How to Start a Home Tutoring Business

Starting a home tutoring business can be an exciting and rewarding business venture for entrepreneurs who are passionate about education and helping students reach their full potential.

Having said that, you should keep in mind that launching a successful home tutoring business requires strong teaching skills and a clear strategy to attract and retain clients.

In this comprehensive guide, we’ll walk you through all the essential steps you’ll need to take to start your own home tutoring business, from choosing the right business model and registering your company to preparing your teaching materials and obtaining the appropriate licenses.

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Industry Overview

The home tutoring industry forms part of the larger global tutoring and education market — which is projected to grow by a staggering $318.2 billion between 2024 and 2028 at a compound annual growth rate (CAGR) of 19.83%.

In particular, this growth is thought to be largely driven by the increasing demand for personalized learning in STEM (Science, Technology, Engineering, and Math) subjects. Since students of these disciplines are increasingly facing heightened academic competition, individualized tutoring services are growing in popularity as students seek to improve their performance and gain a competitive edge.

At the same time, the rise of online education has created new opportunities for home tutoring businesses to expand their reach and tap into key markets in the Asia-Pacific (APAC) region, such as China, India, and Japan.

With that said, it’s important to mention the significant threat posed by the spread of free, open-source tutoring platforms to these businesses. While many students still prefer private, personalized tutoring for its tailored approach and individual attention, cost-conscious customers may opt for these free alternatives.

Overall, the current market climate presents a promising opportunity for those looking to start a home tutoring business. While competition from free platforms presents a challenge, the demand for personalized learning remains strong, particularly for tutors that can differentiate their services based on the attributes that free platforms often lack — quality, specialization, and personalization.

Startup Costs

If you’re considering whether a home tutoring business is right for you, the first thing you’ll need to know is whether it’s a) affordable, and b) worth the investment. I mean, how much can you actually make running your own home tutoring business?

Well, it depends. While it’s true that one of the best things about starting your own home tutoring business is the lack of upfront costs, there are still several key expenses you may encounter depending on how you choose to run your business:

• Teaching Supplies and Tools: One of the most common expenses to be faced with when starting up your home tutoring business is that associated with the tools and supplies you’ll need in order to teach. While the specific amount you’ll need to spend on this will largely depend on the subject you plan to tutor, you can expect this cost to range anywhere from $50 to $500 — which could be used to cover anything from educational software and subscriptions to things as simple as textbooks, worksheets, and lesson plans. If you plan to tutor online, you’ll also need to factor in the cost of a higher-quality webcam and microphone, which could add an extra $100 to $300 to this.
• Licensing and Insurance: Before you can legally operate your home tutoring business, there are a number of different permits you may need (e.g., a general business license or home occupation permit), which can add between $50 and $500 to your upfront costs. Additionally, you’ll also likely want to invest in general liability insurance, professional liability (E&O) insurance, and possibly workers’ compensation if you plan to hire other tutors — which may add an additional $100 to $300 per month.
• Marketing and Branding: When just starting out, most home tutoring businesses will be able to get by with free advertising using social media or word-of-mouth. Despite not being necessary by any means, if you have the capital available to invest, professional marketing materials can be incredibly helpful in quickly attracting more students. At an entry-level, a professionally-designed website can range from $500 to $3,000 — depending on the complexity and features — while paid online ads (e.g., on Google, Facebook or Instagram), could start as low as a couple hundred dollars but easily climb into the thousands depending on your desired reach.

It’s worth noting that due to the amount of money you’ll save on overheads purely by virtue of running your tutoring business from home, it’s worthwhile looking to find ways to invest these savings back into the business where you can.

Re-investing this money on things like the marketing and branding strategies mentioned above, or higher-end technology to give your students a better tutoring experience, can give you the edge needed to stand out in this competitive market and ultimately stimulate long-term growth.

Ongoing Costs

While minimal, the main ongoing costs associated with starting up a home tutoring business that you should be aware of include:

• Keeping your teaching materials up-to-date
• Subscriptions for teaching services

Purchasing resources like textbooks, workbooks, or other materials is not a regular monthly expense but rather a sporadic one that usually occurs on a semi-annual or annual basis. It will typically cost between $20 to $100 at a time, though this will ultimately depend on the number of subjects you tutor and how often new materials are required.

Similarly, subscriptions for teaching software like Zoom Pro, Quizlet, and Google One will occur on a monthly basis but are generally nominal. These services typically each cost between $15 and $50 per month, though this figure can quickly begin to stack up if you’re using multiple tools.

