Tutoring can be a lucrative side gig that you can grow into a full-time revenue source. If you’re passionate about using your knowledge to help students reach their academic goals and want to consider starting an educational business in Australia. There are specific legal requirements you need to meet and one important point to verify is whether you have registered for Australian Business Number (ABN).
In Australian business dynamics, no business or commercial can start without getting an ABN. In general, to legally and officially start your business it is necessary to have an ABN number. ABN is an identification and credibility like a digital fingerprint for SMEs. So, if you are ongoing or you want to start a business in Australia here is the complete Step-by-step guide for you:-
In this article, we will discuss whether you need an ABN to start a tutoring business and the benefits. Keep reading to know more!
What is an ABN?
The Australian Business Number (ABN) was introduced on 1 July 2000 and issued by the Australian Business Register (ABR). It’s an 11-digit identifier that is operated by the Australian Taxation Office (ATO). ABN helps you to inform the general public about your business.
ABN for SMEs is just as important as ABN for large corporations because it is part of a major tax reform that includes the introduction of a GST.
Who is Entitled To An ABN In Australia?
ABN is entitled to anyone:-
- Running or starting a business in Australia.
- Engaged in supplies through Australia’s indirect tax zone.
- Registered corporation or company.
Tutoring may fall under the 1st category which is ‘Running or starting a business in Australia’. Here it is important to understand what is considered as a business by ATO. Some of the criteria for considering an activity as a business are –
- Any commercial activity that involves buying and selling of products or services.
- Such commercial activity is running to make a profit out of it. A hobby is not a business.
- The activity must be repeated every day or every month.
- Records and accounts for the activity are kept.
- The doer of the activity or entity must have essential knowledge or skills to conduct it commercially and professionally.
In case your business has not yet started commencement activities are done like purchasing business space, printing cards, running advertisements, obtaining business licenses, etc. Then it will be considered as business only and ABN has to be taken.
On the contrary, no ABN is needed if a person is working for others under his employment.
Do We Need An ABN For Private Tutoring And How Do We Apply?
If you satisfy all the above-mentioned criteria for an activity i.e. TUTORING to be considered as a business, you need an ABN. Otherwise, there is no need to have ABN.
This means that,
- If you provide tutoring services.
- You intend to earn profit out of it.
- You provide tutoring services repeatedly, Tutoring is an activity that typically occurs every day.
- You keep records and accounts for income generated out of tutoring activity.
- And that you have the required knowledge and skills to provide tutoring services.
If aforesaid all the points hold for you, get an ABN. Applying and registering for ABN is free. But if you are tutoring just for social work or pursuing it as a hobby, no ABN is needed.
What Is The Best Time To Apply For An ABN?
The best time to apply for an ABN is before you start any business activities as a sole trader, partnership, enterprise, or trust. This will include every activity from setting up the website, and social media accounts, to buying equipment, and more.
Some Other Uses For An ABN:
An Australian Business Number (ABN) is used for business dealings within Australia. It streamlines interactions with other businesses, government agencies, and clients when you provide resource-building and other services.
Things You Should Know Before Applying For ABN?
● To get an ABN, you have to present evidence for your business entitlement.
● If any information is found incorrect or misleading, a hefty penalty is levied.
● Information furnished by you is cross-verified by other agencies.
● Cancel and update ABN details, if you shut down your business.
Conclusion
Tutoring in Australia largely comes with no regulations or legal obligations. However, you need ABN if you are planning to go big and pursue tutoring as a business.
Getting an ABN is quite simple compared to the other legal and tax-related requirements that business owners need to navigate. It is issued by ATO to ensure that you pay your taxes on time and report the correct particulars of your income earned out of it. ABN is also useful for letting people know about your business through the ABN lookup website.
