Legal Considerations for Microschool Leaders

Some microschools start organically: a few families coming together in an informal parent-run pod, where at most perhaps a teacher-facilitator is paid directly by families. Other microschools may stem from a choice on the part of a founder to offer a new educational option in a community. Whatever the starting point, many microschools quickly reach the point of having to address their legal structure: incorporation and regulation. Thinking carefully about legal structure is perhaps inconvenient but still important—thoughtful planning at the start of the process can prevent a lot of cost and headache on the backend. As you start a microschool, or even for microschools currently in operation, here are some important things to keep in mind.

First, you’re starting an employing entity. Whether your microschool decides to be for-profit or non-profit, the first step is to create a legal entity that separates the microschool from the individual human beings starting it. That may mean creating a corporation or limited liability company (LLC) for a for-profit school, or a nonprofit corporation for a non-profit school.

Then you need to go through all the paperwork necessary to become an employer, assuming your microschool will employ teachers or other staff, and not merely rely on parent volunteers. This means registering with the Internal Revenue Service and your state revenue agency, registering for workers compensation or unemployment insurance, and complying with any other requirements for employers. These are generally generic to any employer, not just microschools.

Microschools in particular need to be aware of several specific regulatory issues. First, each state has a department of public instruction or education that regulates schools. In most states, this includes regulating private schools, even if in a different, less invasive way that public schools. Depending on the size of your staff or student body, a microschool may be required to seek licensure as a school. This may bring specific regulatory burdens, like educational degree requirements for teachers or the principal. Or even things you may not think about, like food safety rules for lunch and snacks.

If a microschool is not regulated as a school, it still may be liable for regulation as a childcare facility. If parents are dropping children off at a facility and paying someone to watch them, it may count as a child care facility. Again, each state has a department or agency that licenses and supervises child-care facilities. Again, licensure may bring with it substantial compliance costs, like a minimum number of feet for playground space or a maximum number of students per employee that is different from standard classroom ratios.

A microschool may not qualify for categorization as a school or child-care facility by organizing more like a home-school co-op, or maintaining a student body beneath a certain threshold.

Separately, microschools should be aware of zoning rules for different spaces they may use. If a microschool is operating out of a residence, that space likely is not zoned for commercial use. Issues like traffic from parents dropping off students every day at the same times may spark complaints from neighbors, who object to high traffic on a residential street. Some states have laws to protect home-based businesses, but others may insist on commercial zoning for educational uses.

These three concerns are the ones we hear most from microschools, but the full list is much longer. At bottom, microschools are new, interesting, innovative. Regulatory structures are slow, bureaucratic, and cautious. As a result, there will almost inevitably be conflicts and clashes. Thinking ahead can help avoid or minimize those issues. Do your research, talk to an attorney, and reach out to us if you have a specific issue.

Daniel Suhr is senior legal fellow for the National Microschools Center. He’s also managing attorney at the Liberty Justice Center, a national non-profit law firm with a focus on education reform. This column is general legal advice and does not create an attorney-client relationship. Consult a lawyer in your own state for advice specific to your state and situation.