Arguably the largest ongoing expense you might face as the owner of a home tutoring business is the cost of fuel and vehicle maintenance, though you’ll only be faced with this if you plan to travel to students’ houses instead of (or in addition to) offering tuition in your own home.

Depending on your location and the distance you travel, monthly transportation expenses could range from $50 to $300 per month. However, if you live in an area where public transport is available and preferred, your costs would be much lower than this.

Earning Potential

Ultimately, the earning potential of your home tutoring company will vary depending on the type of business model you adopt and how you position yourself in a highly competitive market.

For example, successful solo tutors can often charge between $30 to $100 per hour — depending on their subject expertise, location, and experience — and are able to keep 100% of what they earn since they directly charge for their time and services.

While this approach can initially seem quite attractive because it allows you to hold onto a larger proportion of your income, it’s not without its tradeoffs as this model isn’t scalable in the long-term.

In other words, because your earning potential is capped by the number of hours you can work and you’ll be solely responsible for all business operations (e.g., buying textbooks, creating worksheets, and administrative tasks) on top of tutoring students, you’ll hit a point at which it’s virtually impossible to grow because you won’t have enough time or resources to take on more clients.

As such, if you want to scale your business further you’ll likely need to think about hiring other tutors — which will increase your earning potential as you’ll no longer be limited by your own time. However, while this model opens up greater income opportunities, it also comes with added costs that will reduce your overall profitability.

The biggest of these is the fee you’ll need to pay your tutors, who will typically take the largest portion of your earnings since they’re the ones delivering the actual services and doing the majority of the direct work with students. As an example, if your business charged $60 for a class it would likely need to pay the tutor around two-thirds of this revenue, which would be $40.

However, there are a number of other key expenses to budget for, including scheduling software, training materials, and ongoing marketing efforts. As your business grows, you may need additional administrative tools (such as Google Drive or Notion for organization), and accounting services to manage your finances.

Overall, with the latter business model you should be striving for profit margins of around 20%, though this will more realistically be somewhere between 10% and 15% (especially when you’re just starting out).

7 Steps to Starting a Home Tutoring Business

In order to start a home tutoring business, you’ll need to complete the following steps:

1. Planning Your Home Tutoring business
2. Registering Your Business
3. Setting Up Your Taxes
4. Opening a Business Bank Account and Credit Card
5. Preparing Your Teaching Materials
6. Getting all Applicable Licenses and Permits
7. Obtaining Business Insurance

We’ve broken each one of these down in more detail below.

Still exploring your options? Check out other small business ideas.

Step 1: Plan Your Home Tutoring Business

Before diving into your home tutoring business, you’ll need to spend some time conducting thorough market research.

This can involve analyzing the local market to understand the demand for tutoring services, identifying potential competitors, and assessing how you can distinguish your business.

Due to the highly competitive market created by this industry’s low barrier to entry, identifying these distinguishing factors is crucial to your ability to stand out and succeed in the long-run.

This will help you evaluate the financial viability of your project — including projected revenues and expenses — as well as determine the best location for your business.

Finding a Suitable Name

Choosing the right business name is both important and challenging.

Your name will need to be eye-catching, memorable, and (at least somewhat) related to your industry.

If you don’t already have a name in mind and need help, you can visit our How to Name a Business guide or use our Home Tutoring Business Name Generator tool.

If you do have a name in mind, we recommend researching the following to confirm it’s available:

• Your state’s business records
• Federal and state trademark records
• Social media platforms

You will also need to make sure that your business’s name is available as a domain — this is your website’s URL address.

Note: If you’re planning to operate a sole proprietorship, you might want to operate under a business name other than your own name — known as a “Doing Business As” (DBA) name. Keep in mind that this is not recommended for a home tutoring business.me before someone else does.

Choosing the Right Business Model

Before getting started, there are a number of important questions you’ll need to consider to ensure you choose the right business model for your needs, including:

• Which specific subjects or skills do you plan to offer?
• What qualifications do you have?
• What types of clientele do you intend to serve?
• How do you plan to distinguish your business?

Arguably the most influential factors on how you plan to run your business will be your niche and the specific subjects or skills you plan to offer.

For instance, if you specialize in standardized test preparation (e.g., SAT and ACT), college admissions coaching, or language tutoring, your clients will likely be high school students or adults seeking a tutor with more advanced qualifications and a formal teaching approach.

