There's a lot they cover in TEFL training. Phonetics. Lesson planning. How to explain the third conditional without losing the will to live. What they don't cover — not even in a footnote — is what happens when you try to actually run this thing as a business.
Nobody hands you a spreadsheet on graduation day. Nobody explains estimated taxes, late-payment policies, or why charging €15 an hour feels fine until you do the maths. And so, thousands of newly qualified tutors each year step into self-employment with all the financial preparation of someone who just decided to start a restaurant because they're "pretty good at pasta."
This post is the briefing you never got. No jargon, no judgement — just honest talk about online tutor finances, what trips most people up, and how to get a grip before it gets expensive.
You're a Business Now. Sorry.
The moment you accept payment for teaching, you are running a business. It doesn't matter that your "office" is a spare bedroom with a ring light and a stack of grammar textbooks. It doesn't matter that you only have four students. The tax authority in your country doesn't care about your vibes — it cares about your income.
What does being a business actually mean in practice?
- You are responsible for your own taxes. No employer is withholding anything.
- You probably need to register as self-employed (requirements vary wildly by country — look into yours).
- Your income is variable, unprotected, and entirely dependent on you showing up.
- Nobody is going to pay you when you're sick, on holiday, or staring at the ceiling wondering where all your students went in August.
None of this is a reason not to do it — freelance tutoring is genuinely great. But walking in with eyes open beats the alternative.
The Income Variability Problem
Salaried people get the same amount deposited on the same date every month. You do not. Welcome to the feast-or-famine cycle that every freelancer knows intimately.
Tutoring has seasons. Back-to-school months (September, January) are often packed. Summer is often a ghost town. December can go either way depending on your student mix. Exam season drives a surge; post-exam season drives a cliff edge.
Then there are cancellations — which we'll address properly later — and slow months that just... happen. A student gets busy at work. Another takes a spontaneous three-week trip. Two people leave in the same week and your income drops by 40% with zero warning.
The way you survive this isn't by panicking or immediately slashing your rates to fill the gaps. It's by planning for it in advance, which means treating your good months as partially belonging to your bad months. More on that shortly.
Tax Basics: The Bit Everyone Ignores Until It Hurts
This isn't legal or financial advice — tax rules differ enormously depending on where you live. But here are the universal truths of self-employed taxation:
Keep receipts for everything business-related. Your internet bill, your teaching software subscriptions, your noise-cancelling headphones, your textbooks — these are likely deductible expenses. "Likely" because, again, it depends on your jurisdiction, but you can't claim what you can't document. Shoebox of receipts > nothing.
Tax doesn't deduct itself. When a student pays you £50, that's not £50 of income you can spend. A chunk of it belongs to the government. In most countries, self-employed people pay both income tax and some form of social contributions. If you're earning meaningfully, set aside 20–30% of gross income in a separate savings pot as a rough rule of thumb — then adjust once you know your actual rate.
Many countries require periodic filings. Some places want quarterly estimated payments; others want an annual return. Find out which system applies to you and calendar the dates. Missing them comes with penalties that feel deeply personal.
Consider a local accountant. The cost is usually deductible. The peace of mind is priceless. Even a one-hour consultation in year one can save you from expensive guesswork.
The Rate Trap: Why Tutors Undercharge and How to Escape It
If you surveyed a room of independent tutors and asked whether they were charging enough, the majority would probably say no — and most of them would be right.
Undercharging is endemic to the profession. The reasons are psychological as much as practical: tutoring feels personal, raising rates feels like "taking advantage," and there's always a vague fear that students will leave if you charge what you're actually worth.
Here's the thing: most students who value your teaching will stay when you raise your rate by a sensible amount. Some will leave — and that's a business outcome, not a personal rejection. The ones who leave because you charged £35 instead of £30 were probably not your ideal long-term students anyway.
How to think about your rate:
- Research the market — not to match the lowest price, but to understand the range. You're not competing with AI-generated worksheets. You're offering expertise, relationship, and tailored instruction.
- Factor in non-teaching time — lesson prep, admin, chasing invoices, planning. More on this below.
- Build in a raise mechanism — decide in advance that you'll review rates once a year. Small, predictable increases are easier for students than sudden jumps.
- Charge more for specialist skills — business English, exam prep, beginner literacy. These command premiums for good reason.
The rate trap isn't permanent. It just requires a deliberate decision to exit it.
The Real Hourly Rate (This One Stings)
Let's do some honest maths.
Say you charge €40 per hour. You teach 25 hours a week. That's €1,000. Feels reasonable.
