How To Start a Tutoring Business in Eight Steps

The first step is to develop a business plan outlining your business model. Do you want to provide private tutoring by yourself? Or do you want to start a small business by hiring tutors, such as college students, to handle different subject areas? You should do some market research to determine, among other things, your competition, your pricing or hourly rate, and your marketing strategy to attract new business.

You should also consider the startup costs for your venture, including advertising, and if you can cover those expenses with your personal finances. However, the main questions for starting a successful tutoring business should include where you will operate, what subject areas you cover, and who your clients are.

Where Will You Tutor Students?

In choosing your tutoring location, you want to make sure you can teach in a place free from noise and other distractions. You have a variety of locations to consider for tutoring students.

• Tutoring Services at Your Prospective Clients' Homes or Other Locations. Most tutoring sessions are in-home or at a neutral location, such as a school or library. Parents welcome the convenience of a tutor coming to their home and may pay more for this service. Or you may meet your students at the library, local coffee shop (if it is conducive to studying), or school.
• Tutoring Services at Your Home or Office. Tutoring from your home has benefits for you. You don't have to travel and may be able to deduct expenses relating to the studying space in your home from your income taxes. When deciding whether to offer home-based tutoring, determine whether you have a private, quiet area for your students to learn and if your home is convenient for them. If you are considering leasing space, you should figure out if your income from your own tutoring business is enough to cover rent and still provide a profit.
• Online Tutoring Services. There are pros and cons to an online tutoring business. You won't have to travel to another location or provide a study space in your home or office. However, it may not be the best learning method for your students. Additionally, you and your students will have to know how to handle video conferencing and Zoom. Determine if offering online tutoring benefits your students or if they prefer in-person instruction.

No matter where you tutor your students, make sure to schedule tutoring sessions with enough time for one student to leave and another to arrive without disruption.

What Subjects Will You Tutor?

Determine what subject matters you can competently teach. Do you have any specialties or certifications? Or are you a math whiz who enjoys helping others? Can you expand to other subject areas? For example, if you are a high school English tutor, can you offer test prep services or review essays for college applications?

Who Do You Want to Tutor?

Think about who you want to help. What grade levels or age groups can you teach? Are you fluent in other languages and can help students whose English is not their first language? Can you handle students with special needs, for example, students with a learning disability such as ADHD? Knowing who you want to tutor, and your expertise, helps you identify ways to reach potential clients.

If you are a one-person business, you run a sole proprietorship. As a business, you can write off business expenses from your tutoring income. Many entrepreneurs running a one-person company form a limited liability company to shield their personal assets from any business liability. The benefit of an LLC business structure is that it is similar to a sole proprietorship, where you report any business income or losses on your individual tax return (eliminating the need for filing corporate taxes) and provides liability protection similar to a corporation.

You can follow the step-by-step guide to forming an LLC to set up your business in your state. It is easy to do with your state or you can let our trusted partner LegalZoom handle your business formation filing for $99 plus filing fees.

There are many factors to consider when naming your business. First, you must make sure your business name is available in your state. This is easy to find by searching the Secretary of State's online business name database. You may also check in your county or local town if any other business has registered the name as a DBA or “doing business as." If the name is taken, you must choose another one. If you want to register your name, you can form an LLC with the Secretary of State or file for a DBA in your local county.

Business owners keep their business and personal finances separate for tax filings. If they own a corporate entity such as a corporation or LLC, they want only business transactions going through their bank accounts. Make sure your bookkeeping tracks your business expenses to offset your income from tutoring. You need this information at tax time.

For tax reporting and filing, or if you plan to hire employees, you will need an Employment Identification Number (EIN). An EIN is a number the IRS uses to identify your business, similar to a social security number. Applying for an EIN online or completing an IRS SS-4 application form is easy.

Depending on the level of tutoring you provide, you may need a business license or other permits. If you are doing it alone, you may not need a business license. However, if you open a storefront tutoring center, you may need a business license, certificate of occupancy, or other permits. Check out the licensing requirements for your type of business in your state, county, and town.

Also, if tutoring from your home, determine if your Homeowners Association (HOA) or landlord has any restrictions from operating from your residence.

If you have student's come to your home or office you may want to determine what business insurance you need, if any. Depending on your business you may want to get a business owners policy (BOP) or general liability policy to insure you from liability of personal injury or property damage. 

The final step is to get the word out and build your client base. Use social media to advertise your services to new clients. Leave business cards at the library or local coffee shops (with their permission). Word-of-mouth advertising is the best, so give your current students a discount on a tutoring session in exchange for a referral.

Whether you are a full-time tutor or want to earn money on the side, you now know the essentials to set up a tutoring business.