Do I Need An ABN If I Earn Under $75,000?

If you’re starting (or growing) a small business in Australia, it’s very common to ask whether you need an ABN if you earn less than $75,000.

On one hand, you might have heard the “$75,000 threshold” mentioned everywhere. On the other, you might already be invoicing clients, selling online, or doing side work and wondering if you’re “allowed” to operate without an ABN.

The good news is that the $75,000 figure is mainly about GST registration - but ABN rules are different. Whether you need an ABN depends on what you’re doing, how you’re operating, and whether you’re truly running a business (as opposed to being an employee or hobbyist).

Below, we break it down in plain English, with practical examples and a checklist to help you decide what to do next.

What The $75,000 Threshold Actually Means (And What It Doesn’t)

Let’s clear up the most common misunderstanding: $75,000 is the GST threshold for most businesses, not the ABN threshold.

GST Registration: The $75,000 Rule

In Australia, if your business has (or is likely to have) GST turnover of $75,000 or more in a 12-month period, you generally must register for GST.

This is where the “$75,000” number comes from. It affects things like:

whether you need to add GST to your prices
whether you need to lodge Business Activity Statements (BAS)
whether you can claim GST credits on business purchases (if registered)

But you can still have an ABN even if you’re under $75,000.

ABNs: There Is No “$75,000 ABN Threshold”

An Australian Business Number (ABN) is an 11-digit number used to identify your business when dealing with other businesses, government agencies, invoicing, tax, and other commercial activities.

Many businesses apply for an ABN long before they reach $75,000, because it makes day-to-day trading simpler and can help you look more established when dealing with customers and suppliers.

So, Do I Need An ABN If I Earn Less Than $75,000?

If you’re genuinely carrying on a business (also called an “enterprise”), you can usually apply for an ABN - and in many cases it will be very practical to have one, even if you earn less than $75,000.

So, to answer the question “do I need an ABN if I earn less than $75,000?” properly, you need to ask a more important question:

Are you carrying on an “enterprise” (a business) in Australia?

When You’ll Usually Want An ABN

You’ll often want to apply for an ABN if you’re doing things like:

selling products (online or in person)
providing services to clients as your own business (eg consulting, trades, design, marketing, coaching)
issuing invoices in your own name or business name
advertising your services to the public
entering into supplier arrangements or commercial contracts

Even if your turnover is small at first, an ABN can be part of building a proper legal and operational foundation for your business.

When You Might Not Need An ABN

You may not need an ABN if what you’re doing is not really a business. Common examples include:

hobby activities (eg casual selling without a profit intention, no real business system)
one-off private sales (eg selling your own second-hand items)
employment where you are actually an employee and should be paid wages (not invoicing as a contractor)

This is where it gets tricky. Many people think they’re “just earning a bit on the side”, but they are actually trading in a way that looks like a business.

If you’re unsure, it’s worth getting advice early - especially if you’re switching from employee work to contractor-style work, or you’re building something that could scale.

What Happens If You Don’t Have An ABN? (Practical Risks For Small Businesses)

Even if you’re under $75,000 and not registered for GST, operating without an ABN can create practical issues that slow you down - or cost you money.

No ABN Withholding (The “47% Problem”)

If you supply goods or services to another business and you don’t quote an ABN, they may have to withhold tax from your payment at the top rate (unless an exception applies).

In plain terms, that can mean your customer pays you less, and it can complicate your cash flow.

If you’re regularly dealing with business clients, having an ABN is often the simplest way to avoid these payment headaches.

Harder To Open Accounts, Deal With Suppliers, And Look Professional

Many suppliers, wholesalers, and platforms will ask for an ABN as part of onboarding. Even where it’s not legally required, it can be practically expected in business-to-business relationships.

It can also impact:

setting up trade accounts
leasing premises
applying for finance
entering into formal contracts

Confusion About Whether You’re Running A Business Or Being Treated Like An Employee

If you’re providing services to one main client and invoicing without an ABN (or without clear contracting documents), it can raise questions about your status.

Misclassifying workers can create real legal risk. If you’re engaging people to do work in your business, having the right paperwork matters from day one, including a properly drafted Contractors Agreement where it’s genuinely a contractor relationship.

ABN vs GST: What You Need To Register For Under $75,000

This is the part most small business owners want a clear, practical answer on - because it impacts pricing, invoicing, and admin.

ABN: Often Very Helpful For Day-To-Day Trading

If you’re carrying on a business, an ABN is commonly used to:

invoice customers in a business-like way
identify your business to government agencies
register a business name (if you’re trading under a name that isn’t your own)

GST: Optional Under $75,000 (But Sometimes Still Worth Considering)

If your turnover is under $75,000, GST registration is generally optional (unless special rules apply).

Some businesses register for GST early because:

they want to claim GST credits on business expenses (if eligible)
they expect to grow quickly and want systems in place early
their customers are mainly other GST-registered businesses (so adding GST may not affect demand as much)

However, GST registration also means more admin, including BAS reporting and careful invoicing. It’s often worth discussing with your accountant, or checking the ATO guidance, based on your cash flow, pricing, and growth plans.

