When Does Your Business Need an ABN?

Starting a business in Australia is exciting - whether you’re testing an idea at the local markets, setting up an online store, or launching a consulting side hustle. Before you start invoicing or taking payments, it’s smart to get your legal and tax foundations in order.

One of the first questions new founders ask is: when do you actually need an ABN (Australian Business Number)? Do you need one to sell online or at markets? And what happens if you start trading without it?

This guide answers those questions in plain English. We’ll explain what an ABN is, how to tell if you’re “in business” (and not just doing a hobby), when to apply, and what else to put in place to trade confidently in Australia.

What Is An ABN And Why Does It Matter?

An Australian Business Number (ABN) is a unique 11-digit identifier for businesses and other enterprises on the Australian Business Register (managed by the ATO). You’ll use it when dealing with government agencies, suppliers, marketplaces and customers.

Having an ABN helps you:

• Invoice customers and avoid “no ABN” tax withholding by payers
• Register a business name and present professionally
• Register for GST if you meet or expect to meet the threshold
• Open business bank accounts, apply for finance and access wholesale suppliers
• Identify your business clearly in contracts and commercial dealings

It’s also practical. Many platforms, procurement portals and event organisers ask for your ABN when you sign up, tender or book a stall. If you’d like a broader view of the pros and cons, it’s worth weighing up the ABN advantages and disadvantages for your situation.

Do You Need An ABN Or Is It Optional?

If you are carrying on a business or other enterprise in Australia, you generally should have an ABN before you start trading.

Strictly speaking, it’s not a criminal offence to trade without an ABN. However, the practical and tax consequences can bite quickly, including the “no ABN” withholding rules and difficulties registering a business name or opening accounts. In short: it’s legal to run a business without an ABN in limited circumstances, but it’s rarely a good idea once you’re genuinely in business.

Clear indicators you need an ABN

• You intend to make a profit from selling goods or services on a regular or continuous basis
• You issue invoices under a trading name, advertise or take bookings
• Your projected turnover is $75,000 or more (you’ll need GST registration)
• You want to register a business name, get a merchant facility or apply for tenders
• You’re engaging contractors or employees, or entering commercial leases

If someone pays you for goods or services and you don’t quote an ABN, they may have to withhold tax at the top marginal rate (currently 47%) under the “no ABN” withholding rules. That’s a significant cash flow hit and a strong incentive to register early.

Am I Running A Business Or Just A Hobby?

The key threshold is whether your activities amount to carrying on an enterprise. If you’re experimenting occasionally without a profit motive, it may be a hobby. If you’re operating in a planned, commercial way, it’s likely a business.

Helpful signs that you’re “in business” include having a business plan, branding, consistent sales, stock or equipment, advertising, a website or marketplace store, and an intention to turn a profit. For a deeper dive into how this is assessed, see what defines a business activity in Australia.

When you may not need an ABN

• Genuine hobbies or one-off private sales (e.g. clearing your own possessions)
• Employment income (you’re paid as an employee and don’t invoice like a business)
• Passive investment income that isn’t a business activity

If you’re on the fence, it’s sensible to think about where you’re heading. The moment you begin promoting, taking pre-orders, issuing quotes, or regularly monetising your activity, having an ABN removes friction and reduces tax withholding risk.

Common Scenarios: Markets, Online Stores And Side Hustles

Many entrepreneurs start small - a weekend stall, drops on a marketplace, or some consulting on the side. Here’s how an ABN fits in.

Selling at markets or pop-ups

If you sell regularly and with a profit motive, organisers will often ask for an ABN as part of your stallholder application. Occasional or one-off sales of personal items usually don’t require one, but a returning stall selling new goods almost certainly does.

Selling online (Etsy, eBay, Shopify or your own site)

Ongoing online sales are typically a business, especially if you’re buying stock, running ads or taking custom orders. Most platforms and payment gateways expect a valid ABN for business accounts, and your invoices should show it.

Freelancing or consulting as a side hustle

If you’re providing services to clients and invoicing them (even after hours), that’s a business activity. You’ll generally want an ABN so clients don’t withhold tax and so you can register a business name if you’re trading under something other than your personal name.

Using a business name

If you trade under a name that isn’t your own personal name, you need to register it with ASIC - and you can’t do that without an ABN. If you’re weighing up your structure, it helps to understand business name vs company name before you lock anything in.

How And When Should You Apply For An ABN?

