In-Home music lessons

[Coltrane]

Hi everyone!

As you obviously know I'm new here, and am looking for your expert advice and comments/critiques.

I am looking to start an in-home music lesson business. What this would entail is hiring music teachers on all of the instruments, and they would travel to students' homes each week to give them private music lessons.

I currently teach private music lessons on my own, and have a completely full schedule (with a bunch on a waiting list). I teach music in a public school during the day, and have many contacts in the area (Central New Jersey). I have talked to other teachers and they would be on board with this idea- me running the business, setting up lessons, dealing with parent contact, money, etc.

What I'm wondering is how to I actually start this business? I have no prior business experience, only lots of teaching experience. Any and all help/guidance would be greatly appreciated!!

Dave

[Owen]

Hello, Dave! Welcome to SBF :)

First off, if these are legit staff members, (like they are taxed), then you will want to register as an LLC. An LLC is a limited liability company, which protects you from any financial liability. LLCs are very common with small businesses, since they are great for tax deduction. LLCs are generally cheaper to start, unlike C-Corps with higher state fees (depends on the state). If I were you, I'd write a small business plan, get together with your co-workers, and talk to an attorney. If you want to skip the hassle of an attorney, there's online services that'll help you out :)

[Coltrane]

Hello, Dave! Welcome to SBF :)

First off, if these are legit staff members, (like they are taxed), then you will want to register as an LLC. An LLC is a limited liability company, which protects you from any financial liability. LLCs are very common with small businesses, since they are great for tax deduction. LLCs are generally cheaper to start, unlike C-Corps with higher state fees (depends on the state). If I were you, I'd write a small business plan, get together with your co-workers, and talk to an attorney. If you want to skip the hassle of an attorney, there's online services that'll help you out :)

Thanks for the reply! Forgive me for being naive, but what exactly do you mean by a business plan? Just jotting all of the information down about the business? (Scheduling, payment, etc?) Also, would I register as an LLC before anything else? Or would I need to establish anything first? Thanks in advance!

[Owen]

Thanks for the reply! Forgive me for being naive, but what exactly do you mean by a business plan? Just jotting all of the information down about the business? (Scheduling, payment, etc?) Also, would I register as an LLC before anything else? Or would I need to establish anything first? Thanks in advance!

A business plan is what is sounds like. It's a structured idea of your business. You can google business plan templates and edit one if you don't know how to make one. Secondly, registering as an LLC is not required ASAP, in fact, it isn't even required. There are loopholes with running your type of business. Here's how it'll work: The "staff" will not work for you. They will be people who work under your name, but do not directly receive payments through your company. All the payments they receive are received are given to them. In order to take the company's cut of money, these workers will pay the percentage via donation to your small group. You will still have to pay taxes, and there are no tax loopholes. However, if you want to find loopholes, register as an LLC. When should you register? Before you handle ANYTHING legal including copyrights, trademarks, paper work, etc.

[Coltrane]

A business plan is what is sounds like. It's a structured idea of your business. You can google business plan templates and edit one if you don't know how to make one. Secondly, registering as an LLC is not required ASAP, in fact, it isn't even required. There are loopholes with running your type of business. Here's how it'll work: The "staff" will not work for you. They will be people who work under your name, but do not directly receive payments through your company. All the payments they receive are received are given to them. In order to take the company's cut of money, these workers will pay the percentage via donation to your small group. You will still have to pay taxes, and there are no tax loopholes. However, if you want to find loopholes, register as an LLC. When should you register? Before you handle ANYTHING legal including copyrights, trademarks, paper work, etc.

Alright, thanks! I was under the impression people would pay the business directly, then I would pay the teachers. Is this how it would work if I registered as an LLC?

[Owen]

Alright, thanks! I was under the impression people would pay the business directly, then I would pay the teachers. Is this how it would work if I registered as an LLC?
Yes. However, you as an individual will be taxed, not the company. You would have to register as a corp to do that :)

[Coltrane]

Yes. However, you as an individual will be taxed, not the company. You would have to register as a corp to do that :)

Ah now I confused myself...so 1. I should register as an LLC? And 2. Will I be paid (then pay teachers) or will teachers be paid (then they "donate" to the business)?

[Owen]

Ah now I confused myself...so 1. I should register as an LLC? And 2. Will I be paid (then pay teachers) or will teachers be paid (then they "donate" to the business)?

1. Register as an LLC if you're hiring legal contracted employees
2. If you register as an LLC, your clients can pay the company directly

[Blessed]

The simplest way to do this would be to hire your music teachers as independent contractors - then you don't have to worry about employment taxes and all the other responsibilities that come with having employees. In the business model you are proposing I think that would work fine for you - but I'm no tax expert. There are other people on this forum who will chime in with some solid information for you next week - it's pretty quiet around here most weekends!

I've met the lady who started a similar business in my area - here is her website: Home Music Teachers | Piano, Violin, Cello, Guitar & Voice Lessons (http://www.homemusicteachers.com/) We haven't actually signed up for any music lessons yet (although I'd love to get the kids started!) but it is in the near future so I've been doing some research on what my options are. You could reach out to her since she's doing exactly what you want to do and see if she would give you some feedback. I don't have any idea if she would or not - but it never hurts to try!

