If you've been thinking of going into tutoring, now may be the time to take the plunge. Whether you are looking to earn your living as a full-time tutor or just want to make some extra money with a part-time side hustle, tutors for all learning levels and subjects are in great demand worldwide. Globally, the tutoring market is projected to reach $218 billion by 2027. In the U.S. alone, the private teaching market is expected to grow by $7.4 billion by 2023.

It is important to understand that tutoring is still considered a small business, even if you will only be providing tutoring services for a few hours each week. This article will cover what you need to know as you move forward as a tutor, including:

  • Whether you need certain education credentials to tutor
  • How to go about planning for your tutoring business
  • How to legally form and market your tutoring business
  • How to handle the business paperwork and accounting that comes with small business ownership

Education Requirements to Start a Tutoring Business

Contrary to what many people believe, you do not need to have a degree in education or a bachelor's degree in the subject matter being tutored in the vast majority of cases. While you do need to be able to demonstrate proficiency in the subject area you are tutoring, most students and organizations that hire tutors do not require formal training.

For instance, if you are tutoring students for SAT preparation, prior experience teaching standardized test review classes and/or a strong showing in your own test scores will lend credibility to your suitability for that particular tutoring position. The same goes for tutoring middle-school math, for instance. You don't need a college degree in mathematics, although it would boost your credibility. If you have an affinity for math and did well in middle and high school math classes, you could be very successful tutoring a student struggling with their own studies.

Making a Tutoring Business Plan

The first step in planning your own tutoring business is creating a business plan that covers:

  • The type of tutoring you want to take on
  • How you will go about finding potential students
  • What you will charge and what your start-up costs will be

Choosing Your Tutoring Path

Traditional tutors provide students of all ages with instruction beyond their classroom work. Whether in K-12, college, graduate school, or technical school, students needing academic assistance turn to tutors to get them up to speed. Tutors are also instrumental in helping students prepare for standardized tests for colleges and grad schools. Test prep services include working with middle school, high school, and college students to get ready for their PSAT, SAT, GRE, GMAT, LSAT, and MCAT tests.

COVID-19 has changed the face of tutoring. Some virtual tutoring companies that offer online sessions report that bookings are up 300 percent. For in-person tutoring, a new phenomenon - the learning pod - has emerged in the wake of the pandemic. Learning pods are a form of micro-school created by parents who hire tutors to teach their children in a live classroom setting during school closures. These tutors do double duty as home school instructors and child care providers.

Which type of tutoring you choose will depend on what your academic strengths are and who your target audience is. You also need to decide whether you prefer to tutor in person, virtually, or both. While in-person tutoring provides for a closer tutor-student relationship, online tutoring expands your potential reach to students across the U.S. and around the world. With video conferencing tools like Skype and Zoom, it is easier than ever to expand your tutoring reach.

Finding Students to Tutor

There are many ways to go about finding your clients. You might want to consider these marketing strategies:

  • Create a website for your tutoring business. You don't have to be a tech guru to create a simple website to promote your tutoring business. Weebly, Wix, and WordPress offer free website-building platforms designed for the novice. Your website should include a robust About Me page that explains your tutoring credentials and experience, a Services page that explains what subjects you are able to tutor, and a Contact Me page so prospective students can easily get in touch with you. If you have been tutoring and can provide testimonials from clients, you can also add those to your website.
  • Leverage your social media accounts. Use your Facebook, Instagram, LinkedIn, and other social media accounts to let your friends and family members know you are taking on private tutoring clients and to ask them for referrals.
  • Create flyers and business cards. You can hand these out to friends, family, and current clients - word-of-mouth advertising is always helpful - and post them on community and school bulletin boards. You can also hand your business cards out to potential clients.
  • Join tutoring websites. There are all kinds of tutoring websites that act as lead generation services and/or provide independent contractor opportunities. For instance:
    • Wyzant is a lead-generating platform that takes the hassle out of finding students, organizing sessions, and collecting fees. You post a free profile on the site and set your own fee. Students contact you and set up an appointment to meet with you either in person or online. Wyzant collects the fee from the student, takes their cut, and sends the rest to you.
    • TutorMe is a one-stop virtual tutoring shop that pays $16 an hour. You can sign on to be one of their tutors and they match you with a student and provide an online platform to use for your tutoring sessions. All you have to do is show up at the appointed time. There are no out-of-pocket costs, which could make up for the lower-end pay scale.
    • Skooli matches tutors with elementary, middle, and high school students. Like other tutor-student matching platforms, it will match you with a student, provide a virtual classroom for you to teach in, and pay you a set amount per hour for your time. Skooli claims to pay its tutors at a higher-than-normal rate because, unlike most tutoring sites, it does require you to have a bachelor's degree in the subject you will be teaching, a government-issued teaching license, or a specialized instructor certification.
    • VipKid, a company founded in Beijing, hires native English speakers to teach children English all over the world. They do require some tutoring or teaching experience and a bachelor's degree, but you don't have to have a set major or have any English as a second language (ESL) training. Teachers earn between $7 and $9 for a 25-minute class plus incentives, so hourly pay ends up being between $14 and $22.

