you just have to fill out the IRS tax-exempt paperwork.
The types and amounts of insurance required can vary by state. As always, check your state-specific guidelines for any published insurance requirements. In general, here are some types of insurance you may want to consider for your school. Note that carrying insurance is a good idea, even if not mandated by your local jurisdiction:
Property insurance – You’ll probably want some kind of insurance on your building (if you own it) and the contents inside (whether or not you own it) in case of a catastrophe. As you start to buy furniture, computers, books and everything else that a school entails, the importance of having it all insured will become evident.
Liability insurance – It is likely you’ll want – or need – some kind of liability insurance to cover accidents that could occur under your roof.
Professional liability insurance – teachers are typically required or highly encouraged to carry professional liability insurance to protect against accusations of abuse/neglect. Many schools provide this to teachers as a benefit of employment. If your local public district doesn’t provide coverage for teachers, it may be worth investigating as a recruiting tool and competitive edge to bring qualified teachers onboard.
Auto insurance – If your school is going to own or operate any form of transportation, either for transporting staff or students, you’ll need to have a policy that covers commercial vehicle use.
Legal requirements for facilities in the area where you are hoping to open your school can sometimes be more difficult to pin down.
Your local municipality is usually responsible for fire codes, number of exits, accessibility for people with physical disabilities, number of bathrooms, and many other specifics for schools. In many cases, an inspector will have to come by prior to school opening.
Your best resource for ensuring all of these requirements are met is to reach out to your municipality, or in some instances, the county, and ask about building codes and requirements for schools. They are usually more than happy to provide you with the specifics required by law in your area.