Business 101 for Tutors

You can’t be a successful tutor without a basic understanding of contracts, LLCs, and the tax code. Here Eric gets into the business side of tutoring and breaks down the basics of what you need to know. He explains all of the main forms you need and shows how to set up your finances for maximum tax benefit. There’s also a savvy tip for anyone working a part-time job in addition to being a math tutor.

Show Notes

If you're working for a company like varsitytutors.com, tutordoctor.com, or a local tutoring company, you can think of it like Uber driving. Uber uses contractors. The difference between a contractor and an employee is that for a contractor, you can choose to open your Uber app and select a trip. You don't have a manager telling you to go pick a ride up, right away. If that happened, you would be an employee and they would be withholding some taxes for you. 

As a 1099 contractor, you are essentially your own business. Many people prefer to be contractors because you can work whenever you want. You can decide Wednesday nights are when you’ll practice your guitar. Whereas for an employee the company could say, “Put down the guitar, you have to go get this guy.”

The way a 1099 works is that if someone pays you over $600 in a given year they are supposed to report that to the IRS. If you make less than $600, they probably won't even report it. But when you reach that point the company will report your earnings to the IRS. So you’ll want to claim those earnings on your tax return as well. Otherwise, the government is going to see that things aren’t adding up.

If you're also working another job, like maybe you also work 15 hours a week for Amazon, and you have a W4 from them, you could do the maximum withholding for that job. That means they're going to take the highest possible amount of money out of your paycheck. Usually this would get you a tax refund at the end of the year. But if you're also doing some self-employed work, you won't necessarily get a refund but you won’t owe a bunch of taxes all at once, which is nice. 

Consider starting an LLC for your tutoring business. There are many benefits to doing this. First, it’s going to give you some protection, because of what's known as the corporate veil. If you have an LLC, that entity is doing the tutoring and the business, not you personally. You want to create a separate bank account for the LLC to make it seem as separate from your personal life as possible and draw that distinction. You could even pay for things through that account, like if you're driving to a tutoring session, you could pay for gas with that debit card. Or if you have to buy a textbook or something, you could do it with that debit card. And the nice thing is that you're going to be able to write that off on your taxes come tax day. For example, let's say you earned $1,000 so you owe 20% to Uncle Sam: $200. If you've also been investing this year, and you spent $500 getting a website going, now at the end of the year instead of owing $200 to Uncle Sam, you only owe $100. So you just saved $100.

The W9 is going to be a simple form that your employer will send you. Just fill in your name, social security number, and address. They're supposed to have that on file for you. 

If you get advice from an attorney or other business professional, they're going to want you spending money setting things up. But we want to do this for $30 in startup costs. So keep things cheap initially, see what's working, then invest money later.

What is Earn $30k to $70k as A Math Tutor Part Time?

This podcast will reveal some simple strategies to get your first clients, grow your business, and market your services online as a tutor in any subject. There are five mistakes even experienced tutors make that can be costing you a LOT of money. Are you falling into any of the common traps? You might be surprised.

Eric Earle has started 4 different tutoring companies and been working in the tutoring industry for over a decade. Currently he runs his tutoring businesses remotely and travels around the world looking for awesome surf spots.

Along the way, Eric has discovered some tactics that are insanely effective to establish a tutoring business from literally nothing and grow it into a full time enterprise.

One of the biggest myths he came across is that you have to lower your rates when you’re first starting out. This is super pervasive and it’s simply not true. You can charge premium hourly rates right from the start, you just have to do it properly. Eric will show you a foolproof method in this podcast. Don’t discount yourself. Charge what you’re worth.

Whether you’re just starting out as a tutor or a seasoned pro with a thriving business, the hacks and secrets in this podcast will help you land more clients and scale your tutoring more effectively. You can use these strategies regardless of whether you’re meeting clients in-person or tutoring them online. This podcast will make you money!

Eric Earle is a tutor, entrepreneur, and investor. After science and math tutoring changed the course of his life, Eric saw the potential of tutoring to make a significant positive impact. He grew his tutoring business in Portland, Oregon, and soon needed to hire a staff of other tutors to meet all of the demand. He is also the founder of mathtutoraustin.com and the national tutoring platform zoomtutor.com as well.

It was at a neurology clinic high in the Himalayas that Eric had an epiphany: he realized he wanted to go to medical school. The problem was, he’d already graduated from college and hadn’t taken any of the math and science classes required for admittance. He went back to school to work his way through calculus, physics, organic chemistry, and biochemistry but the topics were unbearably difficult. Eric hired a tutor and, with diligent work, was able to turn himself into a top science student.

This experience with tutoring showed Eric that there is no limit to what we can become with the right teachers. He now supports tutoring and education through his businesses. He is here to share what he has learned about business, investing, tutoring, and life though this podcast. Hopefully you find some of his teachings valuable.