Good luck with your venture and welcome to the forum :)

[Paul]

Jenn is correct. Don’t get too wound up over entities and taxes. An LLC or even sole proprietor to start out is fine. Probably get some liability insurance, should be very inexpensive. Just in case a student or teacher does something stupid!

It’s pretty basic. The student/parent books with you, you assign it to one of your teachers. The student/parent pays you ,then you pay the teacher. IE: You charge $ 100, you pay $ 50, and you made $ 50. That’s what you’ll pay taxes on.

Since the teachers are not your employees you don’t have to worry about payroll taxes etc. just at the end of the year you will issue a 1099 form, which simply tells the IRS how much the teacher was paid. That’s about all the bookkeeping you’ll need. What you made, what each teacher was paid and any expenses you had. Keep a separate checking account and it should be very simple. The checking register will pretty much be all the info you need.

I don’t think you need a formal business plan for this. It’s basic stuff that you were able to explain in a few sentences. The teachers aren’t part of the company so the only person that needs to know the plan is you. The teachers will just want to know how much they are paid and the schedule.

[Freelancier]

I think there might be a problem in the business scenarios described where the student pays the teacher directly, then you have to get that money from the teacher. So you have choices to consider:

1. Student pays teacher for every session. Teacher pays you for the student (a one-time fee), so that you don't have to continuously monitor that relationship. And it's clear at that point that the teacher is an independent contractor, no question will ever arise about that, since you're not paying the teacher.

2. You get set up to take credit cards and student sets all appointments with you and pays on the day of the appointment with the credit card. In this scenario, you'll need to get teacher calendars set up ahead of time, so that you know in advance when you can schedule them, then you get the students to tell you when they want their appointments, and you do the matching. In this scenario, you pay the teacher and take your cut from what you get after credit card fees. The issue here is that you'll need to have a contract with the teacher making it clear they are independent contractors and the customer is your customer not their customer.

3. The student pays the teacher, teacher then has to get some of the money to you at some point in the future (which may get annoying) for each session (instead of one-time fee). I personally don't like this scenario, because it's not clear who is working for whom.

The only reason to at least make an attempt at a business plan is that it helps you figure out the steps you need to take next in terms of business, marketing, advertising, etc. and which steps can be put off for a little while. For example, at some point in the future, you should get a shared calendar (between you and each teacher), so that they can indicate their availability and you can put their appointments on it, and stuff like that ends up in the plan to give you milestones to remember to do.

As for LLC/Corp/Sole Prop... I'd go the LLC route, because it's cheaper and easier to manage the details, pretty simple to create in most states, provides liability protections, and might make the credit card processor happy that you're a business and not an individual (even if you pay taxes on the business as an individual).

[Blessed]

I agree that it could get sticky if the student/parent pays the teacher instead of the company... I'd suggest setting up online payments - and I suspect that many teachers would prefer this too, that way they wouldn't have to ask for payment. Money can make relationships awkward, sometimes it's hard for people to ask for money - even if it belongs to them. :) I've seen this before when I took lessons from a private teacher - I had to remember to pay her, she never asked for money and if we got to talking or ran a little late on a lesson I would often get half way home before I realized I hadn't paid her for that lesson - then I had to remember to pay her the next time. A simple way to have all the lessons pre-paid by taking payments online or over the phone when you scheduled would eliminate that confusion.

You definitely want shared calendars/etc... between you and each teacher to make sure that you don't overbook or double book anyone! It's much more convenient to have everyone using the same document rather than emailing a document back and forth.

Also - since you will be going into people's homes and/or having them come into yours choosing the LLC over a sole proprietorship makes sense. Also I'm seconding what Paul said about insurance - make sure you get some, it will probably be fairly inexpensive but could save your bacon if you get a crazy student/parent or teacher at some point!

I'm not sure if you can insure against sexual impropriety between a teacher & student - but I would ask. I teach Sunday School and lead the children's choir and our church insurance company requires everyone who works with the kids or young people to go through a one day training seminar on how to avoid being put in a compromising situation, how to handle yourself if you are accused, how to address perceived abuse, what is proper and improper physical touch between teacher/student, etc... It's been awhile since I had to go through it, so I can't remember exactly what it was called... but it was definitely an educational and eye opening seminar to sit through. I don't know what liability insurance coverage you need to have - but I would ask an insurance guy or lawyer some very specific questions about what liability insurance you were getting and what it would and would not cover early on in getting set-up.

[Coltrane]

Thanks for all the replies! I had multi quoted you guys and commented/answered your posts yesterday, but for some reason it's not showing up. To clarify, I do not want students to pay the teachers directly- I would prefer them pay me, then I pay the teachers (every week/2weeks). How hard is it to get a credit card system (for payment) set up through a website? Also, is having students send checks to me (all in advance of the single lesson/month/semester payment) viable? I saw that the lesson business in the link Blessed posted had that option. Thanks again!!

