In 2019, the United States tutoring service industry brought in total revenue of $608 million, with the average tutor earning between $20,000.00 and $85,000.00 per year, depending on their chosen subject(s) and tutoring services.
In addition, the tutoring industry has grown exponentially in the last six years, increasing by popularity with 6.9% between 2014 and 2019. This growing interest in tutoring businesses has attracted entrepreneurs across the world, ultimately helping the global tutoring industry reach the $100 billion mark in 2018.
How to Start a Tutoring Business:
In this detailed guide, we will show you all the steps you need to follow in order to successfully start a tutoring business.
Do research on the tutoring industry.
Research essential questions about the tutoring industry.
A few questions you should be asking include:
- What does the current market in my area look like?
- What niches do local tutoring businesses cover?
- Is there a need for my specific niche?
- Is there room for profit?
- What do local tutoring businesses charge?
- Will I work from home or an office?
- Do I have the proper supplies and material?
- Will I travel to students?
- Will I need to hire tutors to keep up?
Approach local tutoring business owners.
Before setting up a tutoring business, scope out the competition. Once your business is up and running, these are the businesses you will need to keep up with. Find out all you can about their services, prices, and customer base. More importantly, this step will allow you to determine a way to help your business stand out from the rest.
Interview current and new clients.
Depending on your experience in this field, it's wise to ask current and potential clients questions about your services. Find out how you can improve and what works for your current students. In addition, ask potential clients about their experiences with other tutoring businesses, as well as what they would expect from a good tutor.
Determine your business growth potential.
Certain factors can affect your growth potential, such as location and overpopulation in the industry. If your area already has a large number of tutoring services available, your business could get lost in the crowd.
Read about the tutoring business.
Your research should include additional reading as well. Numbers and statistics may be great for determining the likelihood of your business success in your location, but are you prepared as well? There is always room to learn more about the tutoring industry and books are a great way to unlock new tutoring strategies and services.
Best books to read before starting a tutoring business:
- How to Start a Home-Based Tutoring Business (Home-Based Business Series) by Beth Lewis.
- How to Start a Tutoring Business: A guide to starting your own tutoring business by Tutor Cruncher.
- How to Make Over $4,000/Month Tutoring by Mark and Erik Krupp.
- Smart Marketing For Tutors: A Step-by-Step Guide To Building Your Online Tutoring Business Using Free Marketing Tools by Victoria Olubi.
- The Novice Tutor: Answers to Your Questions About Running a Successful Tutoring Business by Adrianne Meldrum and Killian Piraro.
Find your target market.
Who will you be offering your services to? While deciding on your niche, you should have thought about who you will serve. Will you focus on college students or high school graduates? Or both? Once you've decided on your target market, determine the need for your services in the area.
Defining your ideal target market will be beneficial in the long run, as it will help determine your services, costs, advertising requirements, and materials needed. For example, if you plan on tutoring school children, especially those under 16, then consider their parents as primary customers.
Start by listing important points about your target market:
- What time will they be at school or work?
- What are their traveling constraints?
- Do they expect home-based tutoring?
- How often will they use your services?
- What are they willing to pay for your services?
- Do they want one-on-one sessions or group sessions?
Formal training will provide you with advanced knowledge of key tutoring strategies and methods, which will enhance your professional credibility. In the United States, you generally don't require a specific qualification to become a tutor. However, there are multiple training options for tutors to consider.
If you're an individual with a bachelor’s or graduate degree in a high demand field, such as English, mathematics or science, entering a tutoring certification program will be enough to get you started. However, if you wish to work in a classroom, formal training in education will be your next step.
Decide what type of tutoring business you want to open.
Research working out of your home.
If you decide to start a home-based tutoring business and work from home, you will save money on rent and travel expenses. However, this means that clients will need to travel to you which could be difficult for students without a car.
The size of your home also limits the number of students you can teach at a time.
Research working from a formal environment.
If your business grows, you may want to rent an office space where you can create a classroom for more students. Not only will you be able to teach more students at a time, but you could also be based near schools or along public transport routes.
Pick a location space near the main street. This could help potential clients find you better. Make sure your location offers good parking, which might be required for licensing and zoning purposes.
Visit different locations. Don't just visit one or two locations. Be patient while searching for a location by touring different areas in your community.
Choose a location near educational facilities. Consider a location near a school, college or university, as your target audience will mainly be students.
Think about tutoring online.
Online tutoring services have gained popularity due to widespread use of technology like free voice over internet services and video sharing platforms like YouTube. Parents and students alike have become comfortable with online tutoring. With this option, you get to work with students from diverse cultural backgrounds and geographic territories.
