Do You Need A License To Start An eLearning Tutoring Business?
If you have a college degree or perhaps a teaching certification and lots of passion for teaching, starting a tutoring business is a lucrative proposition. There are minimal initial costs involved, and you can work from home to your own schedule by embracing online tutoring.
Nothing is more exciting than running your own eLearning tutoring business. But you need to go through numerous processes, including legal aspects, when starting your own eLearning tutoring business. Like any business endeavor, running a successful tutoring business requires you to comply with local laws. Most educators have a common doubt: “do you need a license to start a tutoring business?” In this article, we are going to cover the basic legal aspects of running a tutoring business.
Types Of Tutoring
If you are interested in teaching a subject or a skill to learners who are interested, you can adopt different types of tutoring approaches to start your own tutoring business. Here are some types of tutoring you can choose from.
1. Specialty By Age
Some educators love to work with small kids, whereas others prefer working with university-level students. Do you have any preferences when it comes to the age bracket? If yes, you can choose accordingly based on your interest and business goals.
2. Specialty By Subject
Keeping aside the age bracket, all tutors will have an area or a subject that they are experts at. Whether it is teaching a language or math, there is always scope for subjects you specialize in.
3. Exam Preparation
Another area you can explore when starting a tutoring business is helping students prepare for college entrance exams like the ACT or SAT.
Do You Need A License To Start An Online Tutoring Business?
Before getting into the important legal aspects of running an eLearning tutoring business, let’s address the most common doubt most tutoring start-ups have, about whether a license is needed. The answer to this is “no.” You do not need to have a license for a tutoring business, but you must have a proper structure for your business. For example, you can operate your business as a sole trader, a corporation, or a limited liability company. A limited liability company (LLC) is a structure you have to choose, which determines your tax and liability when running a tutoring business.
Setting Up Your Online Tutoring Business
When establishing an online tutoring business, you must make financial decisions for your tutoring business. The first thing you want to decide is whether you wish to operate as a C-Corp, an LLC, or an S-Corp. These three options are best suited for small tutoring businesses and serve to protect all your assets and help you with essential tax advantages.
- C-Corp If you opt for this category, the income tax would be paid from your own individual level instead of at a corporate level.
- S-Corp Business owners have to pay their own salaries and also receive dividends from the profits earned.
- LLC All business expenses and income must be reported on the LLC income tax return.
Depending on the location where you reside, you will have to consider securing essential permits, licenses, and liability insurance.
Important Legal Aspects To Consider When Running A Tutoring Business
Before starting a home-based tutoring business, assess your commitment, personal qualifications, and legal aspects to begin a business. Here are some of the key legal aspects you must consider before starting a tutoring business.
1. Tax Laws That Apply To Your Business
If you are running your own tutoring company, it is important to familiarize yourself with your country’s tax laws. Based on your location, you will have to pay some type of tax, like income tax, sales tax, corporate tax, or other tax categories. As an entrepreneur, you are solely responsible for paying your tax, and it is really important to keep a close eye on tax regulations.
2. Running Valid Background Checks On Tutors
If you plan to run a tutoring marketplace where you hire other subject experts, it is important to employ strict background checks. In the UK, the law makes it mandatory for tutors to undergo a mandatory DBS (Disclosure and Barring Service) check to get a copy of a person’s criminal record. While this is not a strict legal requirement, most tutoring companies, especially in the US and UK, highly recommend doing so.
The next thing is tutor contracts. Make sure you set a clear understanding of each tutor’s role, the rules they need to follow, and what happens next if they fail to meet the standard of your tutoring business. When creating a tutoring contract, make sure you consider the following points:
- Is there a specific number of hours a tutor is expected to teach?
- Do you have clear rules in place for class cancellation and refund?
- How do you expect tutors to represent your brand?
- How often do you want to pay the tutor?
- What scenarios warrant tutor termination?
Insurance For A Tutoring Business: What You Need To Get Started
Now that you have an idea about the answer to the question, “do you need a license to start a tutoring business?” let’s get into the next important aspect: business insurance. Business insurance is specially created to provide protection for financial and personal assets. Getting insurance lowers the risk of unfortunate scenarios affecting your business. When it comes to insurance for tutoring businesses, there are four different types of insurance you might have to consider to manage the risks associated with running your business.
- Professional liability insurance This insurance covers major business errors and other malpractices.
- General liability insurance This protects your business from common lawsuits related to the industry.
- Workers compensation insurance This insurance is advantageous if more than one employee is working under you. It offers coverage for job-related illness issues, injuries, and the demise of employees.
- Commercial property insurance If your tutoring business owns any equipment like electronic devices, it is essential to cover these to gain benefits if they are damaged, lost, or stolen.
Now coming to the cost part of insurance for a tutoring business, it might cost around $700–$4000 annually for a small business.
Taking the legal aspects into consideration when running a tutoring business is critical so that you can avoid getting into legal disputes. It is equally important to protect the reputation of your business. The more professional the approach you adopt, the more your learners will trust your tutoring brand and will choose you over other competitors in the industry.