Since this type of tutoring is in high demand and requires a deeper knowledge of the subject matter, you would likely be able to charge premium rates (e.g., between $75 and $150 per hour) for your classes, depending on your experience and testimonies.

By contrast, with subjects like elementary math or reading you’ll be working with younger students, which often demands a more creative and patient teaching style, among other challenges.

However, because the qualifications required to teach this demographic of students are far lower, the rates you can charge are generally more modest, typically ranging between $30 and $60 per hour, depending on your experience and the local market demand.

It’s important to highlight that there’s no singular “right” choice, just try to weigh up your qualifications and skills with the clientele you feel you’d be more successful working with when making this decision.

Step 2: Register Your Business

One crucial aspect that cannot be overlooked when starting your home tutoring business is the importance of establishing a solid business foundation.

While sole proprietorships and partnerships are the most common entity types for small businesses, they’re a far less stable and advantageous option than LLCs — especially when it comes to home tutoring businesses (with potential liabilities and debt).

This is because unincorporated business structures (i.e., sole proprietorships and partnerships) expose you as an owner to personal liability for your business’s debts and legal actions, while LLCs protect you by keeping your personal assets separate from your business’s liabilities.

In practice, this means that if your business were to face a lawsuit or incur any debts, your savings, home, and other personal assets could not be used to cover these costs. On top of this, forming your business as an LLC also helps it to appear more legitimate and trustworthy.

Note: If you’re interested in more information before getting started, we recommend having a look at our How to Start a Business guide (DIY) or our in-depth Best Business Formation Services review (for those opting for a professional service).

Step 3: Set Up Your Taxes

The next step you’ll need to take is to register your business for taxes. To this, you’ll need to obtain an Employer Identification Number (EIN), which you can think of as your business’s Social Security Number.

If you form your LLC through a specialized LLC formation service, this will likely be already handled for you in exchange for a small additional fee.

Even so, it’s important to make sure that you fully understand your business’s tax obligations; since these can depend on your location, it’s a bit difficult to accurately break down exactly which taxes you’ll be subject to.

Nevertheless, most businesses will typically be subject to income tax, sales tax, and employment taxes at the federal level.

Due to the complex nature of business taxes, we always advise our readers to seek the help of a professional accountant or business attorney for this step.

Step 4: Open a Business Bank Account and Credit Card

Using dedicated business banking and credit accounts is essential when operating as a business owner; this is because when your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) can be at risk in the event your business is sued.

In business law, this is referred to as piercing your corporate veil and is a result of the fact that not having a separate business bank account can be interpreted by some courts as evidence that you are not treating your business as a separate financial entity.

As a result, you could lose your limited liability protections even if you’ve registered a separate business such as an LLC or C Corp.

There are also a variety of practical and economic benefits to this step, such as a larger access to business loans and a more legitimate look.

Getting a business credit card can also be a great idea as it can help you build your company’s credit history from the start.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Step 5: Prepare Your Teaching Materials

At this point, the next step you’ll need to think about is preparing all the necessary materials and resources you’ll need in order to be able to effectively teach your students.

Regardless of the subjects you plan to teach, you’ll likely be need to look into obtaining all of the following:

• Teaching Materials: This could include textbooks, workbooks, lesson plans, and worksheets tailored to the subjects and specific curriculums you’ll be tutoring.
• Digital Tools: Educational software and apps (e.g., Kahoot!, Quizlet, Zoom Pro) are great as they offer an easy way to create interactive and engaging lessons.
• Reliable Internet Connection: This will be essential if you plan to offer online tutoring sessions, as a laggy connection is not only disrupting and annoying, but appears unprofessional as well.
• Printer and Scanner: These can allow you to easily create hard copies of materials, as well as maintain digital copies of physical paperwork you need to send to students.
• Professional Software: Tools like Google Drive (e.g., for storing student records and important documents) or Acuity (e.g., for managing lessons and student progress) can be a huge help.

Note that the above list is a general guide for the types of materials you’ll likely need — in reality it will vary largely depending on the type of subject you plan to teach.

It’s a good idea to have materials that cover different levels of difficulty to ensure you can support students with varying abilities. Whether you’re helping students with basic concepts or more advanced topics, having a range of resources will allow you to tailor your tutoring sessions to individual needs.

Step 6: Secure All Necessary Permits and Licenses

One of the final steps you’ll need to take before you can officially launch your home tutoring business is to obtain a number of different licenses and permits that are commonly required by law.

