Side hustle or business?
Do you need to get an ABN for a side gig? If you’ve started selling products online, freelancing after hours, or earning extra income through a gig platform, this question must be on your mind. Many new entrepreneurs in Australia aren’t sure when a side hustle becomes a business in the eyes of the ATO.
Getting this right matters. In this guide, you’ll learn exactly when you need an ABN, how it benefits your side hustle, and what are the next steps you’ll need to take. Deciding whether to apply for an Australian Business Number is one of the first key decisions, and it pays to get it right from the start.
What counts as a “Side Hustle” under Australian Law?
Your side hustle might feel like a small project, but the tax office sees things in black and white. It is either a hobby or a business. This distinction is the most important factor in determining your ABN and tax obligations.
A hobby is something you do for pleasure or recreation. You might make a bit of cash, but that is not the main goal. An Australian business, on the other hand, involves activities carried out with an intention to make a profit.
The ATO has clear guidelines to help you figure out where you stand. If you plan to make a profit and operate in a business-like way, you are likely running a business. It is less about the money you make and more about your intent and actions.
Hobby vs. Business. 4 questions to help you decide
Not sure if your side hustle is a business or hobby? Ask yourself:
- Do you have a marketing plan? Are you actively promoting your services or products to make money?
- Are you keeping records or tracking income and expenses?
- Are you repeating the activity regularly, not just one-off?
- Do you have a clear intention to earn a profit?
If you answered “yes” to two or more, the ATO is likely to consider your activity a business, not just a hobby.
The ATO looks at a range of factors to determine if you’re in business. No single thing decides it, but together they paint a clear picture. Here is a simple breakdown to help you analyse your situation.
Factor | Hobby | Business
|
|---|---|---|
Intention | Done for personal enjoyment or recreation. | Clear intention to make a profit. |
Organisation | Casual and disorganised. No records kept. | Operated in a business-like way with separate bank accounts and records. |
Frequency | Irregular or a one-off activity. | Repetitive and regular activities. |
Size and scale | Small, not intended for commercial scale, like a market stall. | Significant in size with a commercial character. |
When do I need an ABN for a side hustle?
You have reviewed the above checklist and you are pretty sure your side hustle is actually a business. So, what happens now? The general rule is simple: if you are carrying on an enterprise in Australia, you need an ABN.
This applies even if your business is very small or you only work on it part-time. The legal structure does not matter; sole traders, partnerships, and companies all need a business number. Most side hustles begin with one of the simpler business structures, like a sole trader.
An ABN is a unique 11-digit number that identifies your business to the government and community. It is different from your personal tax file number (TFN), as the ABN is for your business activities. It is a core part of operating legitimately in Australia.
The GST and invoicing rules you can’t ignore
One of the clearest triggers for needing an ABN is your turnover. If your business earns $75,000 or more in a year, you must register for Goods and Services Tax (GST). You cannot complete your tax registration for GST without an ABN first.
But what if you earn way less than that? You still likely need an ABN. Many businesses you work with will ask for your ABN on invoices.
If you give an invoice to another business and it does not have an ABN, they must withhold 47% of the payment and send it to the ATO. This is known as “no ABN withholding”. Getting an ABN is the only way to avoid this large, upfront tax hit on your cash flow.
Industry-specific ABN rules
For some side hustles, getting an ABN is not optional, no matter how much you earn. This is specific to the industry you work in.
Industries where ABN is mandatory from day one:
- Rideshare drivers (e.g. Uber, DiDi, Ola)
- Contract cleaning services
- Courier and delivery drivers
- Home-based food businesses
- Freelancers contracting to businesses (e.g. web design, consulting)
Always check if there are special tax obligations or if you need to register licences for your chosen field.
4 benefits of getting an ABN early
Getting an ABN is not just about following rules. It also offers some real advantages that can help your side hustle grow. From looking more professional to simplifying your taxes, an ABN is a valuable tool. It opens doors that are closed to those operating purely as a hobby. Let us look at some of the key benefits.
1. Appear more professional and trustworthy
Having an ABN on your invoices, website, and business cards adds a layer of professionalism. It tells potential clients and suppliers that you are a legitimate business. This can build trust and make it easier to win work.
Other businesses are often more comfortable dealing with ABN holders. It simplifies their own accounting and gives them confidence that they are dealing with a registered entity. You might also find it easier to secure support services or insurance services for your operations.
2. Claim your business expenses
This is one of the biggest financial benefits. With an ABN and a business in operation, you can claim tax deductions for your business-related expenses. This reduces your overall taxable income, meaning you pay less tax.
What can you claim? Costs like software, advertising, business-use portion of your internet bill, and tools are all potential deductions. Even certain start-up costs incurred before you began trading may be claimable over several years.