Decide on a focus area for your services.
Tutoring is no longer just the test preparation many families and schools have come to know. In today's market, there are different options to consider that have been established to help clients at different academic stages.
These stages include, but are not limited to:
- Pre-K tutors.
- Elementary tutors.
- General tutors.
- Special education tutors.
- Speciality subject tutors.
- Test-prep tutors.
- Homework tutors.
- Admissions and application tutors.
- Student tutors.
- Language and ESL tutors.
Create a business plan.
Write an executive summary.
This section should describe your business, define your mission, and highlight what makes your business stand out.
State your legal structure.
You should let investors know which legal structure you plan to register as. Many businesses choose to register as an LLC.
Describe your launch.
Explain how you plan to launch your business. For example, you could offer discounts on lessons or offer a free lesson when clients pay for several lessons at once.
Explain your source of revenue.
While simple, it should be made clear that you charge clients per lesson or offer a discount for multiple lessons (or multiple children in a family).
Download our tutoring business plan template to see an in-depth breakdown of how to write a section on your finances.
List essential staff members.
List the job titles of any staff members that will need to be working for the business at its launch. Name yourself as the owner and head tutor, for example, and mention any other tutors you will be working with.
Describe your target market.
Explain who they are and include some information from your market research about the target market's preferences.
Describe your marketing strategy.
List the promotional outlets you plan to use to advertise your business.
List your competition.
Name your closest competitors and describe how your businesses are similar and how your business is unique.
Describe your finances.
List your startup expenses, sources of funding, and revenue projections.
Explain your future plans.
Describe how you will expand your business in the future by hiring more tutors or offering more subjects.
Form your tutoring business.
Choose your business name.
The name you operate under will represent your services to the outside world. Therefore, it's important to evaluate your different business name options before officially choosing a name. Your business name should be catchy, memorable, and accurately describe the services you will be offering. Write down your name ideas and ask people for their opinion on your ideas.
Before you settle on your name, check with the Secretary of State's (SOS) office in your state to ensure that your business name is not already registered with the SOS.
Choose your business structure.
There are four common business structures:
Sole Proprietorship: owned and run by one individual. No legal distinction between the owner and the business.
Partnership: a legal agreement between two or more individuals who share management duties and profits.
Limited Liability Company (LLC): offers the protection of a corporation but only the owners pay taxes on business profits.
Corporation: the more formal structure available which includes offices and a board of shareholders.
With a partnership or sole proprietor, you will have an easier time filing your taxes. However, if you choose a corporation or LLC, you are able to limit your liability for anything that happens while you manage your business.
Each business structure offers its own advantages and disadvantages. Your ideal business structure should provide you with the best liability protection, and tax and financial benefits.
Obtain an EIN.
If you plan on hiring employees for your tutoring business, you will need a federal Employer Identification Number (EIN) from the IRS. Also known as Federal Tax ID Number, the number is used to recognize taxpayers who are obligated to file different business tax returns.
To get an EIN, you can complete an online application on the IRS website. There is no filing fee. If you are unable to apply online, you can also get an EIN by mail or fax.
Open a bank account.
To ensure that your personal and business finances stay separated, your best option is to open a business bank account. Opening a bank account will also help with clean audits, and present professionalism.
Contact your local banks for the different business accounts available.
Some of the best banks for small businesses include:
- U.S. Bank.
- Wells Fargo.
- Popular Bank.
- Axos Bank.
As a business owner, it's essential that you research the different types of insurance suitable for your specific business and industry. Because every business is different, you may require different types of insurance.
Consider the following:
Business interruption insurance.
For tutoring businesses, liability insurance is a popular choice. Liability insurance will help provide peace of mind to parents and the business owner, ensuring that the business is protected financially for any situation that may occur.
Professional indemnity insurance is another option for tutors to consider. It will be able to pay out if a client claims they’ve made a loss because of your services. For example, if you haven't covered a part of the syllabus and your client/student doesn’t perform well on their exams because of it, your client may decide to take you to court, which is where your professional indemnity insurance would be beneficial.
For more information on which types of insurance are required based on your type of tutoring business, visit your local municipal government office.
Obtain the applicable licenses and certifications.
In order to legally operate your business, you may need to obtain special licensing and certification. Failure to obtain certain certificates and licenses can result in substantial fines, or even force you to close down your business.
State boards of education often require tutors working in school environments to be licensed. However, private tutors may establish their own rates and advertise their services to the public. These private professionals are not regulated or licensed. Therefore, private tutors do not have to meet any additional training requirements beyond their chosen credentials.