Timing-wise, apply shortly before you start trading - when you’re ready to advertise, take bookings, make sales, or incur expenses you want to treat as business deductions. If you’re only in research mode, you can wait, but don’t leave it until you’re chasing first payments.

What you’ll need to apply

• Your personal details and Tax File Number
• Your intended business structure (sole trader, partnership, company or trust)
• Your business contact details and principal place of business
• A short description of your activities and your intended start date
• Details of any partners, directors or associates (if relevant)

Approval is generally quick if you’re clearly entitled. If the ATO isn’t satisfied you’re starting an enterprise, your application can be refused. In that case, gather evidence of your intention (business plan, supplier quotes, a draft website, lease or equipment orders) and try again.

Practical tips

• Keep your ABN details current if you change address, structure or activities.
• If you’re not sure whether an ABN is still active for a business you deal with, it’s easy to check if an ABN is active before you trade.
• If you plan to operate more than one venture, consider whether you can use one ABN for multiple businesses or whether separate structures make more sense.

Note: GST registration is separate. If your current or expected turnover is $75,000 or more, you’ll need to register for GST and add 10% to applicable sales. For tailored tax guidance (beyond the legal setup), speak with your accountant or tax adviser.

After Your ABN: Registrations, Laws And Documents To Get Right

Getting an ABN is a key first step, but it’s not the only one. Once you’re ready to trade, make sure the rest of your legal and compliance settings are in order.

Choose the right structure and register names

Deciding between sole trader, partnership or company will affect liability, tax and how you onboard co-founders or investors. Many founders start as sole traders for simplicity and later incorporate a company when they grow or want limited liability. If you’re incorporating, you’ll also need documents like a Company Constitution and, if there are multiple owners, a Shareholders Agreement to set decision-making and ownership rules clearly. If you’re trading under a brand that isn’t your personal name, register the business name with ASIC (you need an ABN to do this).

Consumer law (ACL) applies to almost all businesses

If you sell goods or services to consumers or other businesses, you must comply with the Australian Consumer Law (ACL). That covers fair advertising, product safety, guarantees and refunds. It’s important to avoid misleading conduct and ensure your refund policy aligns with the ACL’s mandatory consumer guarantees - areas that regularly attract complaints and enforcement.

Privacy and data protection are separate obligations

Privacy law is different to the ACL. If you collect personal information (for example, online orders, bookings or email list sign-ups), you should have a clear and accurate Privacy Policy and handle data consistently with the Privacy Act. Even small businesses benefit from being transparent about data - it builds trust and reduces risk if things go wrong.

Employment and contractor compliance

If you’re engaging people to help, be clear on whether they are employees or contractors and use a compliant Employment Contract or contractor agreement. Follow Fair Work requirements on pay, hours and entitlements, and make sure you understand any relevant modern award or enterprise agreement.

Online trading essentials

If you operate a website or online store, publish tailored Website Terms and Conditions that set the rules for use, ownership of content and liability limits. Your customer-facing terms should also cover pricing, delivery, returns and warranties in line with the ACL and any platform policies you’ve agreed to.

Everyday contracts that reduce risk

• Customer terms: Clear payment, scope and refund terms reduce disputes and chargebacks.
• Supplier or manufacturer agreements: Lock in quality, timelines and IP ownership.
• NDAs (non-disclosure agreements): Protect your ideas and sensitive information when sharing with partners or freelancers.
• Founder documents: If you’re building with others, set expectations early through a Shareholders Agreement or founders’ deed to avoid tension later.

A strong contract set doesn’t have to be complicated - it just needs to be clear, consistent with the law, and tailored to how you actually operate.

Key Takeaways

• If you’re carrying on a business or enterprise in Australia, you should have an ABN before you start invoicing, advertising or taking payments.
• It’s not illegal in itself to start trading without an ABN, but payers may have to withhold 47% tax, and you’ll run into practical roadblocks like business name registration and platform onboarding.
• Whether you’re “in business” depends on your intent and conduct - regular, profit‑driven activity points to a business rather than a hobby.
• Apply for your ABN shortly before you launch, and keep your details up to date as your business evolves.
• After getting an ABN, sort out structure, business name, ACL compliance, a Privacy Policy, website and customer terms, and the right Employment Contract or contractor agreements.
• Market stalls, online stores and consulting side hustles commonly require an ABN once the activity is ongoing and commercial, even if it’s part‑time.
• For tax specifics (like GST and deductions), team up with an accountant; for contracts and compliance, getting legal advice early will save headaches later.

If you would like a consultation on ABN requirements or any aspect of starting a business in Australia, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.