Do You Need an ABN to Sell Online?

If you are selling goods or services online, you need to decide whether you are operating as a hobby or a business. In simple terms, if the primary reason for selling the goods or services is to make a profit, then you must have an ABN (Australian Business Number).

Deciding Between Hobby and Business

The decision to sell online as a hobby or a business heavily influences many aspects, including legal, tax, and financial implications. Here, we explore the benefits and requirements of having an ABN.

Abundance or Necessity of an ABN?

Whether you need an ABN depends on your income. Even if you operate as a business, you might not need an ABN if your earnings are below certain thresholds. However, this decision is highly context-dependent and should be made with professional advice.

Why Not to Rely on Quora for Tax Advice

Taking tax advice from platforms like Quora is not recommended. Such advice can be general and lacks the necessary detail and expertise required. For personalized and in-depth advice, consulting a taxation solicitor or the Australian Taxation Office (ATO) is advisable.

Options for Starting a Business

If you are starting a company, you can have an ABN and act as a sole trader. However, sole traders are taxed at personal tax rates, and your personal assets are at risk if your business is sued.

Pros: Initial ease and flexibility in setting up and operating a business as a sole trader. Cons: Personal assets are liable for business debts and legal issues, and only personal income tax rates apply.

Alternatively, you can apply for an ACN (Australian Company Number) for an incorporated company (Pty Ltd). This approach offers the advantage of fixed tax rates and protection of personal assets from business liabilities, but it comes with its own set of complexities and considerations.

Legal and Tax Considerations

Both options have their pros and cons in terms of legal and tax implications. Acting as a sole trader simplifies the initial setup but poses greater risks. In contrast, incorporating a company provides asset protection but requires more stringent financial management and compliance with company laws.

Professional Consultation for Optimal Setup

To ensure that you make the best decision, it's crucial to speak with an accountant or law firm. They can provide guidance tailored to your specific situation, helping you navigate the complexities and avoid potential pitfalls.

Conclusion

The decision to have an ABN or not is a crucial one, especially if you are planning to sell goods or services online with the intention of generating a profit. It is highly recommended to seek professional advice, especially from a taxation solicitor, to ensure compliance with Australian regulations and to make the most of your business setup.

Erecting a Robust Business Foundation

Your main competitors in the downloadable games industry include established platforms like Steam, Google Play Store, Apple App Store, EA Origin, Ubisoft Uplay, and overseas vendors such as G2A and OzGameshop. Understanding your competitors will help you better position your business and stay ahead in this competitive market.

Remember, whether you opt for a sole trader or an incorporated company, having the right ABN and understanding the legal and tax implications are vital steps towards building a successful online business.