Because tutoring is not regulated at a state or national level, both entry-level and experienced tutors have the option to choose from a range of tutoring certification programs to develop new skills and become certified.
If you wish to study further and enhance your skills as a tutor, you may pursue basic and advanced certifications from the National Tutoring Association and the College Reading and Learning Association.
Comply with necessary tax laws.
You will have to manage differing tax responsibilities, depending on the type of legal business structure you choose. When selecting your business structure, you should have educated yourself on the forms you will need and the types of taxes you must pay.
With a partnership, S-corporation, and multiple member LLC, owners must report a share of the business taxable earnings on their personal returns. They are also responsible for paying the income tax on it.
With a sole proprietorship or single-member LLC, your business will have to file business taxes as a sole proprietor. Sole proprietors use a Schedule C to separately report revenue, deductible business expenses, and net profit.
With a corporate structure, your personal tax returns will not be affected as your business is seen as a separate legal entity that reports revenue and expenses with a Corporate Tax Return, Form 1120. Your business will have to pay the tax on profits, which are taxed at special rates that only apply to C-corporations.
If you plan on working as an independent contractor, the Internal Revenue Service will consider you a small business owner. To ensure you keep track of your tutoring profits and expenses, record all transactions throughout the year.
Establish an accounting system.
To ensure that your tutoring business is operating in the best financial state, you may need to obtain accounting software or hire an accountant.
Accounting software. This software will help simplify accounting processes, such as expenses, tuition, payment processing, and reporting. There is a range of free accounting software.
Hire an accountant. It's wise to research the benefits of this option. They allow for fewer mistakes and less time worrying if your taxes were in order.
Ask friends and family.
Prepare a business presentation and ask family and friends if they're willing to invest in your tutoring business.
Apply for a loan.
If you need more funding than you or your family and friends are able to afford, applying for a loan is a good alternative. Find out more about small business loans.
Start small. Consider starting small by offering home-based tutoring services. This eliminates the cost for location space, employees, equipment, and supplies needed for large groups of students.
With crowdfunding, you will need to raise money by appealing to the online community. This option is often used in exchange for gifts, future products, or other small rewards.
Prepare your tutoring materials and supplies.
Buy stationery and find resources.
Before you start your business, make sure you are prepared for success by stocking up with the appropriate stationery, office supplies, and equipment. By creating an effective system and stocking up with the proper tools beforehand, you will be properly prepared for your first student.
- Calculators (if necessary).
Prepare your lessons ahead of time.
Start by preparing at least 3-4 lessons for each subject and level you plan on teaching before you officially launch.
For example, some of the most successful tutoring businesses offer their own learning handouts as marketing material for their business. Apart from including your contact details and business logo, a handout of personalized learning material also gives the impression that you are experienced and that your teaching style is student-friendly and effective.
Hire and train employees.
Evaluate your business size.
At first, you may choose to work alone as you will probably have a manageable number of students. If you think that hiring more tutors to cover a variety of subjects would be beneficial, you should look for suitable candidates.
Create job descriptions.
Once you have decided which employees you need, you should create job descriptions for each role to outline exactly what is expected.
Advertise your vacancies.
Post your job descriptions on online job boards, in newspapers, or on industry-specific social media groups.
After reading through applications, you should invite suitable candidates for an interview.
Prepare interview questions that are job-specific as well as questions that reveal the candidate's cultural fit to your company.
Hire suitable candidates.
If you find the right individuals to fill your vacancies, make them employment offers and draw up employment contracts. You can ask a lawyer to do this for you to ensure that the contract is legal.
Set your hourly rate.
Determine the going rate.
While studying your competition, you will get an idea of what to expect with pricing. Make sure you don't charge too low for your services, especially if you plan on traveling and creating your own materials. Your rate should be fair and match your quality of work and experience.
There are many factors that will affect your hourly rate. A general tutor charges between $17.00 - $45.00 per hour, depending on your location, education, and experience. If you have extensive experience and certification, you can charge up to $75.00 per hour.
Consider your travel expenses.
Do you plan on offering home-based tutoring or will you meet at a public location? As your location will play a major role in your business success, you should be prepared for the traveling expenses you may need to cover. For example, if you have three students in different parts of your area, you will need to consider traffic, time-constraints, and gas expenses.
For example, your average traveling time is 30 minutes for a round trip. This means a 1-hour session will require 1.5 hours of your time. So if you want to make $20.00 per hour for your tutoring services, you should consider charging $30.00 for that 1-hour session.
