Cash tips for the self-employed English teacher in Japan

The Bulletin (Issue 45)

Mar 13, 2024

It’s tax season, so I thought I should post some cash tips (the advice kind, not the ones you can stuff under your futon) about collecting your fees that may be news to you if you’re just contemplating the life of a self-employed English teacher in Japan.

Cash is king. It is when you start out at least, and all your lessons are face-to-face. It’s an accepted custom to be paid in cash once a month. This is the simplest option when you are starting out. Get students to pay you for the coming month of lessons. Always check the money in envelopes in front of the student (sometimes they underpay, but more often pay too much) and give a receipt to appear pro and to avoid any unpleasantness over money. But it can feel awkward to remind someone you need paying. What do you do if they forget to bring any money? What if they forget two weeks running? What if you forget to ask for the cash?
PayPay (or another e-payment system) is the next step up and has certain advantages over cash — you can be paid remotely (by online students, for example) and you don’t have to mess with infuriating Japanese banking bureaucracy.
Once your student numbers grow, say beyond a few dozen, you might consider getting everyone to wire their fees directly to your bank account. You can use your regular personal account, you don’t need to be a listed company or corporation. Get the students to pay for any banking wire fees (typically a couple of hundred yen per transaction) or get the net-saavy to pay online — it’s often free or a minimal charge.
Keeping track of all the payments gets tiresome and you always have to chase the same few usual suspects who are perpetual late payers. You’ve got to keep records to keep track of who’s not paid otherwise they make a late payment and think they have paid for the next month, when they are in fact still one month behind. If you don’t keep track of this stuff, they won’t either and then you find yourself working for free. Don’t do that.
The next stage, say when your student numbers are 100+, is to get all payments automatically direct-debited by the bank. The downsides: The bank charges between one and two student’s monthly fees-worth for the service; it takes months of back and forth to set this up with the bank; you have to set all the amounts that the students will pay every month (but you can cut and paste this info); and if you forget to file this information, you might not get paid for two to four weeks (yes, this has happened to me). The upsides: it’s way less hassle when it comes to filing your taxes; it’s easy to see who hasn’t paid; you appear far more professional; you rarely have to chase folks for their fees; you know every month when and how much you are going to receive.
Yearly fees. Let students know that they can, if they choose, pay for a year’s worth of lessons in advance. Most won’t, but you might be surprised. Some folk prefer this as they hate paying monthly banking fees or they want to keep their monthly bills down. Get folk who do want to pay annually to pay every April, then if you’re lucky, their fees will be enough to pay off your entire tax bill. That can be a life-saver.
I’m not willing or able to offer tax advice, other than to repeat here what I’ve posted before, namely: file your taxes. Get started earning money at any time, but make sure you file your taxes by the following April. If you don’t pay your taxes you could get into lots of trouble but also you will never be able to grow your business beyond a black-market, fly-by-night enterprise. This is unnecessary because you’ll find there’s a mountain of things you can legitimately write off, and tax will not be a problem until you are earning loads, by which time you can afford it, if you are sensible with your money. I look at tax as the price you pay for having a successful business. Need help? Find your nearest aoi-iro shinkoku (tax-filing advice office), they are quasi-independent, city-hall-approved offices but will save you time and money if you have no idea what to do and have no accountant.

I hope there’s some advice here that will make your life as a self-employed teacher a little easier. A bonus tip: Aim to get most students doing your preferred payment method, but it’s always handy to have some who pay cash, others by PayPay, still others who pay yearly because you don’t want to have any one point of failure.

Do you have any money tips to add? Your fellow subscribers (me too) would love to hear them.

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