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I’m making money, what’s next?

Do I need to declare my income and get an ABN?

This question gets asked a lot. By women and men – you should be asking too. If you’re a resident of Australia, living and working here you need to be aware and abide by your financial and tax obligations. The Australian Taxation Office has put out a few articles on this topic.

First Pass Assessment

“If you are making money from a hobby, that’s purely a hobby, no ABN is required. However, if you set up your side hustle like a business, i.e. you get a website, a logo, bank accounts then yes, you need to declare this income and possibly get an ABN too. It’s best you check with your accountant.”

If you’re running a business, then yes, you’ll need to include that income on your tax return – but if your jewellery-making is just a hobby, then no, you won’t. It can be tricky sometimes to work out if your hobby is actually a business. There is no one “thing” that decides if you’re running a business – we usually look at a few different factors to help us work it out.

Side Hustle Hobby or Side Hustle Small Business

You’re probably in business if:

  • You’ve decided to start a business and you’ve done something about it – like registering a business name or getting an ABN.
  • You honestly think you’ll make a profit – even if that’s not happening right now.
  • You’re doing the same thing all the time – so selling items regularly or ordering items, for example.
  • You’ve built planning or organisation into your activities – that is, you’re keeping business records, have a separate bank account for your business, have a shopfront, have a license or qualifications.

Once you start running a business, you’ll need to make sure you have all your registrations in place.  

Check out https://www.ato.gov.au/business/starting-your-own-business for more information about business registrations and reporting.

If your jewellery-making is a hobby, then you don’t have to declare any earnings on your tax return or lodge activity statements. However, if you supply items or services to a business as part of your hobby, that business has to ask for an ABN when they pay you and may need to withhold more tax from your payment.

Conclusion

For more information about if you need an ABN and how the ATO rules on starting your own business, have a look at:

https://www.ato.gov.au/business/starting-your-own-business/before-you-get-started/are-you-in-busines… to find out more.