Consider the subjects you'll be teaching.
As some subjects are in demand, you may adjust your hourly rate according to the subject. If you are skilled in any of the subjects listed below, with the exception of English, you should contemplate setting your tutoring rate above the average for other tutors in your area with related experience.
Subjects that are in high demand:
- SAT prep.
Consider your qualifications.
The highest paid tutors are experienced, often charismatic people with prestigious degrees or certification. Generally, college students and individuals with minimal tutoring experience will charge less than the average rate.
Your cost of doing business, which includes materials, tool costs, transportation and office administration costs, should also be billed to customers in addition to your hourly rate.
Market your business.
Develop a marketing strategy.
Before you officially start your business, it's wise to invest in a solid marketing plan. Having the appropriate skills and acquiring the proper supplies does not mean customers will arrive in droves. Instead, you'll need to market your business. During the early stages of your tutoring business, you will need to rely on small scale advertising activities like fliers, word-of-mouth, or going door-to-door.
Your marketing strategy should be based on the image and values of your business. What message would you want it to convey to the public? To help sort out your different marketing ideas, compile a list of the services you're offering and what type of values your business will hold.
Approach educational organizations and businesses.
Distribute your business brochures and business cards at libraries, recreational spaces, PTA meetings, neighborhood get-togethers, colleges, etc.
Get a website.
All the important information about your business should be on your website including costs, location, policies, values, mission statement, services, contact details, and more. You can create a website with a website builder.
Open social media accounts.
Social media is an easy way to access thousands of potential clients. However, it does require constant updates and admin support. Furthermore, there are additional charges for advertising your business to larger audiences.
Form a Search Engine Optimization (SEO) strategy.
When clients search for "the best tutoring business near me," you will want your business name to appear in search results of the first two pages. To do this, you will need to invest in a proper SEO strategy and register your business with Google.
Host a grand opening.
In the tutoring profession, small tutoring businesses that are home-based start accepting jobs steadily, growing their customer base with each new client. However, if you plan on working from an official office space, a grand opening is a great way to attract new clients.
This will help create a celebratory atmosphere, attracting interested customers located in your area. Clients won't easily walk into your establishment on day one and immediately book your tutoring services. Therefore, you should be prepared to answers all the questions about your experience and offers.
Set a daily schedule.
Create a schedule for lessons and travelling.
As your business will require a lot of traveling and daily tutoring sessions with different clients, be prepared to follow a strict schedule. Your daily schedule will depend on the size and scope of your tutoring business. You don't want to arrive late for appointments or have to cancel because of scheduling conflicts. This will reflect poorly on your business reputation.
Your schedule should allow you enough time to set up your materials and travel to different clients, as well as ample time for additional processes, such as progress reports with parents or appointment scheduling.
Manage employee schedules.
If you are opening a major tutoring business, you will require additional employees. To prevent scheduling conflicts, ensure that all your tutors have their daily schedule. Consider different factors, such as employee leave, job estimations, available materials, part-time employees, employee breaks, and shift changes.
Tutoring Business Metrics: Hourly Rate
Knowing how to set a fair hourly rate for tutoring services will be a vital part of your business. Your rates will be the difference between success or failure, between making a profit and making a loss. Ultimately, it will help you to determine prices, what kind of discounts you can offer, and what type of services you'll provide.
It's important to note that your hourly rate may change with each job.
Establish how much you would like to earn in your first year. Let's assume you're starting out small and want to earn $45,000 by the end of your first year.
Determine the expected monthly income.
$45,000/12 months = $3,750 per month.
Determine the work schedule. For example, if you want to work 30 hours a week, a four-week month would be 120 hours a month.
$3,750 / 120 hours = $31.25 per hour.
Tutoring Supplies & Equipment:
Supplies and Equipment
Pens, pencils, rulers, highlighters, etc
$100.00 - $500.00
Binders, presentation supplies, tape, forms, note pads, etc.
$100.00 - $500.00
Storage, bookshelves, desks, chairs, chalkboards, etc.
$2,000.00 - $10,000.00
Tablets, laptops, desktop computers, etc.
$100.00 - $2,000.00
Note: Your cost for supplies and material will depend heavily on the number of students using your tutoring services.
How do I register a tutoring business with Google?
- Log into your Google account.
- Go to google.com/services and click Google Places.
- Add your tutoring business.
- Enter your business's phone number, address, or company name.
- Verify your business.
- Select your method to confirm your business information. Google will send a PIN.
- Enter PIN.
