My deposit doesn't cover books and is non-refundable, so there is no different tax treatment as in regular tuition. But I've been considering a book deposit where I would keep track of what books have been purchased out of it. I haven't quite figured it out yet.

From the advice of others here, I went from requiring a book deposit and tracking books out of that, to raising my tuition $10/month and supplying all music. I love the new system! I don't have to worry about re-selling, from a tax perspective. Also, I hated having to keep track of who got what, trying to remember if I wrote it down or not, and sending out invoices when a student's deposit was used up. I am also finding that now I can give out music I have on hand (freebies, especially) that maybe I would not have "sold" to a student before b/c I would have only used one piece out of it and would have felt guilty having them purchase it.

I haven't had any problem. In fact, my enrollment fee for a first-time student is $100 (because the 'kit' of initial supplies and books that the student will use is more).

You might check around your area for what other activities charge for a registration fee. Dance, gymnastics, karate, art, etc.... usually have a fee that can be $20 or more and it goes towards nothing more than someone logging in your info into a computer. THEN, there are separate materials charges (particularly with dance, where recital costumes can be another $80).

Back in the 80's, I used to charge a smaller fee and it went strictly for books. I would give the parent an itemized statement at the end of the year of all books purchased. Now, I make sure the fee covers way more than books. I don't give an itemized statement anymore. Parents don't have a problem with it and life is much more simple.

Betsy, you are right. A refundable deposit usually carries over from one calendar year to another, and the IRS doesn't like that. That plus keeping inventory get into accrual accounting, which is way beyond me. So, Yes on fees, No on deposits.

Because of that, I have changed my wording about money for music and now call it the Materials Fee. I claim it as regular income just like tuition payments, and all music I buy is claimed as an expense. I still keep track of music I give students though, and I suppose if someone gave me proper quitting notice and I knew I had not spent all the money they paid me for materials, I'd charge them appropriately less on their last month of tuition. For accounting and tax purposes, that is not the same as refunding a deposit.

I charge a high Activities Fee every year, nearly half of which covers Guild or Certificate of Merit. Charging extra up front tends to weed out those who "just want to try it out" and helps cover lost fees if someone quits on November 30.

Jenny, no, I do not have any problems. Most activities charge a registration fee. A lot of activities, like dance, require expensive costumes for the parents to buy. They don't blink an eye at it. If you enforce a higher registration fee, I don't think you'll have a problem, so long as you are providing a lot from it. I haven't had a problem with it at all! $80 or $100 is not a lot when you are putting it towards all the different things you pay for in the studio for the student's benefit, whether awards, books, print outs, games, computer privileges, prizes, recital hall rental, magazine subscriptions, etc, etc! And that is for a whole YEAR. Charging a registration fee has been wonderful this year. And I, personally, don't mind keeping track of who gets what books when, etc. I like being organized.

Another way to think of it is that it costs, for example, $1180 for the year of lessons & books, payable in 11 equal monthly payments of $100 plus a fee of $80 due upfront. Most people understand the extra upfront money is to help cover your beginning-of-the-year expenses.

Jenny, I started out with a deposit of $40, which was all used for the students' music, and I kept meticulous track of what each student used for several years after that. I would increase the registration/music fee by about $5 each year, until last year when I charged $110 Registration & Materials Fee, with an Early Bird Registration of $100 by the end of July. Lots of teachers charge a fee equal to one month's tuition, and it's very smart to do that in case the student leaves early in the semester without paying the (for me) required 1 month's tuition after notice of withdrawal. Then at least you are covered financially. When my parents read the long list of what the Registration/Materials Fee covers, absolutely nobody has questioned it.

As teachers we are always afraid that asking for more money is going to mean losing students, but that doesn't match with reality most of the time. If I've lost a student because of increasing tuition or fees, it just proves that that family was really looking for a cheap deal and not a program like I offer student.

The reality is: Parents pay registration fees for hockey, dance, soccer, baseball, and swimming that are much higher than our fees. We really have to start thinking like a small business owner about business policies and charges for our services, and stop thinking like a friend, neighbor, or "that nice person down the street." Don't let fear keep you back from being the success you should be.

Thanks everyone for the insights and experience on registration fees! It really got me thinking as I prepare for next year. I occasionally give out extra sheets and activities, and I never thought more than "oh it's just a few pieces of paper", and these little expenses should come out of the registration fee from every student..

Q88 - I'll not let fear old me back!

Now you're talkin'

Marcia, how did it go when you started adding music to the registration fee? From everything I've read, $40 is about the right amount per student, especially when they are still in method books. What do you do about the few student who are older, and may not be going through method books, or like to purchase their own music?