Do you need an Australian business number?
It’s not mandatory to have an Australian business number (ABN), but there are a few good reasons why you should. Foremost among them will be that without one, your business will probably feel a whole lot poorer than it should.
Other businesses that deal with you are legally bound to withhold tax from any payments they make to you if your business does not quote an ABN on invoices – and they must withhold it at a rate of 47%. Although your business would be able to claim back excess tax paid in the tax return at the end of the year, it’s not ideal from a cashflow perspective.
Having an ABN also gives your business the ability to claim back goods and services tax (GST) credits, claim fuel tax credits you quality for, register to use the pay-as-you-go withholding system, be able to offer fringe benefits to employees, and just generally make dealing with other businesses a much smoother task.
Where to register
To get an ABN, you can apply online at the Australian Business Register, but you may be asked some questions to determine if you are indeed entitled to an ABN.
The Australian Business Register is also the central collection point for basic information about every business with an ABN. But separate registrations are needed for GST, PAYG and so on, and to register your business name.
If your turnover is more than $75,000 a year (before GST), you are required to register for GST anyway, and to do that you need an ABN. (Taxi drivers, by the way, need to be in the GST system no matter what.)
The ABN does not replace the tax file number, and you will still need one of those to lodge a tax return.
Entities, not businesses
Every business that applies for an ABN only needs one (whether sole trader, partnership, company or trust) but can then run as many enterprises as they like from the one ABN – one business can operate for example a furniture shop, a separate curtain outlet and an online fabric supply outlet. But if any of these operations are run by a different business entity, that entity requires a separate ABN.
You also need an ABN to register a website domain name with an extension that ends in ‘.au’, for your business’s online presence.
If you choose a company structure for your business, the first registration undertaken will likely be with the Australian Securities and Investments Commission, which will issue you with an Australian Company Number (ACN). You will need this when registering for an ABN (and your ABN will actually be your business’s ACN plus two digits at the beginning). You don’t need to show both numbers on invoices or stationery, just your ABN.
DISCLAIMER: This is general advice only and does not take into account your objectives, situation or needs. This advice is may not be appropriate in all circumstances. Details included in this article are subject to change, while we endeavour to keep all information up to date, Archer Solutions Pty Ltd can’t make any guarantees as to the accuracy of this information.