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California does not license private tutors. However, if your prospective employees are to work with young children, and you want to avoid potential liability, then you will probably want to obtain a fairly substantial background security check to ensure that the employee has no record of sex offenses or other potential risks (drug use, alcoholism, etc.).
As far as liability insurance goes, that's a project for an insurance agent. The question largely revolves around the size of your business, because the more assets accumulated in the business, the more risk of legal action and the more insurance coverage required.
Other than that, you will need to either incorporate or create a Limited Liability Company to further protect yourself against risk. You will also likely need to set yourself up with a payroll company like ADP, because dealing with payroll taxes (unemployment insurance and workers comp, etc.) can be a major hassle and very difficult to maintain unless you're planning to hire an accountant.
That about covers it. Let me know if you have questions.
Hope this helps.
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A sole proprietorship is nothing more than a fictious business name. It offers zero liability protection, and it is, frankly, and extremely dangerous means of doing business, because if you are sued, all of your personal assets are at risk.
Re contracting out tutors, The California Employment Development Department is extremely tough on determinations of contracting employees. If you misclassify someone as a contractor who should have been contracted as an employee, you could be exposed to tens of thousands of dollars in fines. So, before you even think about treating your personnel as 1099 contractors, you may want to objectively fill out this worksheet. If after you fill out the worksheet, you decide that you want to take the risk of hiring independent contractors, then you can simply "google" "independent contractor agreement" on the net, and probably find 1,000 different agreements that you could massage to fit your requirements.
If you're operating as a sole proprietorship, all you need is a fictitious business name (DBA) and an employer identification number (EIN) from the IRS, so that you can open a bank account in the business' name.
Re what I think is the best business structure, I would use an LLC, because it's easy to set up and maintain and it provides liability protection.
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