Do I need an ABN to work as a tradie in Australia?

An ABN is an Australian Business Number, an 11-digit number that identifies your business to the government, to other businesses and to your customers. If you are running a business, even a one-person operation, it is how you are recognised when you invoice, register for GST or deal with the ATO.

An ABN is not the same as setting up a company. As a sole trader you keep your own name and tax file number and simply add an ABN on top. It is also separate from GST. You can have an ABN without being registered for GST, and you generally have to register for GST once your turnover reaches $75,000 a year.

If you are carrying on a business, invoicing customers, buying materials and taking on jobs, then yes, you almost certainly need an ABN. Nearly every working tradie does. The ATO looks at whether you are genuinely in business rather than doing the odd favour, so a hobby or a one-off cash job for a mate sits differently to running trade work as your income.

If you are employed by someone as a PAYG worker, with tax taken out of your wage, you do not need your own ABN for that job. The trap is being asked to invoice under an ABN while really being treated like an employee. That can be sham contracting, so it is worth checking with the ATO or Fair Work if you are unsure which side of the line you are on.

This is the big reason to sort your ABN early. If you invoice another business and do not quote an ABN, that business may be required to withhold 47% of the payment and send it to the ATO. You would sort it out at tax time, but that is a huge dent in your cash flow in the meantime.

Quote your ABN on every invoice and the problem goes away. For most tradies that one number is the difference between being paid in full and waiting a long time to see nearly half of it.

You apply for an ABN through the Australian Business Register at abr.gov.au. It is free. Be wary of sites that charge a fee to do it for you, they are just filling in the same free form. You will need your tax file number and some basic details about your business, and many applications are approved straight away.

While you are there, it is worth thinking about registering a business name if you are trading under anything other than your own name, and considering GST if you are near the $75,000 threshold. If any of this is unclear, a registered tax agent or your accountant can set you up properly. Licensing rules for your trade are separate again and vary by state and territory, so check with your state authority.

Once you have your ABN, it needs to appear on every quote and invoice you send. If you are registered for GST, your invoice becomes a tax invoice and must show your ABN and the GST amount. If you are not registered, it is a plain invoice with your ABN and no GST added.

This is where good software earns its keep. ONARA Ops puts your ABN, your logo and your bank details on every branded quote and invoice automatically, so you never send one without it. Add ONARA Books, an optional add-on, and your GST and BAS figures are worked out each quarter too. ONARA Books is a tool to help, not a registered tax or BAS agent.