Do You Need an ABN to Sell Online? (2021 Update)
If you're selling products online, it's likely that you'll need to register an Australian Business Number (ABN). Find out more here.
Are you selling goods online? If you are, you’ll likely need to register for an Australian Business Number (ABN). Having an ABN allows you to run your online operations as a business, and may be required by law. Further, you will need one to register for the majority of Australian website domains. Read on to find out what you need to know about having an ABN for your online business.
Table of Contents
- What is an ABN?
- Do you need one to sell online?
- Why else would I register one?
- Article summary
What is an ABN?
ABNs are unique 11-digit numbers that allows you to conduct a business in Australia. You will need to provide relevant identification details in order to acquire one. Furthermore, if you want to register a business name, an ABN is required. If you already have one for another business, you can not use it for your online business.
Do you need an ABN to Sell Online?
If you are selling goods/services online, you need to decide whether you are selling as a hobby or a business. In Layman’s Terms, in Australia an ABN is not required when your business turnover is less than $75,000/year, but highly recommended.
A further consideration consideration is also GST. You are required to register for GST if your online sales/ business has a turnover of more than $75,000 a year (before GST). If you make sufficient turnover to register for GST, you will also need to register an ABN. If you hire employees, you will need to have an ABN in order to register for PAYG Withholding.
Selling as a Business
In simple terms, if you are operating as a business and the main reason behind selling the goods/services is to make profit then you must have an ABN. You will need to display it on invoices and receipts you issue to your customers. A business will often sell products with the intention of making a profit and generating repeat sales over an extended period of time to name a few.
Selling as a Hobby
Often times if you are not paying for an online shop/website, making one off sales (eg: second hand clothing) or not selling to make a profit to name a few. You would be classed as selling as a hobby. Especially if you do not have the intention of transforming your online store into a long term commercially viable business.
I’m Unsure If I’m Selling as a Business or Hobby
If you answer “yes” to the following questions, devised by the Australian Taxation Office (ATO) then you are most likely closer to selling as a business than a hobby:
- Did you set up your online store with the intention of becoming a business?
- Do you pay for your online selling presence?
- Is your main intention to make profit?
- Do you make repeat or regular sales?
- If you make the items you sell online, do you charge more than they cost you to make?
- Do you manage your online selling activity as if it were a business?
- Is what you are selling online similar or the same as what might be sold in a “brick-and-mortar” business?
Registering your domain name
Most domains names in Australia have the extension .com.au, .au or .net.au. If you want to register a domain name with one of these extensions, you will need to register for an ABN. Alternatively, you can apply for your domain name using your Australian Company Number (ACN) or trademark number). If you don’t have an ABN, you can register for a .id.au domain, however you cannot use this website for commercial purposes.
Why Else Would I Register for One?
Regardless of whether your online operations are a business or a hobby, we advise you to register for an ABN. It will enhance the legitimacy of your business to customers by including one on your tax invoices or website. Moreover, it allows you to claim back GST credits and will assist you in making operations with other businesses an easier experience.
Therefore, while it may not be legally required, it is advisable to register an ABN if you are selling online. If you need assistance registering one, get in contact with a business formation lawyer for relevant legal advice. For further information about selling online on platforms such as Etsy, eBay or Facebook please refer to our other legal guides.
Dominic is the CEO of Lawpath, dedicating his days to making legal easier, faster and more accessible to businesses. Dominic is a recognised thought-leader in Australian legal disruption, and was recognised as a winner of the 2015 Australian Legal Innovation Index.