Tax records to keep when you teach for yourself

Tax time is hard for most independent teachers for one reason: the records are spread across a bank app, a calendar, a pile of receipts and your memory. The filing itself is rarely the problem. Finding out what you earned in March, and proving it, is.

This post is a checklist of the records most tax authorities expect a self-employed tutor, music teacher or language tutor to keep, plus a 15-minute routine to keep them current. It describes how things generally work. Rules differ by country and by your own situation, so check the details with your tax authority or an accountant.

Why the records matter more than the return

When you work for a school or agency, someone else keeps the payroll records. When you teach for yourself, you are the payroll department. If your tax authority ever asks how you got to your income figure, the answer has to come from records you kept at the time, not from a reconstruction in April.

Most authorities publish their own guidance on what to keep and for how long. Start there:

• UK: HMRC on business records if you're self-employed
• US: IRS recordkeeping for small businesses and the self-employed
• Australia: ATO record keeping for business

Retention periods are measured in years, not months, so plan to keep everything well past the year you file it.

The income records to keep

Your income records should let anyone trace each payment back to the lessons it paid for.

• A list of every session you taught. Date, client, length and fee. This is the backbone. A tutor's Tuesday 4pm maths lesson at $60 is one line; so is a music teacher's 30-minute piano lesson at $40.
• Every payment you received. Date, amount, who paid and how: bank transfer, card, cash or a payment app. A parent who pays for a block of ten lessons is one payment covering ten sessions, and your records should show that link.
• Cash, written down on the day. Cash leaves no trail of its own. If a student hands you notes at the end of a lesson, note it that evening.
• Refunds and credits. If you refunded a cancelled lesson or carried credit forward to next term, record it. Otherwise your income looks higher than it was.
• Income from platforms or agencies. If some students come through a tutoring platform or a language school that pays you, keep their statements. They may also report what they paid you to the tax authority, so your figures should match theirs.

If you charge for late cancellations, those fees are income too. Our post on what to charge when a client cancels at the last minute covers setting the policy; the record is simply another line with a date and an amount.

The expense records to keep

What you can claim depends on your country and on how much of each cost is for work. Keep the evidence anyway, and let your accountant or the authority's guidance decide what counts.

• Teaching materials. Workbooks, past papers, sheet music, graded readers, printing.
• Equipment. A keyboard or tuner for a music teacher, a headset and webcam for an online language tutor, a laptop used for lessons.
• Software and subscriptions. Video-call plans, scheduling or record-keeping apps, exam board resources.
• Travel to clients. If you teach in students' homes, keep a simple log: date, from, to, distance, which client.
• Room hire. If you rent a studio or a room by the hour, keep the invoices.
• Training and memberships. Courses that keep your skills current, professional body fees.
• A share of home costs, if you teach from home. Many authorities allow part of this. The method varies, so read your authority's guidance before you claim it.

For each expense, keep the receipt or invoice and a note of what it was for. "Amazon, $34" means nothing in a year. "Amazon, $34, Grade 5 theory workbooks for Chloe and Isabel" explains itself.

Records that are easy to forget

A few things catch independent teachers out:

• Mixed personal and business accounts. If lesson fees land in the same account as your salary from a part-time job, you will spend hours separating them. A separate account for teaching income, even a basic one, saves that work.
• Unpaid fees at year end. Depending on how you report, money owed to you on the last day of the tax year may matter. Know who owed what on that date.
• Group lessons. A group class with four students is one session and four payments. Record both.
• Tax already paid. Any payments on account, estimated tax payments or tax taken off at source.

A 15-minute monthly routine

You do not need a weekly bookkeeping session. You need one short sitting a month, on the same day each month, so nothing goes back further than four weeks.

Put it in your calendar for the first Sunday of the month, or whichever evening has no lessons. Then work through this list:

1. Check your session list against your calendar (5 minutes). Every lesson you taught last month should be on the list with its fee. Add any you missed, and mark cancellations and no-shows.
2. Match payments to sessions (5 minutes). Open your bank or payment app and tick off each payment against the sessions it covers. Add cash from your notes. Anything unmatched is either a payment you have not recorded or a lesson nobody paid for.
3. File last month's receipts (3 minutes). Photograph paper receipts, save email invoices to one folder named by year and month, and write one line on what each was for.
4. Write down the month's totals (2 minutes). Income received, expenses paid. Twelve of these lines and most of the work for your return is done.

The unmatched items from step 2 are the useful by-product. A lesson with no payment against it is a fee to chase while the client still remembers the lesson.

At the end of the year

If you kept the monthly routine, the year-end job is short:

• Add up the twelve monthly totals for income and expenses.
• Check the total income against your bank statements and any platform statements.
• Put the year's session list, payment records, receipts and statements in one folder, named for the tax year.
• Take that folder to your accountant, or use it to fill in your own return.

If something looks wrong, such as a month with income far below the lessons you taught, the monthly records tell you which month to look at instead of the whole year.

When to get help

An accountant who works with self-employed people is worth it if you are in your first year, if you also have employment income, if you teach across borders online, or if you are unsure what you can claim. Bring them clean records and the meeting is shorter, which usually means it costs less.

BonHand keeps the session list and the payments in one place, matches them into a balance for each client and totals your income by month and by year; see how it works.