If your business uses a vehicle, you might be eligible for fuel tax credits. In specific circumstances where you provide benefits to employees (if you have any), you would need to understand fringe benefits tax. You must keep records and receipts for everything you claim.
3. Simplify your invoicing process
An ABN is vital for proper invoicing. A valid tax invoice in Australia must include the seller’s ABN. It makes the whole process smoother for you and your clients.
You will not have to worry about the 47% withholding tax. This helps with your cash flow, as you get the full payment amount from your clients. You can then manage your own tax obligations through your annual tax return, which will be separate from your personal tax file lodgement.
4. Register for a business name
Do you want to operate your side hustle under a name that is not your own? To register a business name with ASIC, you first need an ABN. This lets you use trading names instead of just your personal legal names.
Having a registered business name also helps you protect your brand. It is often the first step before you look into getting a trade mark for your logo or product name. This helps safeguard your intellectual property as your business grows.
How to Reactivate an ABN: A Guide for Aussie Businesses
What if my side hustle is truly a hobby?
If you have reviewed the criteria and are certain your activity is a hobby, then you do not need an ABN. You are not considered to be running a business, so the rules are different. This is perfectly fine and quite common for people who are not profit-motivated.
You can still sell items you create or offer services occasionally. The money you receive from a hobby is not considered assessable income by the ATO. This means you do not have to declare it on your tax return, and you cannot claim any deductions for hobby-related costs.
For many, keeping an activity as a hobby reduces stress and preserves the enjoyment of the craft. It can be a great benefit for your mental health to have a creative outlet without the pressure of business registrations and tax obligations. Just be honest in your assessment of whether it has crossed the line into a commercial venture.
Planning your side hustle for success
Once you decide to get an ABN, it is a good idea to think about the future of your venture. A little planning can go a long way. Creating simple business plans can help you set goals and stay focused.
A basic plan does not need to be complicated. It could outline your services, your target market, and your financial goals. Performing a simple SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) can also give you valuable insights into your market position.
Consider developing a basic management plan to outline how you will handle operations, from production to customer service. As you grow, you might even think about your governance structure, especially if you consider bringing on a partner. For those focused on community outcomes, structuring as a social enterprise could be an option to explore.
P.S.: If you’re ready to take the next step and need an ABN, we’ve got you covered. Here’s a step-by-step guide that walks you through how to apply for an ABN.
Are there any responsibilities for ABN holders?
Responsibility | What it means | Deadline (if any) |
Keep your details up to date | If your business details change, you must update your ABN record. This includes:
| Within 28 days |
Report your income | Declare all ABN income in your yearly tax return | End of financial year |
Cancel ABN if you stop trading | Notify the ATO when your business shuts down. Also cancel registrations for GST or other roles you may have considered for at the same time. | ASAP after ceasing |
Conclusion
Taking your side hustle seriously is a smart move and that starts with knowing whether you need an ABN. If you’re offering products or services with the intent to make a profit, the answer is almost always yes.
Getting an ABN keeps you compliant with ATO requirements, protects your cash flow, and gives your venture a professional edge. It also opens the door to tax deductions, business name registration, and long-term growth opportunities.
The good news? Applying is free and straightforward through the Australian Business Register. And once you’re set up, you can focus on doing what you do best, growing your business.
How can Sleek help?
We make it easy to take the next step. With Sleek’s expert services, you can:
- Get expert guidance if you qualify for an ABN or not
- Apply ABN online in minutes, no paperwork, no hassle
- Add a business name registration or GST setup if needed
- Keep all your business documents in one secure dashboard
Whether you’re freelancing, selling online, or driving part-time, Sleek helps you start right and stay compliant, so you can focus on growing your side hustle, not worrying about admin. Schedule a free consultation call now.
FAQs on do I need an ABN for a side hustle
Yes. If you earn income from your side hustle, you must report it in your annual tax return. Whether you’re registered as a business or not, the Australian Taxation Office (ATO) considers that income assessable. You can also claim deductions for business expenses if you’re operating as a registered business with an ABN. Keeping detailed records is key to staying compliant and maximising your tax position.
If you’re regularly earning with the intent to make a profit, yes, you’re likely running a business, not just a hobby. This means you should register for an ABN and operate within the ATO’s guidelines. It doesn’t matter if it’s part-time, weekend-only, or just online. Profit-driven activity usually signals the need for business registration, even if your income is modest.
Absolutely. Many Australians run side hustles while holding full-time jobs. You can apply for an ABN and manage both legally. Just remember, income from your side hustle is separate and must be declared at tax time. You may also want to set up a separate bank account and track expenses to simplify your bookkeeping and maximise deductions.
Not necessarily. If your existing ABN and business structure (e.g. sole trader) covers the same type of work, you can use your current ABN for the side hustle. But if it’s a completely different venture, say, running a tutoring service while also selling handmade goods, you might consider updating your ABN details or registering a new business name under the same ABN.
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