Home Occupation Permit

If you plan to operate your home tutoring business from your residence, you may need to apply for a home occupation permit, depending on local regulations. This permit ensures that your business adheres to zoning laws that regulate the types of businesses allowed in residential areas.

Typically, the permit process involves verifying that your business activities won’t cause disruptions in the neighborhood — such as excessive noise, increased traffic, or the need for additional parking. For a tutoring business, this is usually not an issue unless you teach large groups of classes at once.

Business Operation Licenses

At a state level, your business may be required to obtain a business license in order to operate — though this will depend on your location.

This process generally involves submitting an application, paying a fee, and meeting specific state requirements. However, some states may also require you to provide a detailed business plan or proof of insurance as part of the licensing process.

Tutor Certification

It’s not common for independent, private tutors that don’t work directly in public education programs to be required to obtain a statewide certification before they can teach.

However, obtaining one of these certifications (e.g., from the National Tutoring Association or American Tutoring Association) can go a long way in both building credibility and attracting clients.

It’s also worth noting that some states may have local districts or specific programs that impose their own requirements — so it’s always a good idea to check local regulations or consult a legal advisor.

Step 7: Get Business Insurance

In addition to securing the necessary permits and licenses, you will need to obtain the right business insurance.

Note

Even if you form an LLC, purchasing business insurance is still a good idea. This is because an LLC structure protects your personal assets, not your business’s.

While the policies we’ve broken down in more detail below are recommended for a home tutoring business, it’s worth mentioning that these will be by no means necessary in order to get started — particularly for smaller operations.

In fact, it’s unlikely that many home tutoring businesses have all of this coverage, so try to make a decision on which of these policies are most relevant to you based on the risks you’ll most likely face.

General Liability Insurance

General liability insurance is a foundational coverage that’s essential for home tutoring businesses because it protects against claims of bodily injury, property damage, and personal injury that could happen on your premises.

An example of this might be if a student trips and falls while entering your home or if a piece of equipment, like a whiteboard, accidentally falls and injures someone — in either of these cases, general liability insurance would cover the costs.

The average cost for general liability insurance according to recent data is between $25 and $50 per month, though costs can vary based on your business’s specific needs and risks.

Commercial Property Insurance

Property insurance is essential for safeguarding your home tutoring business’s physical assets, such as its computers, furniture, and other equipment used for lessons (e.g., whiteboards).

The median cost for business property insurance is approximately between $30 and $60 per month. Having said that, rates can vary significantly based on factors such as your business’s location, risk profile, and the value of the property in question.

Errors and Omissions Insurance

This protects against claims that your tutoring services caused financial harm to a client, such as in situations where you’re accused of failing to provide the expected level of instruction, giving incorrect advice, or neglecting to cover key material that resulted in a student underperforming on an exam.

For the most part, you shouldn’t be surprised if this policy costs your home tutoring business anywhere from $40 to $100 per month.

Commercial Auto Insurance

If you use your car to travel to students’ homes for tutoring sessions, you may also need commercial auto insurance as personal auto policies often don’t cover accidents that occur while conducting business activities.

Depending on the number and type of vehicles you plan to use for your business, you might need to pay anywhere from $50 to $150 on this type of insurance.

Ready to Get Started?

How to Start a Home Tutoring Business FAQs

Who is the target market?

The target market for a home tutoring business will largely include school-aged students whose parents are focused on improving their academic performance, particularly for long-term engagements lasting a semester or more.

However, college students and adult learners also make excellent clients as they view tutoring as an investment in their future success.

How much can you charge customers?

Tutors typically charge between $30 and $40 per hour for standard subjects, with higher rates for more complex topics or unique specializations.

With that being said, your pricing should reflect your experience and education while staying competitive in your local market — these figures are just guidelines based on industry standards.

How much profit can a home tutoring business make?

Outside of obvious factors like the rate you charge and the number of students you have, your business’s profit can also fluctuate based on the model you’ve adopted.

While solo tutors keep 100% of their earnings, they’re limited by the number of hours they can personally work. Contrastingly, a tutoring company will see lower profit margins — typically around 10% to 20% — due to additional costs like tutor wages.

How can you make your business more profitable?

To increase profitability, focus on attracting more students through advertising and networking.

Offering free workshops at schools is an excellent way to demonstrate value and expand your client base, as is publishing guest posts on educational blogs and encouraging customer reviews to help enhance your reputation.