Australian Business Number (ABN) - What is it and who needs an ABN?

If you are planning to do business in Australia, you need to know what an Australian business number, otherwise known as an ABN, is. In this article, we will explain why having an ABN is essential to conduct business in Australia, what will happen if you don’t have an ABN and how to get an ABN.

What is an ABN?

An Australian business number or ABN is a unique 11-digit number used to identify your business in all your communications, not only with the government but also with the business community in general.

Why should I register for an ABN?

Registering for an ABN can help you uniquely identify your business to others when ordering and invoicing.

When your business has an ABN, your customers won’t have to withhold taxes from payments they make to you.

Furthermore, you need to have an ABN to register for GST, which will allow you to claim credit for any GST included in the price of any goods and services you buy for your business.

Another benefit of having an ABN is that it will help you meet one of the common requirements to apply for certain government grants and to buy an Australian domain name.

But do all businesses need an ABN?

Not everyone is entitled to an ABN. In most cases, you can only apply for an ABN if you are currently carrying on a business or starting an enterprise in Australia. You may face prosecution or criminal charges if you apply for an ABN, register for GST, and claim GST credits when you’re not entitled to do so.

Even if your business is entitled to an ABN, you are not legally required to apply for an ABN unless your annual turnover is $75,000 or more.

However, there are many good reasons why businesses should get an ABN. For example, the tax laws require that your customer is obliged to withhold a whopping 47% of their total payment due to you and then submit the withheld amount to the ATO. Now, that would be a significant blow to your business’s revenue and cash flow. So, it’s in your favour to get an ABN before making the sale.

So, does this mean I cannot sell goods or services until I have an ABN?

Not exactly. If you haven’t yet obtained an ABN, your customers can still buy your goods or services using the no-ABN withholding rule.

How can I apply for an ABN?

You can apply for one through the Australian business register website at www.abr.gov.au. Registration is completely free if you do it yourself. If you use a tax agent, they might charge a fee for their services. You will receive an email notification as soon as you complete the application and normally within 20 business days, you will be allocated a number for the life of your business.

Can I use the same ABN for more than one business?

You can conduct different businesses/activities under the same ABN if they all operate under the same business structure. However, if another business operates under a different structure then you must apply for a separate ABN for each new business structure.

If you need help with getting an ABN or setting up a business in Australia, please contact our team today.