Create & Thrive Q&A on ABN, Business Name, Tax, and GST

Today’s question is from Majay, who writes:

“I am just in the planning stage of creating a little online creative business. I’m 7 months pregnant now ( first one ). I know its crazy but I am trying to make some goods to sell online before the bub comes, ’cause I don’t know how busy am I going to be.

I have been contemplating this idea for a long time now, as I love creating and I am a huge fan of handmade stuff, and now that I’ve finished my full time job I thought I needed to enact my little dream of having a little online store.

I just want to ask, do I need to get an ABN or register a business name? I am sure I will not have $75,000 profit a year with my handmade goodies.

I did a bit of research but still I am confused: I don’t want to get in trouble!


For those of you outside of Australia, you may not know what most of the title of this post means – but bear with me! The local equivalents to these questions in your country is something you NEED to figure out asap.

Also – let me just state that I’m not an accountant or tax agent, so I’m just giving my personal advice based on my understanding of Australian business and tax rules. Please do your own research based on your situation and talk to a professional if you’re unsure of what you need to do.


Okay, so, let’s look at Majay’s questions.


People often conflate – ABN/Business Name Registration/GST/Putting business income on their tax – as one big morass, but it’s actually 4 separate – though inter-related – issues. Let’s look at each one individually.


Getting an ABN (Australian Business Number)

From the Australian Government website here (This site/resource is no longer available):

“An ABN is not compulsory, but it does allow you to:

  • facilitate a single Business Activity Statement (BAS)
  • confirm your business identity to others when ordering and invoicing
  • avoid Pay as You Go (PAYG) tax on payments you receive
  • claim Goods and Services Tax (GST) credits
  • claim energy grants credits
  • obtain an Australian domain name.


Some of the above is pretty irrelevant when you’re starting out. That said, I would encourage anyone starting even a very small business to register for an ABN. It’s free, easy, and gives your business legitimacy. Also, of course, you can’t get an Aussie domain ( without one.

An ABN is just a number that other businesses and the government can use to identify your business. It’s kinda like a TFN (tax file number) for your business.

Your ABN isn’t linked to any one business, either. If you register as a sole trader, you can use the same ABN for multiple enterprises (in my understanding).

This is connected to the whole ‘do I put my income down on my tax return as a ‘business’ or a ‘hobby (This site/resource is no longer available)’.


Do I Have a Hobby or a Business?

I know Majay didn’t ask this directly, but it’s a question I hear so often that I thought I’d just throw it in here. It’s actually pretty easy to work out. Are you trying to make a profit from what you’re selling? Then you’re in business. The actual amount of money you make is completely irrelevant here.

If you’re not sure, here’s what the ATO has to say (This site/resource is no longer available):


A hobby is a spare-time activity or pastime pursued for pleasure or recreation.

A business requires some form of investment and enough customers to whom its goods or services can be sold on a consistent basis with the intention of making a profit.

When selling online becomes a business, the income you earn from it is subject to tax. If this is the case, you may also be eligible for tax deductions.

Quick Checklist

There are questions you can ask yourself to work out if you are undertaking a hobby, or carrying on a business that should be declaring income:

  • Did you set up your online sales with the intention of being a business? (bolding mine)
  • Do you pay for your online-selling presence?
  • Is your main intention to make a profit?
  • Do you make repeated or regular sales?
  • Do you sell your online items for more than cost price?
  • Do you manage your online selling as if it were a business?
  • Is what you are selling online similar or the same as what might be sold in a ‘bricks and mortar’ business?

Each time you answer ‘yes’ to a question the likelihood that you are carrying on a business increases. However, all of the questions need to be considered together to get an accurate picture of your personal situation.”


I’m guessing pretty much everyone reading this would be answering ‘yes’ to most of those questions. Therefore, you are in business, and need to put your income on your tax return.

Frankly, I don’t know why anyone wouldn’t put themselves down as a business on their tax return… especially because if you do, all those delicious supplies you’ve bought to make your creations with become tax deductible! As are online courses, books, subscriptions, travel to conferences, etc. that you spend money on in order to improve your business.

If you’re spending the money anyways, why wouldn’t you offset it against your business income?


Registering a Business Name

Yes. You need to register a business name, unless you’re trading under your own name.

In detail:

“You’re required to register your business name with the Australian Securities and Investments Commission (ASIC), unless you plan to conduct your business under your, or your partner’s, first name and surname, or initials and surname.” {source} (This site/resource is no longer available)

{For more information on ABN and Business Registration issues, check out this page.}

Fair warning – this can be a frustrating process. However, it’s necessary, so just grin and bear it!

This isn’t free, but it’s pretty inexpensive.


Registering for GST

GST is the Australian Goods and Services Tax. Whenever you buy pretty much anything here in Australia, 10% of the cost price is this tax.

If you’re just starting out, I can say with 99% certainty that you don’t need to register for GST. In fact – I have only JUST done this as of April 2014, as I have exceeded the income threshold, and didn’t have a choice any more.

As stated by the ATO here (This site/resource is no longer available): “You must register for GST if you run a business or enterprise and your GST turnover is $75,000 or more”. GST turnover is basically just your gross income – from Australian AND international sources.

Unless you’ve come up with the handmade equivalent of the first iPhone, I’m pretty confident you’re not going to be making this much in your first year in business. However, as one of my friends who owns his own building business has said to me ‘I don’t know why anyone wouldn’t register for GST, because you then get 10% back on all your purchases’. That is – when you buy stuff from another Australian that is business-related, you can claim the 10% GST back on that item. If you’re doing all your business buying and selling within Australia, this is certainly a good point. BUT, most of us are buying and selling stuff across international borders, so it’s a bit more complex than that.

For me, adding GST is something I wanted to avoid for as long as possible, because about 80% of my jewellery sales are international. That means I can’t just put the GST into my prices, because it wouldn’t be fair for all those international customers to be paying the extra amount (I’m pretty sure that’s illegal, too).

I have had to set up my online stores so that the tax is put on as an additional charge at checkout for Aussie customers. Thankfully, all the software I use to sell (Etsy, Ecwid, and e-junkie) make this very quick and easy to do. But I hate that my Aussie customers now have to pay more.


So, Majay, I hope that clarified things! And for everyone else – don’t neglect figuring this stuff out. If you’re starting a business, treat it seriously, and do it right. I’m the first person to cringe at the thought of bureaucratic paperwork, but starting a creative business isn’t just all about the fun stuff! You’ll be clearer and more relaxed when you know you’re doing things right and legally.

Image source: Death to the Stock Photo

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