Are you selling goods on eBay? Then you may need to get an ABN. You may need to think about the purpose for your eBay store, and whether you intend to sell the goods as a business or as a hobby. This article considers the factors that determine whether you need to get an ABN for your eBay store.

What is an Australian Business Number (ABN)?

An Australian Business Number (ABN) is essentially like a Tax File Number (TFN) for businesses. Other businesses will use the ABN to identify your business.

With eBay stores, the main thing that will determine whether you should get an ABN or not is whether you are running the store as a hobby or a business.

Is Your eBay Store a Hobby or a Business?

Applying for an ABN depends on whether your eBay store is a hobby or a business. If you are running your eBay store as a business, you will need to pay tax on the income you receive from the business. Consequently, you will need an ABN.

When determining whether you have a hobby, or are running a business, ask yourself: 

  • Do you intend to make a profit from setting up your eBay store?
  • Do you spend any money to have an online presence?
  • Do you have regular sales?
  • Are you selling your items for more than the cost price?
  • Are you managing the store as if it were a business?

If you are answering “yes” to the questions above, it is likely that your eBay store would be considered a business.

Here are two scenarios of eBay store owners and the circumstances under which the owner may need an ABN.

Cecilia’s Books 

Cecilia buys new books regularly, and after she’s read them once, she sells them. She posts them on her eBay store and for the next few weeks, eBay users engage in bidding wars to purchase Cecilia’s used books. Although Cecilia does this on a regular basis, she is not carrying out a business and does not need an ABN. It is not Cecilia’s intention to make a profit from selling the books.

Frank’s Book Business

Frank arranges with a book wholesaler to receive books that he then posts on his eBay store. The number of books Frank sells varies each week, but he is making a steady income from his book sales. Frank is running his eBay store for the purpose of profit and would need an ABN.

Running a Business

You will need to include the income you receive from your business on your tax return. If this is the case, you will need to have an ABN. You can also claim tax deductions on expenses made for your business.

Conclusion

There are a number of articles on eBay’s community pages about when you need an ABN. If you are still unsure about running your eBay business, or whether you need to apply for an ABN, get in touch with one of our online business lawyers.

Questions? Call us on 1300 544 755.

Dhanu Eliezer

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