Explore The Legal Requirements for Starting a Tutoring Business

When you launch a new tutoring business, it’s important to think strategically about how you’ll market and brand yourself, how you’ll attract new customers, and more. And then there’s the matter of legal compliance. While tutoring is not a field known for having an onerous regulatory environment, there are certainly a few legal considerations you’ll want to keep in mind.

Choosing the Right Legal Structure for Your Tutoring Business

One of the foremost considerations is the legal structure you’ll use for your business.

When you first start to generate self-employed income as a tutor, you’ll automatically be classified as a Sole Proprietor. This basically means you call all the shots at your business, and you’re the one who claims all revenues and liabilities alike. The problem with a Sole Proprietorship is that it offers no legal liability protection. If your tutoring business is served with a lawsuit, it could be bad for you on a personal level!

An alternative is to establish a Limited Liability Company, or LLC, which allows you to create some distance between yourself and your business, and to minimize your legal risk exposure. To register as an LLC, you’ll need to check state-specific guidelines, e.g., how to form an LLC in Arizona.

Other Legal Considerations for Your Tutoring Business

Choosing the right legal structure is a foundational step, but there are a few other legal considerations you’ll want to keep in mind for your tutoring business.

Check for Local Licensing and Permitting Requirements

While regulations vary according to state and municipality, many jurisdictions will require you to have either a business license or permit to start a tutoring company. Be sure you check out the local requirements before you set up shop as a tutor. Contacting the local chamber of commerce or business bureau is usually a good way to find the information you need.

Consider the Kinds of Insurance You Might Need

Insurance coverage is one of the most powerful resources small business owners have for mediating risk; in fact, insurance can keep you safe while also protecting your customers. In particular, you might wish to acquire liability coverage, ensuring you are not found liable for any accidents or injuries that occur during a tutoring session.

Use Contracts to Clarify Formal Agreements

The use of contracts can be an important way to clarify the relationship between you and your clients, ensuring everyone is on the same page and reducing the risk of a dispute down the line. A good contract will outline the terms of service and summarize your policies for payment and for cancellations.

Know Your Tax Obligations

The old saying about death and taxes holds true for everyone, including tutors! Familiarize yourself with the tax obligations that tutoring businesses face, including income tax and sales tax (if applicable in your state). Note: If you have an LLC, you do not need to file a separate business tax return; you simply declare your share of the profits on your personal tax return.

Understand Privacy Laws

Tutoring businesses may be bound by privacy and confidentiality laws. This is particularly true if you’re working primarily with minors. Spend some time reviewing germane privacy laws and regulations, such as FERPA (Family Educational Rights and Privacy Act), if applicable.

Safeguard Intellectual Property

As you seek to market your services, you may create original assets such as logos, brochures, videos, or blog posts. Keep in mind that trademarks and copyrights allow you to safeguard these assets, preventing them from being used without authorization. This is important as you seek to prevent your brand from getting diluted.

Be Mindful of Employment Laws

If you plan to hire additional tutors (as opposed to working solo), you will need to study up on relevant employment laws. Think in particular about worker classification and compliance with other labor laws.

Follow Laws About Advertising and Marketing

Finally, remember that, as you promote your tutoring services, you’re bound by advertising laws. For the most part, you’ll just need to avoid making any misleading claims, or promises you can’t keep. Just being honest should be sufficient for ensuring legal compliance.

For Tutoring Businesses, Legal Compliance is a Must

Every business faces its own unique regulatory environment, and tutoring is no exception. Before you start seeing students, take the time to develop a robust understanding of the law, ensuring your tutoring business is positioned for long-term success. Follow the guidelines here as a jumping-off point for legal compliance.

Author Bio

Amanda E. Clark is a contributing writer to LLC University. She has appeared as a subject matter expert on panels about small business leadership and social media marketing.