Do You Need an ABN for Dropshipping in Australia?

Abn for dropshipping

So you’ve decided to start a dropshipping business? In order to make your dropshipping business a success, you need to ensure that you are taking the right legal steps to protect it from the beginning. 

One of these checks includes getting started with an Australian Business Number or ABN. But does your dropshipping business needs an ABN, or can you do without it? Since “Dropshipping” is a relatively new means of buying and selling products online, many entrepreneurs still lack enough insights into the above questions. 

In this article, we’ll cover whether you need an ABN for dropshipping business and how to get started with your ABN application in Australia. 

Read along! 

Table of Contents

What is an Australian Business Number (ABN)?

An ABN is a unique eleven-digit number which identifies registered businesses in Australia. This number is obtained through the Australian Taxation Office (ATO). Having an ABN is a legal requirement to run a business in Australia. This is true whether you operate as a sole trader, a partnership, or a company. 

Who needs an Australian Business Number (ABN)?

Not everyone needs an ABN. If you meet any of the following criteria, you are eligible to obtain an Australian Business Number (ABN):

  • Engaging in or commencing a business venture within Australia
  • Providing goods or services that are linked to Australia’s indirect tax zone
  • Operating as a company under the Corporations Act

It is important to note that applying for an ABN, registering for Goods and Services Tax (GST), and seeking GST refunds without meeting the entitlement requirements may result in 

prosecution or criminal charges.

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Need an Australian Business Number to start a casual job? We've got you covered.

What is dropshipping?

Dropshipping is a business model where an online retailer does not keep products in stock but instead transfers customer orders and shipment details to the manufacturer, wholesaler, or another retailer, who then ships the products directly to the customer. 

The retailer acts as a middleman, handling the business’s marketing and customer service aspects while avoiding the need to handle inventory or manage fulfilment logistics. This model allows entrepreneurs to start an e-commerce business with minimal upfront costs and inventory risks.

Do You Need an Australian Business Number (ABN) for dropshipping?

Given the lack of inventory, inventory management facilities, a storefront, and other traditional features of a business involved in dropshipping, it can be difficult to know if it even counts as a business. The important things to consider are your plan, profit, and platform.

Plan

Look at your plan on how you are going to operate your dropshipping activities. Does it detail business names, finances and bank accounts, and marketing and branding strategies for the products you wish to dropship? If so, your dropshipping activities are likely a business; you will probably need an ABN.

Profit

Consider whether or not you intend to make a profit from dropshipping. Are you planning to sell many products you source from wholesale suppliers at a higher price than you obtain them? Additionally, are you planning on recouping delivery and other costs through this higher price? If so, your dropshipping activities are likely a business; you will probably need an ABN.

Platform

Think about the platform you want to run your dropshipping activities through. Is it an online space which you pay for, including things like a domain name and advertisement? If so, your dropshipping activities are likely a business; you will probably need an ABN.

Essentially, these three key considerations, alone or in combination, can be good indicators that you will need an ABN. If you’re still having trouble deciding if you need an ABN, check out further guidance from the ATO.

Conclusion

In all, dropshipping can be an exciting activity to get into. However, it’s important to identify whether you want to do it as a business and, if so, to get an ABN. Pro-tip: If you are planning a dropshipping business, you should consider eventually setting up multiple businesses to capture different niche markets.

And if you’re looking to register an ABN, we are here to help. Lawpath offers easy online registration and expedited application so that you can focus on your business! 

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