Do I Need an ABN to Invoice? A Guide for Australian Sole Traders

If you are starting out as a freelancer or sole trader in Australia, one of the first questions is whether you need an ABN before you can send your first invoice. The short answer: if you are running a business, you almost certainly want one. Here is why, and what happens if you invoice without one.

What is an ABN?

An Australian Business Number (ABN) is an 11-digit number that identifies your business to the government and to other businesses. Sole traders use their ABN on invoices, when registering for GST and when dealing with the Australian Taxation Office (ATO).

Do you legally need an ABN to invoice?

You are entitled to an ABN if you are carrying on a business, and a hobby does not count. There is no rule stopping you from writing an invoice without an ABN, but in practice it is hard to operate without one for three reasons:

• Withholding tax: If you do not quote an ABN, a business paying you for work may be required to withhold tax from the payment at the top marginal rate (currently 47% including the Medicare levy). You would have to claim that money back when you lodge your tax return.
• GST: You need an ABN to register for GST, and to claim GST credits on business purchases.
• Client expectations: Most business clients will not pay a supplier who has not given an ABN, because it is also how they confirm you are a genuine business.

How do you get an ABN?

Applying for an ABN is free through the Australian Business Register (abr.gov.au). Be wary of third-party sites that charge a fee for the same application. You will need your tax file number and some personal identification details. Many applications are approved straight away.

An ABN is not the same as a business name. If you trade under a name other than your own, you also need to register that name with ASIC.

Where does the ABN go on an invoice?

Put your ABN near the top of the invoice, alongside your name or business name. If you are registered for GST, your ABN is a required part of a tax invoice. If your invoice is for $1,000 or more, also include your client's name or ABN. Our guide How to Invoice as a Sole Trader in Australia lists every requirement.

ABN and GST are separate decisions

Getting an ABN does not mean you must charge GST. GST registration becomes compulsory once your GST turnover reaches $75,000 in a year, and optional below that. Read GST for Sole Traders: How to Handle It on Invoices for how that works.

Keeping it simple with Sole Invoice

Enter your ABN once in your Sole Invoice settings and it appears on every invoice you create, and you can save each client's ABN against their record too. If you just need a one-off, you can also use our free invoice template.

This article is general information only and is not tax or legal advice. Check the ATO website or speak to a registered tax agent about your own circumstances.