As a contractor, you may have heard of the term Australian Business Number (ABN). An ABN is a unique eleven-digit number issued by the Australian Business Register (ABR) to identify your business or entity. It is a legal requirement for any Australian business to have an ABN, and it is often a requirement for contractors to have one as well.

However, the question arises, can you work as a contractor without an ABN? The answer is yes, but it depends on the specific circumstances of your situation.

Understanding the Need for an ABN

First, it is crucial to understand why an ABN is necessary. An ABN is used to identify your business and is necessary to register for goods and services tax (GST). GST is a tax imposed by the Australian government on goods and services sold in Australia.

As a contractor, you may need to invoice for your services. If your annual turnover exceeds $75,000, you must register for GST and charge GST on your invoices. You also need to provide your ABN to your clients, suppliers, and any businesses that you deal with.

Furthermore, some organisations and businesses may require you to have an ABN to work with them. These organisations will typically check your ABN status before engaging your services to ensure that you are a legitimate contractor.

Working Without an ABN

If you are earning less than $75,000 per year as a contractor, you may not need to register for GST. In this case, you can still work without an ABN and invoice your clients using your name.

However, it is essential to note that some businesses and organisations may not hire contractors without an ABN, regardless of the amount of money you earn. Therefore, it is always best to consult with the business or organisation you wish to work with beforehand to determine if they require an ABN.

Additionally, if you are working as a sole trader without an ABN, you cannot claim any business-related expenses as a tax deduction. This means that you cannot claim expenses like office rent, equipment purchases, or travel expenses.

Therefore, if you plan on working as a contractor for an extended period, it may be beneficial to obtain an ABN to take advantage of tax deductions and increase your chances of securing work with potential clients or businesses.

Conclusion

In summary, while it is possible to work as a contractor without an ABN, it is always best to consult with the business or organisation beforehand to determine if they require an ABN. If you are earning less than $75,000 per year as a contractor, you may not need to register for GST. However, if you plan on working as a contractor for an extended period, it may be beneficial to obtain an ABN to take advantage of tax deductions and increase your chances of securing work.