Fees and Cost Considerations

Because tutoring is a business (even if it's only a side hustle), you will need to determine what your tutoring rates should be, what your startup costs will be, and how much you will have to spend to keep your tutoring business running.

Like any service business, you can only charge as much as the market will bear. For high school tutors, for example, hourly rates often range anywhere from $10 to $40 per hour, with the most experienced and credentialed tutors charging $100 or more. As pointed out above, tutoring through some online services can pay a lot less. Conduct some market research to find out what tutors are charging in your community or what the going rate is online for the type of tutoring you are doing.

Like fees, start-up costs will vary. If you plan to meet students in their homes or at a public place like a library, your startup costs will be minimal. You will need regular office supplies, some textbooks and other teaching materials, and transportation to and from the meeting venue.

If you plan to tutor students in your home, you may also need to create a home office or, at the least, a dedicated workspace. If you plan to rent office space for tutoring, you will have to factor in the cost of the space, furnishings, and office equipment like a computer and printer.

For an online tutoring business, you will need a computer with a webcam and microphone, as well as a reliable high-speed internet connection. You might also want to subscribe to a service that provides a digital whiteboard.

Establishing and Managing Your Tutoring Business

Once you know what direction your tutoring business will take, you will need to focus on establishing a legal framework and managing the day-to-day aspects of your small business.

Deciding on a Legal Framework for Your Tutoring Business

Generally speaking, there are four types of business structures from which you can choose for your tutoring business:

  • Sole proprietorship
  • Partnership
  • Limited Liability Company (LLC)
  • Corporation

Choosing which business entity to go with depends on a number of factors, including how much personal liability exposure you could be subjected to, the tax consequences of your choice, and the expense of keeping all of the required documentation current and properly filed with your state.

As a sole proprietor, you will be taxed at your individual rate but you will have no protection against personal liability. As a corporation, you have the most protection from liability but you also pay more in taxes. An LLC is a comfortable middle ground for many as it allows some protection from personal liability while keeping taxes at your personal rate.

If you will be teaching mostly online, you will be at significantly less risk of exposure to personal liability than if you are having students in your home or operating your tutoring business from an office space outside of your home. If you decide to form a corporation or an LLC, you will need to file the necessary paperwork with the state where your tutoring business will be based.

Permits, Licenses, and Tax ID Numbers

If you are tutoring out of your home or an office, you may need to obtain a permit and/or a business license from your local government. You can check local requirements through your municipal government's website.

You will also have to determine whether or not you need to obtain a federal tax ID or EIN. In some instances, you will be required to have a tax ID. Even if you are not required to have an EIN, there are reasons to obtain one for your tutoring business. Having an EIN allows you to open a business bank account. Delineating your business account from your personal account can be advantageous from both a bookkeeping standpoint and a potential liability standpoint.

Maintaining a Successful Business

To run a successful business, you are going to need to develop a system to keep track of business-related paperwork. For example, you might be issuing invoices to your students' parents, collecting payments, and issuing receipts. You will need to account for the equipment, office supplies, and furniture you buy for your business, as well as the cost of the office space you are using to conduct your tutoring sessions.

Putting all this together can take time away from the actual work of tutoring. Fortunately, ready-to-use business software - like Skynova's invoice and receipt templates - are available to help small businesses like yours seamlessly and easily manage their business affairs.

You can easily track all of your expenses and income with Skynova's accounting software, which is specifically designed for small business owners with little or no bookkeeping or accounting background.

Spend More Time Tutoring and Less Time Shuffling Paper With Skynova

Tutoring is about connecting with learners to help them reach new academic heights. Tutoring is also about being paid for the time you spend helping your students learn. Understandably, the last thing you want to do is spend a lot of uncompensated time dealing with accounting and business paperwork headaches.

With Skynova's online software options and business templates, you can spend less time on the mundane tasks associated with running your tutoring business and devote more time to making money as a tutor.