Do You Need A Business Name Or Company Too?

ABN and GST are only part of your “setup” picture. Depending on how you trade, you may also need to think about:

business name registration if you’re trading under a name that isn’t your personal legal name
a company if you want a separate legal entity for risk management and growth
your business structure (sole trader vs partnership vs company)

If you’re setting up a company, you’ll also need governance documents like a Company Constitution (or an alternative structure document) to help regulate how the company is run.

Common Scenarios: Quick Answers For Small Business Owners

Here are some common “real life” situations we see, and how the ABN question usually plays out.

I Do Freelance Work On The Side And Earn Under $75,000. Do I Need An ABN?

If you’re providing services to clients and invoicing them (even casually), you’re likely carrying on a business. In that case, you’ll usually want an ABN.

This is especially true if your clients are businesses, because not quoting an ABN can trigger tax withholding and make you harder to engage.

I Sell Products Online (But It’s Small). Do I Need An ABN?

If you’re selling products with an intention to make profit, with repeated transactions, branding, and a system for fulfilling orders, that looks like a business - even if your sales are well below $75,000.

Having an ABN also supports other basics, like setting up proper online terms and protecting your brand identity as you grow.

I Only Have One Client. Do I Still Need An ABN?

Possibly, but this is a “pause and check” moment.

If you have one main client and you work like an employee (set hours, their tools, their direction, integrated into their business), you may be at risk of being treated as an employee rather than a contractor.

This isn’t just a tax question - it can trigger employment law issues too. If your business engages contractors, clear contracts and expectations are key from the start.

I’m Testing A Business Idea. Should I Wait Before Getting An ABN?

If you’re genuinely only in the “idea stage” and not trading yet, you might wait.

But once you begin marketing, taking orders, issuing invoices, or entering agreements, applying for an ABN early can make the transition smoother.

As a general principle: if you’re acting like a business, it’s worth setting up like a business.

Legal And Practical Steps To Set Your Business Up Properly (Beyond The ABN)

Once you’ve worked out that you’re operating a business (and you’ve decided to apply for an ABN), the next question is: what else should you put in place to protect yourself?

For small businesses, getting your legal foundations right early can prevent painful disputes later - with customers, suppliers, contractors, co-founders, and even regulators.

1) Choose The Right Business Structure

Your structure affects your tax, liability, admin, and ability to scale. The common options include:

Sole trader: simple and quick to start, but you are personally responsible for business debts and liabilities.
Partnership: shared ownership, but can get risky without clear rules on decision-making and exits.
Company: a separate legal entity, often chosen for risk management and growth, but requires more setup and ongoing compliance.

If you are starting with others (or plan to bring in investors), it’s worth getting your ownership and decision-making documented early through a Shareholders Agreement.

2) Put Your Customer Terms In Writing

If you sell products or provide services, clear terms help you manage expectations, payment timing, cancellations, warranties, and liability.

For many small businesses, a tailored set of Business Terms can reduce disputes and make it easier to enforce payment and scope boundaries.

3) Check Your Australian Consumer Law (ACL) Obligations

Even the smallest businesses need to comply with the Australian Consumer Law (ACL). This covers issues like:

making sure your marketing isn’t misleading
handling refunds and remedies correctly
honouring consumer guarantees for goods and services

This matters whether you’re earning $5,000, $50,000 or $500,000 - because it’s about how you treat customers, not just your revenue.

4) Have A Privacy Policy If You Collect Customer Data

If you collect personal information (for example, names, emails, delivery addresses, payment details, or even tracking data through a website), you should think about privacy compliance.

Many businesses will need a Privacy Policy, especially if you sell online, run email marketing, or use third-party platforms to process data.

5) Don’t Forget Intellectual Property (IP) Basics

As your business grows, your brand becomes valuable. If you’re investing in a name, logo, or unique offering, it’s worth considering trade mark protection and making sure you’re not accidentally infringing someone else’s rights.

That’s particularly important if you plan to scale, franchise, or build strong online visibility - because disputes over names and branding can be expensive and disruptive.

Key Takeaways

The $75,000 threshold is mainly about GST, not whether you can (or should) have an ABN.
If you’re genuinely running a business, you can usually apply for an ABN, and it’s often practical to have one even if you earn less than $75,000 (particularly if you invoice clients or sell products).
Operating without an ABN can trigger no ABN withholding and create practical barriers when dealing with business customers, suppliers, and platforms.
Even under $75,000, your business still needs to comply with key rules like Australian Consumer Law and (where relevant) privacy requirements.
Once you’re set up, strong foundations like business structure choices and the right contracts and policies can reduce risk as you grow.

Note: This article is general information only and isn’t tax advice. GST turnover, registration requirements, and “no ABN withholding” exceptions can be technical, so it’s a good idea to check the latest ATO guidance or speak with your accountant about your situation.

If you’d like help setting up your business properly (including your structure, contracts and policies), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.