With the coronavirus crisis disrupting business as usual worldwide, millions of people are exploring options for home-based businesses. If you have teaching experience — whether in a classroom or a more informal setting — starting a tutoring business from home can help you connect with students in new ways.
Tutoring is a relatively simple business to start, but like any other company, there is a lot to think about. Here are some tips to help you get started.
Education and specialization
When you are deciding on where to focus your tutoring business, consider areas where you have a strong understanding and ability to explain concepts to others.
If you don’t have a teaching credential, be transparent with your students. Your related professional or life experience could be an asset for those who are looking for help in other credentialed courses.
Do you have experience in a STEM field? You might want to focus primarily on math and science courses. Are you a homeschooling parent of young kids? Perhaps elementary schoolers are your target students. Maybe you’re a prolific writer or you have a degree in history.
Start with your strengths, and you can always branch out later as you gain experience and confidence.
Certification for online tutors
Certification is not required to become a tutor, but it does add legitimacy to your business.
Certification is available through both the American Tutoring Association, which requires either a bachelor’s degree or significant tutoring experience. The National Tutoring Association has different levels of certification based on your educational background and area of specialization.
How much do tutors make?
When thinking about starting a tutoring business, the logical question is, “how much do tutors make?” The answer, like so much in life, is that it depends.
Typically, tutoring rates are higher for more advanced grade levels and subjects. On average, tutors can expect to make between $12 and $30 per hour.
Setting up your tutoring business
Depending on your state, you will likely need a business license. This is a standard requirement that allows you to operate a business in your community. You can typically apply online.
You will also need to choose a business structure for your new tutoring company. This is an important decision that will affect your company long-term, so it’s best to speak with a business attorney or tax professional before making your choice.
Most small businesses choose one of three business structures:
Sole Proprietorship: If you are the only owner, a sole proprietorship may be right for you. This structure lets you do business under your own name or file a DBA (doing business as) with your state to register a company name. You can apply for an employer identification number (EIN) through the IRS or simply use your social security number.
You’ll make business deductions and pay business taxes as part of your personal tax return.
LLC: A limited liability corporation protects your financial assets if you get sued. It typically requires some additional paperwork and an annual fee to state regulators. With this structure, your business profits and losses “pass-through” to your personal tax returns.
Unlike a sole proprietorship, you can have partners with an LLC.
S Corporation: You can make an IRS election to become an S corporation. This provides some tax benefits, but it also requires additional paperwork each year and designations for you and your partners.
Visit your state’s official website and the Checklist for Starting a Business from the IRS for step-by-step guidance on setting up your. Also, consider working with an attorney to make sure you don’t miss anything and all documents are correctly filed.
Insuring your tutoring business
When starting a tutoring business, there is a lot on your mind. It’s completely understandable if you haven’t thought much (or at all) about business insurance for tutors.
Yet insurance is key to protecting your tutoring business. For example, if you spill and drink on a student’s new laptop, the general liability coverage in your policy could pay for the repair or replacement. And your professional liability coverage could reimburse you for legal expenses if a student’s parent claims you didn’t deliver on your contracted services.
If you travel to meet with students outside of your home, you may need to add commercial auto insurance to your policy, as well. Personal auto insurance policies typically exclude the use of your vehicle for business purposes, which could leave you responsible for any financial losses.
Business plans and marketing considerations
To start any business, you need a plan. Fortunately, you no longer need a formal, stuffy business plan. Instead, your tutoring business plan should be a guide that explains your services as they exists today and shows where you want it to go.
Do you want to tutor solely online? Will you meet students somewhere else, or have them come to your home? Will you have employees? What grades and subjects will you tutor? Do you have enough cash to last from now until your company turns a profit? Be as specific as possible with short-term and long-term goals.
You might also be wondering how to advertise tutoring. Do you need tutoring business cards? Should you find a tutor network? The answers lie in your marketing plan, which is your guide to finding and keeping students.
First, decide which students you want to target. For example, you might want to teach English. Do you want to teach it to non-native speakers or honors students? Adults, high school students or elementary children?
Now, where do your target students hang out? Can you find them on social media? Can you partner with a local school? Does your neighborhood library sponsor a group or a class that your desired students might attend? Effective marketing and advertising rely on meeting your prospects where they naturally go.
Starting a business isn’t easy, but it can be a great way to make money while doing something you love. But it’s important to set yourself up for success by treating it as a business from the beginning and taking a disciplined approach to every decision you make.
Ready to get started?
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