Do I Need an ABN to Sell on Shopify?

If you’re setting up a Shopify store to run as a business (selling regularly and intending to make a profit) you need to register an ABN. If you’re selling as a hobby with no real profit motive, you may not need one. But the line between the two is blurrier than most people think, and the ATO is watching more closely than it used to.

What is an ABN?

An ABN (Australian Business Number) is an 11-digit identifier issued by the ATO that allows you to conduct business in Australia. It’s how suppliers, customers, and government agencies recognise your business. Without one, you can’t register a business name, issue proper tax invoices, or register for GST.

Any sole trader, partnership, or company operating a business in Australia needs an ABN. It’s not just about tax. It’s the foundation of your entire business identity.

Do I need an ABN to sell on Shopify?

Whether you need an ABN depends on whether what you’re doing counts as a business or a hobby under ATO rules. The answer is not always obvious, and getting it wrong has real tax consequences.

Hobby or business? How the ATO decides

The ATO doesn’t use a single factor or a dollar threshold to classify your activity. It looks at the overall picture. According to the ATO, carrying on a business generally involves ongoing and repeated activities with the intention of making a profit. Occasional, one-off sales of personal items are typically treated as hobby activity.

Here’s a quick framework to think it through:

Indicator	Points to hobby	Points to business
Sales frequency	Occasional, irregular	Regular, consistent
Profit intention	No, activity is for pleasure	Yes, you’re trying to make money
Marketing activity	None	Social media, ads, SEO
Stock management	Selling off personal items	Buying inventory to resell
Financial records	Not kept	Tracked (even informally)
Business structure	None	ABN, business name, or company

If three or more columns point to “business”, the ATO is likely to treat your Shopify store as one, regardless of whether you’ve registered.

Two common Shopify scenarios

Scenario 1, Hobby seller: You make homemade candles and occasionally list them on Shopify when you have stock. You don’t advertise, you don’t reorder supplies to meet demand, and you’re happy breaking even. This is probably hobby activity. You may not need an ABN, though registering one still makes sense for other reasons (more on that below).

Scenario 2, Business seller: You source products from a supplier, list them on Shopify with branded photography, run Instagram ads, and reinvest any profit into more stock. You’re checking your margins and actively trying to grow. This is a business. You need an ABN, and if your turnover hits $75,000 in a financial year, you also need to register for GST.

The grey area is everyone in between, and that’s where most people get caught out.

What happens if you sell on Shopify without an ABN?

If you operate as a business without an ABN and another business pays you, they’re legally required to withhold 47% of the payment and send it to the ATO. That’s not a fine. It’s the default tax treatment for payments to unregistered entities.

For Shopify sellers, this shows up when wholesale suppliers, marketplace platforms, or business customers need to pay you. If you can’t quote an ABN on a tax invoice, the payer has no choice. You can claim the withheld amount back at tax time, but the cash flow hit in the meantime is real, and for early-stage stores running tight margins, it can be painful.

There’s also the ATO’s data-matching programme to consider. As of March 2026, the ATO actively matches data from online platforms including Shopify, eBay, and Etsy to identify sellers who may be carrying on a business without meeting their tax obligations. Regular sales volume is enough to trigger a review.

When do I need to register for GST?

GST registration is a separate question from ABN registration, though they’re linked. Once you have an ABN, you register for GST using that same number. The rules:

• Mandatory: Your Shopify store’s GST-inclusive turnover reaches or exceeds $75,000 in a 12-month period. At that point, you must register for GST within 21 days.
• Voluntary: You can register for GST before hitting $75,000, and there are good reasons to do so early.

The $75,000 threshold is based on your total taxable sales, not your profit. Gross revenue is what counts.

Why some Shopify sellers register for GST before $75,000

A consistent pattern across Lawpath accounting consultations: ecommerce founders who source products from Chinese suppliers register for GST voluntarily, well before they hit the threshold. The reason is practical, if you’re paying GST on Shopify subscription fees, business purchases, and imported goods, you can only claim those credits back if you’re GST-registered. For a store spending several thousand dollars a year on business expenses, that’s real money left on the table if you wait.

The trade-off is that GST registration requires you to lodge Business Activity Statements (BAS), typically quarterly, and charge GST to your customers. For most product-based Shopify stores, the credits on expenses outweigh the admin cost. For service businesses or very low-expense operations, it’s worth doing the numbers before registering early.

Why you should register an ABN for your Shopify store

Even if you’re on the hobby-business borderline, registering an ABN is usually the right call. Here’s what you actually get:

A .com.au domain for your store

Shopify gives you a free .myshopify.com URL by default. It works, but it looks like a side project. Australian domain registrars require an ABN to issue a .com.au domain, and close to half of all Australian Shopify stores use one. For buyers comparing two unfamiliar stores, a .com.au signals local legitimacy in a way a .myshopify.com URL simply doesn’t.

