Business Coaching: How to Make It Tax Deductable

Yes and no. If you are a business, then accoarding to the Austalian Taxation Office (ATO), buinsess coaching is a tax deductable. But if you are an employee or an individual i.e a hobbist, it’s not.

For Business Coaching to be counted as tax deductable you have got to meet the following requirements:

• Be a registered business in Australia.
• Prove that you are in business.
• Possess an ABN.
• Prove that the coaching is solely for business purposes.

Be a registered business in Australia.

Your business must be registered in Australia. Whether you are a Sole trader, Partnership, Company or Trust. So far as you are registered in Australia, you have one part of the puzzle covered.

Prove that you are in and are a business.

As stated earlier, if you are an employee or what you are doing is just a hobby, then you aren’t a business. The Australia government has a great post on how to tell if you are a hobby or a business. And if you are an employee, according to ATO you should not be asked to get an ABN.

As an entrepreneur or you will have to prove that you are a business. Below are some of the questions you need to answer to prove that you are. If you answer yes to all or most of them then you most likely are in business.

Are you a business?

• Have you registered a business name?
• Do you have an ABN?

Are you in business?

• Do you plan to make a profit?
• Are your activities carreid out in a businesslike manner?
• Do you have a bank account for your business separate from you?

Possess an ABN.

An ABN or Australian Business Number is an 11 digit number that is unique to your business. Even if there are 10 different companies with the same business name. They can never have the same ABN.

Are you entitled to an ABN?

To be entitled for an ABN you have to be doing business in Australia and must have registered your business name. The ATO website has a good resource to help you determine if you are entitled to an ABN.

What are the benefits of an ABN?

Customers and other business can easily determine if you are legitimate. It adds that little bit of credibility to your business. And you don’t risk having some of the money businessess are to pay you temporarily with heald as part of the Pay As You Go Withholding System. With the PAYG withholding system companies are allowed to withhold a PAYG tax from the payments they are entitled to pay your business if you don’t provide an ABN.

How to apply for an ABN

It is quick, easy, and free to apply for an ABN. All you have to do is go the the Australian Business Registration website, and follow the instructions on there.

Prove that the coaching is solely for business purposes.

If you hire a life coach who helps you beyond businesss. Then you would be only able to claim the portion that is related to your business as tax deductable. It’s like owning a car and using it for business and personal purposes. You can’t claim tax deductions on driving to the grocery store, but you can on business activities like going to meet a client.

Otherwise, your business coach must only advise you on matters related to your business.