[Freelancier]

How hard is it to get a credit card system (for payment) set up through a website? Also, is having students send checks to me (all in advance of the single lesson/month/semester payment) viable?There are a lot of ways to set up credit card handling through a web site... you can do things without setting up a web site via PayPal and some other processors or you can set up your own web site and integrate PP or other CC processors through that (chat with your friendly neighborhood web designer about those details).

As for checks: it's viable, but more challenging, because instead of just getting a card you charge, you have to hope the check arrives on time and then people don't always do that and you have to chase them... it's a pain. If you need, you should even be able to use a debit card or e-check concept instead of a credit card using the same basic process of securely collecting the info (the CC processor collects the info, not you) then periodically charging against that info.

[Coltrane]

There are a lot of ways to set up credit card handling through a web site... you can do things without setting up a web site via PayPal and some other processors or you can set up your own web site and integrate PP or other CC processors through that (chat with your friendly neighborhood web designer about those details).

As for checks: it's viable, but more challenging, because instead of just getting a card you charge, you have to hope the check arrives on time and then people don't always do that and you have to chase them... it's a pain. If you need, you should even be able to use a debit card or e-check concept instead of a credit card using the same basic process of securely collecting the info (the CC processor collects the info, not you) then periodically charging against that info.

Ok, thanks for that info. Another questions- because the teachers will be independent contractor and not my direct employees, can I still put them on my website under a "teachers" tab? I'm looking at doing something just like this site- In Home Music Teachers - Philadelphia Teachers (http://philadelphia.inhomemusicteachers.com/featuredTeachers/)

[Coltrane]

Thanks again for the info. I'm doing tons and tons of reading and research about things, so all of your direct answers to my questions make things easier!

[KristineS]

Ok, thanks for that info. Another questions- because the teachers will be independent contractor and not my direct employees, can I still put them on my website under a "teachers" tab? I'm looking at doing something just like this site- In Home Music Teachers - Philadelphia Teachers (http://philadelphia.inhomemusicteachers.com/featuredTeachers/)

I don't know why you couldn't do that - even if they're independent contractors. I do freelance work for magazines and I get included in their staff line-up pages on occasion. They are doing work for your business, whether they're directly employed by you or not. I'd say the only thing you'd need would be permission from the teachers in question to post their info, and I doubt many would object if the end goal is to generate income for both of you.

[Coltrane]

I don't know why you couldn't do that - even if they're independent contractors. I do freelance work for magazines and I get included in their staff line-up pages on occasion. They are doing work for your business, whether they're directly employed by you or not. I'd say the only thing you'd need would be permission from the teachers in question to post their info, and I doubt many would object if the end goal is to generate income for both of you.
Ok, great. I already have some teachers lined up, and I'm going to be meeting with a friend this weekend who recently opened up his own small business and who used to be an accountant. All I need to do is buy him a beer! Not bad for an hour or 2 of help, haha.

[Coltrane]

Another question- Can I work for myself as an independent contractor? (i.e. I also teach lessons for my business)

[Freelancier]

I'm not even sure what that means. Do you mean can you work for the business under the same rules for tutoring as the other tutors? Sure. But your income as a single-person entity is going to be taxed the same whether you work as just the managing member of the organization or whether you are a contractor to the organization. The only real question is: as the operator of this business, are you also its only employee and does that mean you have to pay taxes like an employee and pay unemployment insurance? Something to discuss with your accountant.

[Coltrane]

I'm not even sure what that means. Do you mean can you work for the business under the same rules for tutoring as the other tutors? Sure. But your income as a single-person entity is going to be taxed the same whether you work as just the managing member of the organization or whether you are a contractor to the organization. The only real question is: as the operator of this business, are you also its only employee and does that mean you have to pay taxes like an employee and pay unemployment insurance? Something to discuss with your accountant.
I mean could I pay myself as an independent contractor the same as the other teachers, not an employee. So I would be the owner, and also one of the teachers.

[Freelancier]

You can... but if there's enough money involved you might find that you can save a bit on taxes by being an S corporation and paying yourself partially through dividends. Talk with an accountant to figure out the best options for your situation.

[Coltrane]

Okay, thanks for taking the time to answer! I'll be meeting with some people soon, so I can now be a little more prepared going into it.

[protegearts]

Okay, thanks for taking the time to answer! I'll be meeting with some people soon, so I can now be a little more prepared going into it.

I'm new here, but joined the forum because I'm doing something similar in Milwaukee/Chicago here:

Prot (http://www.protege-arts.com)

I'm curious as to how your business is progressing and if I can gain any insight into avoidable pitfalls. I'm about to up my sole proprietorship to an LLC, open a banking account at Chase to pay teachers via quickly, and am accepting credit cards at ClassBug.com | The Easiest Way To Manage and Sell your Classes Online (http://www.classbug.com).

Looking forward to hearing about your progression!

[billbenson]

What are your income targets. My sister has a masters degree in opera from the Boston Conservatory of Music and has sung for the San Francisco Symphony Orchestra. Along with her husband they give voice, guitar, and piano classes. They also perform music at weddings and other functions.

They can't make a living doing the above, so they both have other jobs to support themselves.

[protegearts]

Income targets is a new concept for me. Do you mean a daily, weekly or monthly target to aim for after 1 year in business?