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Registering a small business and getting an ABN

Registering a business - for the last year I have been running my own small business doing pet siting and pet care. I would have probably made around $2000. I am not sure whether to register my business and get an ABN or not. I also have a full time job in a logistics role which I get enough money from. I absolutely love pets and would almost consider it a hobby, but I am now getting more clients and I want to do the right thing.. Will I benefit in the long run by doing it as a registered business for tax purposes?

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3 answers

user
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  • user

    Answer: Hi Emily, What is your aim in the future with pet sitting and pet care? I note you call it a 'business' and you also mentioned that it's growing? If you desire to appear more professional and give your clients reassurance that it's not just 'a hobby' and have a desire to replace your existing secular work, then registering a business name + ABN would be a good idea. If you like your side income and do not know if you will do it long term them just declare the additional income as part of your yearly income. It really depends on the end goal as to your next step. Do you want to have a website and Facebook biz page? Are you planning to grow in 2017? Do you intend to have business cards? It really doesn't matter if it's $2000 or $5000, what does matter to define hobby to a business is your motivation. If it is to build a business, by all means use your $2000 toward your startup fees. You can apply for an ABN and business name via https://www.ato.gov.au/Business/Registration/Register-your-new-business/. There is no need to register for GST until you get close to or over 75k. However, this does not excuse you from keeping good records. The ATO has a free phone app via MyGov that you can photograph your receipts and record your income. You can also then print it all out and take it with your at tax time to your accountant or lodge your tax via MyTax for free. ( see https://www.ato.gov.au/Business/Registration/Register-your-new-business/ )

    • Amanda Hoffmann
    • 18 Dec 2016
    • 09:20 PM
  • user

    Answer: Hi, Further to Andy's comments, as a Tax Agent in Practice it is sometimes difficult to determine whether an activity is a business or hobby. I googled business or hobby ATO. The ATO has Fact Sheet Business or hobby QC 31733 dated 20 June 2016. The Fact Sheet includes a Hobby or Business Tool. The ATO has in recent years offered business owners Tools which if completed in good faith can be relied upon by the TaxPayer. You can always write to the ATO with your circumstances. The ATO has tightened the ability to get a ABN and is looking more closely at the person's circumstances and whether they have a business. Conversely, if a business ceases they should cancel the ABN. If your activity is deemed to be a hobby, then you can give your clients a Statement by a Supplier saying the activity is a hobby. Hope this helps. Duncan Smith Business Advice + Tax

    • Duncan Smith
    • 30 Oct 2016
    • 07:03 PM
  • user

    Answer: Hi there, From what you have described is sounds like it is still a hobby for you, however, as things do pick up you may want to consider "making it formal". Running it as a business has both positives and negatives... You will need to pay tax on money coming in (booooo!) but at least you can claim tax deductions for business expenses (yeahhhh!). Both the ATO and Business.gov.au have some helpful guides to help with this very subject. https://www.ato.gov.au/business/starting-your-own-business/business-or-hobby-/ https://www.business.gov.au/info/plan-and-start/a-business-or-a-hobby Hope this helps!

    • Expert: Andy Giles
    • 28 Oct 2016
    • 04:12 PM
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