We study the effect of baryons on the abundance of structures and substructures in a Lambda-CDM cosmology, using a pair of high resolution cosmological simulations from the GIMIC project. Both simulations use identical initial conditions, but while one contains only dark matter, the other also includes baryons. We find that gas pressure, reionisation, supernova feedback, stripping, and truncated accretion systematically reduce the total mass and the abundance of structures below ~10^12 solar masses compared to the pure dark matter simulation. Taking this into account and adopting an appropriate detection threshold lowers the abundance of observed galaxies with maximum circular velocities below 100 km/s, significantly reducing the reported discrepancy between Lambda-CDM and the measured HI velocity function of the ALFALFA survey. We also show that the stellar-to-total mass ratios of galaxies with stellar masses of ~10^5 - 10^7 solar masses inferred from abundance matching of the (sub)halo mass function to the observed galaxy mass function increase by a factor of ~2. In addition, we find that an important fraction of low-mass subhaloes are completely devoid of stars. Accounting for the presence of dark subhaloes below 10^10 solar masses further reduces the abundance of observable objects, and leads to an additional increase in the inferred stellar-to-total mass ratio by factors of 2 - 10 for galaxies in haloes of 10^9 - 10^10 solar masses. This largely reconciles the abundance matching results with the kinematics of individual dwarf galaxies in Lambda-CDM. We propose approximate corrections to the masses of objects derived from pure dark matter calculations to account for baryonic effects.