Access to wholesale suppliers

Most wholesale distributors and product suppliers only deal with registered businesses. If your plan is to source stock at wholesale prices, whether domestically or from overseas, you’ll need to quote an ABN to open a trade account. Without one, you’re buying at retail prices, which makes your margins unworkable before you’ve even made a sale.

Customer trust and compliant tax invoices

Your ABN goes on your tax invoices. Australian business customers who buy from your store need a valid tax invoice, with your ABN and GST status, to claim input tax credits. If you can’t provide one, you lose B2B customers before they’ve even asked a question.

Your ABN also appears on your website and in your business registration, which adds a layer of credibility that first-time buyers notice. It shows you’re a real business, not someone testing whether people will pay them.

Protection if your hobby turns profitable

This is the most common reason hobby sellers wish they’d registered sooner. You start with no profit motive, then the store takes off, and suddenly you’re running a business you haven’t set up properly. An ABN takes 15 minutes and costs nothing. Getting your tax position sorted retrospectively after a year of unregistered trading is a far bigger headache. Registering early removes that risk entirely.

What else does my Shopify store need legally?

An ABN is the foundation, but it’s not the only thing your Shopify store needs to be properly set up. A few other essentials:

Privacy Policy

Any Shopify store that collects personal information from customers (names, email addresses, shipping details, payment data) is subject to the Privacy Act 1988 (Cth) if your turnover exceeds $3 million, or if you choose to opt in. But even small stores benefit from a clear Privacy Policy, because Shopify’s checkout requires one. Customers increasingly check before entering card details. Lawpath has a Privacy Policy for Shopify stores you can customise in minutes.

Website Terms and Conditions

A terms and conditions document sets out the rules of your store: payment, shipping, returns, and what happens when something goes wrong. Without it, you’re relying on Australian Consumer Law defaults, which are not always in your favour as a seller. Advisors across Lawpath consultations consistently flag missing terms and refund policies as an early ecommerce compliance gap, particularly for stores importing products from overseas where quality disputes are more likely.

Your business structure

Most Shopify stores start as sole traders. It’s the simplest structure, the fastest to register, and entirely appropriate for a side income or early-stage business. The thing to know is that as a sole trader, your personal assets are not protected from business debts or product liability claims. If someone sues your store, they’re suing you personally.

For most hobby-to-business Shopify stores, sole trader is fine to start with. A pattern Lawpath advisors see regularly: founders running ecommerce businesses start as sole traders, then want to bring in a co-founder or raise money, and find the restructuring to a company is significantly more complex and expensive than setting up the company from the start. If there’s any chance you’ll grow the store into something bigger, it’s worth thinking about structure early.

Do I need an ABN for dropshipping on Shopify?

Yes, if you’re dropshipping as a business, the same rules apply. The fact that you don’t hold physical stock doesn’t change your tax obligations. If you’re running a Shopify dropshipping store with the intention of making a profit, you’re operating a business and need an ABN.

The ABN is particularly important for dropshippers because your suppliers and fulfilment partners will need to quote it on invoices. Without one, you can’t issue compliant tax invoices to your customers either, and if your dropshipping revenue hits $75,000 in a year, GST registration becomes mandatory regardless of your model.

For more detail on ABN requirements for dropshipping specifically, see our guide on whether you need an ABN to sell on Amazon, the same principles apply across most ecommerce platforms.

How to register an ABN for your Shopify store

ABN registration is free through the Australian Business Register. It takes about 15 minutes if you have your details ready, and in most cases your ABN is issued instantly. Here’s the short version:

1. Decide your business structure, sole trader is the most common starting point for Shopify sellers.
2. Register your ABN, you can do this directly through the Lawpath ABN registration service ($50, takes under 5 minutes, issued instantly).
3. Register a business name, if you want to trade under a name that isn’t your own legal name, you’ll need to register a business name with ASIC. Your ABN is required for this step.
4. Add your ABN to Shopify, in your Shopify admin, go to Settings > Billing to add your ABN. This also removes the 10% GST on your Shopify subscription fees.
5. Register for GST if required, if your turnover hits $75,000 or you want to claim GST credits early, register through the ATO’s online services.

What we see in Lawpath consultations

Across hundreds of ecommerce consultations each year, a few patterns show up consistently. They’re worth knowing before you launch.

The “I thought it was just a hobby” tax return gap. One of the most common issues Lawpath accountants deal with: a seller who operated under an ABN for one or two financial years without lodging a tax return, having convinced themselves the activity was recreational. The ATO’s position is clear, if you’re operating under an ABN, income is reportable, regardless of how you’ve characterised the activity in your own head. Overdue returns mean penalties and interest. Catching up on two years of lodgements is genuinely unpleasant.