Formal certifications and requirements:
Ten hours of training, at least 25 hours of tutoring experience, ATP membership, and two letters of recommendation.
20 hours of tutor training, 75 hours tutoring experience, ATP membership, and two letters of recommendation.
30 hours of tutor training, 50 hours of tutoring experience, ATP membership, and two letters of recommendation.
Level I Tutor
12 hours tutor training, 25 hours tutoring experience, and GPA of 3.25 plus.
Level II Tutor
Level 1 certificate, 12 hours tutor training, and 20 hours tutoring experience.
Level III Tutor
Level 1 and 2 certificate, 25 hours of tutoring, and two hours or supervised learning sessions.
Basic Level Tutor
High school diploma, NTA membership, 10 hours tutoring experience, and basic training and assessment.
Basic Level Tutoring certification, an associate degree, NTA membership, 10 hours academic coaching experience, and complete basic academic assessment training.
Intermediate Level Tutor
Basic Level Tutor certificate, NTA membership, 30 hours college credit, 30 hours tutoring experience, and competency training and assessment.
Advanced Level Tutor
Intermediate Level Tutor certificate, NTA membership, associate degree or higher, 50 hours tutoring experience, and competency training and assessment.
Master Level Tutor
Advanced Level Tutor certificate, basic academic coaching certificate, advanced academic coaching certificate, NTA membership, bachelor's or master's degree, 5 years of experience after certification, and advanced competency training and assessment.
Advice for Starting a Tutoring Business:
"You're competing with in-house tutoring places (Oxford Learning, Sylvan, Kumon) that charge less than $45/hour (at least where I live) and are there with the student, showing them the textbook, working through problems with them. You're also competing with independent tutors who make more than $17/hour. If you're going to be doing this online, you don't have to think purely local. You're gonna want to scale into the world."
"You need to work out who you will and won't tutor (year levels and subjects). You'll probably find that tutoring primary school students in possibly both maths and english will be quite doable. There's a lot of parents that want their kids to have the upperhand or have minor deficits that fall through the cracks at school (often deemed not high enough to need supports because other kids are worse and it may be as simple as not getting a particular topic in maths but are fine with everything else). But Maths and English tend to be the most wanted subjects."
"Remember that you don't need a blockbuster new idea to be successful. Just make your service a bit better than whatever's out there. If you want to stick to some sort of tutoring, then try and add a new twist, in addition to the "online" bit. Put yourself into the position of your clients, both kids and parents and see what you could do to make your business better."
"Show up. Early. Get good at assessing what the REAL problem is. Have a personality that is laid-back and flexible and easy for kids to warm up to. Establish a set fee. Have parents pay at the beginning of the session. DO not schedule other sessions until they pay for the previous session. You won't make a living if you don't charge for your services."
How much does it cost to start a tutoring business?
It costs between $100.00 and $25,000 to start a tutoring business, depending on the scale and services provided by your business.
What qualifications do I need to become a tutor?
In the United States, you generally don't require specific qualifications to become a tutor. However, the basic requirement is a high school diploma and valid experience in a similar role. Tutors are encouraged to complete voluntary certification programs to sharpen their skills and establish credibility.
Where can I obtain a tutoring certificate?
How much does a tutor earn?
A tutor can earn between $20,000 and $85,000 a year, depending on the size, services, and scale of the business.
What skills and qualities do I need to be a tutor?
- Listening skills.
How many tutors are employed in the United States?
In the United States, there are over 1.2 million teaching assistants and tutors employed. According to BLS, that number is set to increase to 1.3 million by 2024.
How do I become a tutor?
- Graduate from high school.
- Complete additional tutoring training and education.
- Join a tutoring association.
- Obtain tutoring certification.
- Get licensed.
How much does a tutor charge per hour?
A tutor will charge between $17.00 and $45.00 per hour, depending on the services and scale of the business.
What online tools are used by tutors?
- Virtual classrooms.
- Online communication platforms.
- Online tutoring platforms.
- Online file sharing.
- Google Hangouts, Skype, Email, Google Docs, OneDrive, Dropbox.
Do you need a license to start a tutoring business?
No, you do not need a teaching or tutoring license to start a tutoring business. However, you may need to register your business and obtain a business license.
Do I need a license to be a private tutor?
No. Private tutors are professionals that are not regulated by state education boards. Therefore, they do not have to complete additional training beyond their chosen credential.
Is there insurance for a tutoring business?
There is no tutoring business insurance specifically, but liability insurance and professional indemnity insurance are popular choices for protecting a tutoring business.