Your Tutoring Business: Money 101 for tutors
How to set rates, track finances, and run a successful business
Whether you're just starting out, working part-time, or launching your own full-time tutoring business, these smart tips and tricks for accounting should help you keep your books balanced -- and your sanity intact.
How to set rates
- While rates will vary based on location, subject matter, and the duration of a particular job, a tutor can generally charge from $10 to $20 an hour; tutors with more advanced skills might be able to charge more, according to cleverapple.com, an internet resource for tutors.
- Research the market for tutoring in your area by looking through listings on Craig's List, SuperPages, Yelp, or CitySearch. Also, check out the listings in your state on Care.com. If you are located in Massachusetts, for example, see what Boston Tutors are charging. Similarly, if you are located in Texas, you can see what Austin Tutors, Dallas Tutors, and San Antonio Tutors are charging in their cities. You can also see what other nearby tutors charge by visiting their local town pages. Go to Care.com's United States Care Directory to get started.
- Base your rates on those charged by other tutors with comparable skills.
How to track finances
- Regardless of how much you think you'll make, first you need to register as a "sole proprietor." To do so, visit the state department of taxation or business, and your town or city hall. Once you complete the registration process, you'll be assigned federal and state employer and tax ID numbers. If your business grows to the point that you're making more than $5,000 a year, you will need to update your business status to an LLC (limited liability corporation) or other corporate entity.
- Keep your records safe, and always keep a history dating back at least three years. Store back up computer files at least once a month. Don't let a computer crash ruin your business -- the IRS reserves the right to audit you at any time.
- Invest in finance-organizing software. Look for programs that cater to small-business owners. These packages provide business forms and templates, and plenty of information to get you up and running. Begin by creating business ledgers, which should include cash-flow worksheets to track your spending, fixed and variable expenses, income, and other financial records. Quicken, QuickBooks, Microsoft Money, and PeachTree are some popular options.
- Hold on to receipts. Cell phones, computers, equipment, and office space are only a few of the items that can be deducted come tax time.
- Speak with someone at your local Chamber of Commerce, which has resources to help you set up, run, and finance your tutoring business. The Chamber of Commerce can also help you promote your business, and might even lead you to potential clients.
The nuances of small-business tax law are best left to an accountant. The best way you can help, come tax time, is by keeping concise records of all the money you spend and earn. You have to be pretty numbers-savvy to keep from getting tangled in the financial web that's spun when you're running a small tutoring business, but with these tips you're on the right track!
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