Missing legal documents, specifically privacy policies and refund terms. Lawpath legal advisors flag this repeatedly for ecommerce clients selling physical goods. A Shopify store sourcing products from overseas is exposed to product quality disputes more than most businesses. Without clear terms covering returns, refunds, and liability, you’re negotiating every dispute from scratch under Australian Consumer Law defaults, which strongly favour the buyer.

GST credits on import costs going unclaimed. Founders who source stock from China and register for GST voluntarily can claim GST credits on business expenses including Shopify fees, advertising, shipping, and certain import costs. Founders who wait until they hit the $75,000 threshold have often missed 12 to 18 months of claimable credits. The voluntary early registration window is a real financial decision, not just a compliance one.

Sole trader structure that doesn’t scale. Starting as a sole trader is fine. The problem arises when an ecommerce business starts to grow, more stock, more sales, a potential co-founder, and the seller wants to restructure to a company. Converting from sole trader to company mid-stride involves transferring assets, potentially triggering capital gains, and starting the business name and ABN process again. It’s manageable, but it’s easier to set up correctly from the start if you know growth is the plan.

Frequently asked questions

Do I need an ABN before I launch my Shopify store?

If you’re launching a business store, yes, get your ABN in place before you start selling. You’ll need it to issue compliant tax invoices, access wholesale suppliers, and register a .com.au domain. ABN registration takes about 15 minutes and is free directly through the Australian Business Register, or through Lawpath’s ABN registration service.

Can I sell on Shopify without an ABN?

Technically yes, Shopify doesn’t require an ABN to open an account. But if you’re selling as a business, Australian tax law still applies to you whether you’re registered or not. Without an ABN, other businesses are required to withhold 47% of any payments they make to you, and you can’t issue proper tax invoices.

What is the GST threshold for Shopify sellers in Australia?

The GST registration threshold is $75,000 in annual GST-inclusive turnover for most businesses (and $150,000 for non-profit organisations). Once your Shopify sales reach that level in a 12-month period, you must register for GST within 21 days. You can also register voluntarily before hitting the threshold, which makes sense if you have significant business expenses you want to claim credits on.

How does the ATO decide if my Shopify store is a hobby or a business?

The ATO looks at the overall circumstances, not a single factor. Key indicators of business activity include: intent to make a profit, regular and repeated sales, active marketing, inventory management, and keeping financial records. There is no specific dollar amount that automatically classifies you as a business, profit intention and regularity matter more than revenue.

How much does it cost to get an ABN?

Applying for an ABN directly through the Australian Business Register is free. Through Lawpath’s ABN registration service it costs $50 and takes under 5 minutes. In both cases, the ABN is typically issued instantly if your details are correct and there are no identity verification issues.

Should I set up my Shopify store as a sole trader or company?

Most Shopify sellers start as sole traders, it’s simpler, cheaper, and entirely appropriate for a side income or small business. A company structure gives you limited liability protection, which matters more when you’re carrying significant stock, have a co-founder, or plan to raise money. If any of those apply to your plans, it’s worth getting advice before you register rather than restructuring later.

Does adding my ABN to Shopify reduce my fees?

Yes. If you’re GST-registered and add your ABN to your Shopify account settings, you won’t be charged the 10% GST on your Shopify subscription and shipping label fees. The exemption applies to invoices issued after you add the ABN, not to any invoices already issued.

Do I need to register a business name for my Shopify store?

Only if you want to trade under a name that isn’t your own legal name (for sole traders) or your company’s registered name. If your store is called something different from your personal name, you need to register that business name with ASIC. An ABN is required to do so. Business name registration through ASIC costs $44 for one year or $102 for three years as of 2026.

You don’t need an ABN if you’re selling under your own legal name, but most sellers want a branded store name, and that means registration.

Do I need a business licence to sell on Shopify in Australia?

There’s no specific “business licence” required to sell on Shopify in Australia. What you need depends on what you’re selling. An ABN is required if you’re operating as a business. GST registration is mandatory once your turnover hits $75,000. A Privacy Policy is required if you collect customer data. Certain product categories (food, cosmetics, supplements, children’s products) may carry additional regulatory requirements under Australian Consumer Law or state regulations. Most general retail Shopify stores don’t need any licences beyond their ABN and tax registrations.

Do I need an ABN for dropshipping on Shopify?

Yes, if you’re dropshipping with the intention of making a profit, you’re running a business and need an ABN. Not holding physical stock doesn’t change your tax obligations. You’ll need the ABN to issue compliant tax invoices, work with suppliers, and register for GST once your turnover reaches $75,000.

Getting your ABN sorted isn’t complicated. It’s one of those things that takes 15 minutes now and saves hours of catch-up later. If you’re running a Shopify store with any intention of making money from it, registering is the right call, even before you’ve made your first sale.

Lawpath is a verified ABN provider. Register yours today and get your store set up properly from the start.

Register your ABN with Lawpath