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ABN/business registration

You could be earning $1000s a month building AI tools, or building all sorts of businesses, but without an ABN (Australian Business Number) you could get yourself into hot water.

Businesses you service want an ABN - because they need it to write off your invoice as an expense. If you don’t bring it it’s really difficult to do business.

The ABN is the mechanism for you to formally pay tax and it’s important to get it right.

Without an ABN you:

  • Can't invoice professionally
  • Can't claim tax deductions on your software and tools
  • Can't open business accounts
  • Can't build business credit
  • Won’t even get considered for most work
  • Have very little negotiation power

But with business registration you can:

  • Invoice anyone
  • Turn expenses into deductions
  • Separate business / personal money
  • Build credibility
  • Look professional
  • Charge professional rates.

In recommend you get an accountant - but:

There is no minimum age for ABNs. You can be 12 and register a business

What you’ll need:

  1. a Tax File Number (TFN) - or your parent's
  2. a business name idea that isn’t already taken
  3. 15 minutes on an online portal at abr.gov.au

The process:

  1. Go to abr.gov.au
  2. Click "Apply for an ABN"
  3. Select "Individual/Sole Trader"
  4. Fill out the form
  5. Get ABN instantly (usually)

The under18 hack:

If the system asks for things you don't have, use a parent as the "business owner" on paper while you run everything. ** But you should ask your parent this.

In this course we won’t talk about establishing companies yet.

Setting up as a sole trader/proprietor is pretty easy

  • It is easier to set up.
  • There’s way less paperwork.
  • You’re in control.

BUT…

  • Liability is personal
  • It’s harder to scale
  • It’s seen as less serious. But perfect for getting started, testing ideas, and earning some money.

The cool thing about an ABN is you can start deduct busines costs against income. E.g.

  • Social media fees can be allocated to the business
  • Courses/conferences/work - can be claimed if there is a specific purpose to the business
  • AI tool costs, and website costs
  • Travel costs if you’re going to meetings etc.

None of this is useful, or can be claimed against regular income - only income the business makes. For some activities under certain thresholds you can claim ‘hobby status’ for income - but if your serious about a business - you really need an ABN. Don’t mess around with the tax office. It’s just a headache. Having an ABN is a superpower - because you can go and do work.

But remember when you earn more than 75k, you also need to register for GST and with that comes all sorts of new headaches like BAS statements.

The tax game is pretty simple:

Move to digital first.

  • Keep digital copies of all of your receipts
  • Allocate all income to one bank account if you can and separate it from other accounts
  • Put expenses on a single credit/debit card if you can - so it’s easy to allocate costs
  • Make sure the costs are business costs and not split
  • Keep a diary of expenses and things you do. This is particularly important for travel and it needs to be in the correct formats

Talk to an accountant about all of this and get set up correctly from the get go

Tax allocation:

  • Don’t assume you get to keep your income. You’ll have to pay tax! and you’ll be in real strife if you spend earned income that its owed.
  • It’s advisable to separate a percentage of income and put it in a separate account.

Remember you can be audited:

  • Keep receipts for 7 years
  • Document business purposes
  • Be reasonable with claims
  • When in doubt, ask an accountant
  • The best option really is to use an accountant because then if things go pear shaped you have a professional in your corner, and they’ll advise you on what you can and cannot do
  • At a young age, I wouldn’t lodge without an accountant helping you along. It’s tax deductable and they’ll get it right

Why you should have a ‘business account’

Even if you don’t have a formal ‘business account’ you want to:

  • Keep your personal money and business money separate
  • It makes calculation of taxes far easier
  • It looks professional.

You also want some other accounts possibly:

  • An income account: Where all the money comes in
  • A tax account: where ~30% is automatically transferred
  • A credit/debit account: For expenses
  • A profit account: Where you can disperse profits to yourself.

The money flow will look like this:

  1. Client pays invoice → Income Account
  2. Auto-transfer 30% → Tax Account
  3. Pay business expenses → Operating Account
  4. What remains → Profit Account (your money)

You also need to think about the business name:

You need a core ABN name, but remember you can attach other trading names to it.

Each one you create has an annual fee so choose carefully. When looking at this there are a number of things to consider:

  • In Australia does the name exist: You can use the https://abr.business.gov.au/ website to do this.
  • You may also want to run searches globably to make sure you don’t clash.
  • Check social media, and domain registers as well.
  • You need a name that is unique from all angles. It’s super painful if you setup a business name, and these conflicts exist.
  • Think through how unique the wording is on your business. Yes you want key SEO type terms, but remember that’s a competitive space. You ideally want a name where it comes up in a Google Search without competition if someone just types it in. That point can save you thousands later in google SEO costs.
  • Once you have a domain name, it’s probably best to setup a placeholder website, and professional email address. The reason you want to get this right is so you can grow things later if you want to.

Given your age, you may also want a holding name - to trade under, then create other names for your businesses with other trading names. Just remember, domains cost money, registrations cost money, email addresses cost money, and the costs can add up super fast.

When your starting out keep it super simple.

Conclusion

Getting an ABN is a crucial step in establishing your business legitimately in Australia. It allows you to invoice professionally, claim tax deductions, build credibility, and operate as a real business. While starting as a sole trader is straightforward, remember to:

  • Keep business and personal finances separate
  • Set aside money for taxes
  • Maintain proper records and receipts
  • Consider working with an accountant

Taking these steps now will set you up for success as your business grows.

An ABN isn't just a number—it's your ticket to operating professionally in the Australian business landscape.