But wait — how long does each lesson actually take, including prep and follow-up? If it's 90 minutes of total time for a 60-minute lesson, your 25 teaching hours just became 37.5 hours of work. Add admin time — invoicing, scheduling, responding to enquiries, dealing with the student who keeps rescheduling — and you're probably looking at another 5 hours a week.
Now your €1,000 week took ~42 hours. Your real rate? About €24/hour.
Subtract taxes and business expenses, and the picture gets even more humbling. This isn't to depress you — it's to show why your headline rate needs to account for the reality that teaching is never just the lesson.
The solution isn't to work more hours. It's to work smarter: streamline prep, automate admin, and charge a rate that reflects your actual time investment.
Separate Your Money (Even If It's Just a Second Bank Account)
Mixing personal and business money is how you end up unable to answer basic questions like "how much did I actually earn last month?" or "do I have enough set aside for tax?"
You don't need a separate business bank account to start — though it's worth getting one eventually. Even a second personal account labelled "business" is a meaningful step. Here's the basic flow:
- All student payments go into the business account.
- At the end of each month, you "pay yourself" a salary by transferring a set amount to your personal account.
- Tax goes into a third pot (or stays in the business account, ring-fenced in your head).
This separation makes tax time dramatically less painful. It also gives you a clearer picture of how your business is actually doing, separate from what you personally spend.
Cancellation Policy: Not Vibes, Actual Policy
Every tutor who has been cancelled on an hour before a lesson — with no warning, no apology, and no expectation of payment — has felt the particular sting of realising they have no cancellation policy.
A cancellation policy is not rude. It is professional. Students who value your time will respect it. Students who don't probably weren't going to stick around anyway.
A reasonable approach:
- 24–48 hours notice required for a free reschedule
- Less than 24 hours notice = 50–100% of lesson fee charged
- No-shows = full lesson fee
Write it down. Share it when a new student starts. Reference it if it ever comes up. You won't regret having one; you will regret not having one.
The Emergency Fund: Three Months, Minimum
For salaried employees, an emergency fund covers unexpected expenses. For self-employed tutors, it covers that plus months when income just... dips.
The standard advice is three to six months of living expenses. For tutors, aim for the higher end. Three months of income sets a floor under the anxiety that comes with every quiet week — and it means you won't panic-slash your rates or take on students who drain you because you desperately need the money.
Building it doesn't have to happen overnight. Set up an automatic transfer of 10% of each payment into a savings account you don't touch. Boring? Yes. Transformative for your peace of mind? Absolutely.
Tracking Income: Spreadsheet vs. Proper Tools
A simple spreadsheet is infinitely better than nothing. If you track every payment received, every invoice sent, and every expense in a Google Sheet, you are ahead of most new tutors. It's free, flexible, and will serve you well in the early days.
As your student list grows, though, the manual work accumulates. Chasing invoices. Logging payments by hand. Remembering who owes what. It starts to feel like a second job.
This is where proper invoicing and student management tools start to earn their keep. Tuton is built specifically for independent language tutors — tracking sessions, managing students, and handling invoicing in one place, so you spend less time doing admin and more time actually teaching (and getting paid for it).
Whether you use a spreadsheet or dedicated software, the non-negotiable is consistency. Log everything. Every payment, every refund, every expense. Your future self at tax time will be grateful.
The "I'm Doing Okay" Illusion
One of the quieter financial traps in tutoring is the feeling of okayness that comes from being busy. Full schedule, money coming in, lessons going well — everything feels fine.
Until you sit down and actually calculate your income after tax, expenses, unpaid admin time, and the slow months you're not accounting for in your mental model. The number is usually lower than you expected. Sometimes significantly lower.
The antidote is regular financial check-ins with yourself. Monthly is ideal. Look at:
- Total income received
- Total hours worked (teaching + prep + admin)
- Effective hourly rate
- Tax set aside
- Emergency fund balance
This isn't about turning teaching into a cold numbers exercise. It's about making sure the thing you love doing is also financially sustainable — so you can keep doing it.
Getting Your Financial House in Order
Online tutor finances aren't complicated, but they do require intentionality. The tutors who thrive financially aren't necessarily the most talented teachers — they're the ones who treat their work like the business it is.
That means setting a fair rate, keeping it reviewed, having a cancellation policy, separating money, building a cushion, and actually tracking what comes in and goes out.
Tools like Tuton exist to make the admin side of that easier — so you're not spending your evenings chasing payments or rebuilding your spreadsheet from scratch every January. Clean financial tracking is a professional habit, and the right tools make it a lot less painful.
Ready to get organised? Start your free trial at tuton.io and see how much cleaner the business side of tutoring can be.