7th February, 2021
In nearly every situation, the first step to legally and officially creating your business is to apply for and successfully acquire an ABN, which must be done before you begin trading.
To help answer any questions you may have about the process of applying for an ABN, we brought all the key details together in one place.
This article answers the following:
ABN is short for Australian Business Number. It’s a unique, 11-digit number that identifies your business to the government.
Your ABN is also used to inform the general public about your business on the ABN Lookup website.
As such, registering for and acquiring an ABN must take place before your new business begins trading.
There’s no cost to get an ABN.
However, if you consult an accountant or tax agent for advice about getting an ABN or other tax or financial matters, they may charge a fee for their services.
Every Australian business needs an ABN, but only businesses that are registered as companies need an ACN.
An ACN, or Australian Company Number, is a unique, nine-digit number that’s issued to a company by ASIC when registered. It must be displayed on all company documents.
If you have a registered company, you can use the ABN in place of the ACN on documents, as long as the ABN includes your nine-digit ACN and the ABN is used in the same places that the ACN is used.
Not everyone needs an ABN, but if you’re carrying out activities with an aim to make a profit, then it’s most likely that you are legally defined as a business. This means you’ll need an ABN to track your business-related activity.
DOWNLOAD: An invoice template to get you started
Try this entitlement quiz to check if you’re entitled to an ABN.
In short, though, if you’re carrying on commercial activities or plan on starting an enterprise, making supplies connected with Australia’s indirect tax zone or are a Corporations Act company, you can apply for an ABN.
The most common form of application relating to ABNs is for carrying out activities with the goal of making a profit, or conducting ‘business’.
The ABN is used to confirm your business identity to others when ordering and invoicing, avoid pay as you go (PAYG) tax on payments you received, claim back goods and service tax (GST) credits, claim energy grant credits and obtain an Australian domain name.
Unfortunately, there is no single test available to determine if you are entitled to an ABN. If you are still unsure and wish to find out if you are entitled to an ABN, speak to your accountant or visit the Australian Business Register (ABR) website.
Don’t panic though, if you’re applying for an ABN and are refused, you’ll receive a detailed response from the Australian Tax Office outlining why your application was refused, and the steps you can take to rectify your application if needed.
There are two ways to apply for an ABN.
The first is to apply yourself. There’s a straightforward online application process at the Australian Business Register.
Key information required for applying:
There’s a full list of what you need here.
While there’s no fee to apply for an ABN, consulting an accountant may incur a fee for their services.
You can search for an accountant here.
If you’re starting a new business, register for an ABN before you begin to incur income or expenses relating to the business. This is so you can begin tracking your income and expenses from the day business activities begin.
Business commencement activities can be simple tasks like setting up social-media accounts or websites and purchasing stationery, stock or equipment. They could also relate to more formal activities such as applying for finance and obtaining any insurances or licences. They also include any work you undertake for profit by selling products or services.
Working out if you want to operate as a sole trader or a limited company can be tricky. While both operations require an ABN, there are some significant differences between the two. Speak to an accountant to work out which is best for your situation.
While the process is straightforward, the length of time it takes to receive your ABN will depend on whether you provide all relevant information correctly, or whether the ATO will need to confirm parts of your application.
If you have correctly submitted your information, you’ll usually receive your ABN immediately after finishing the application.
To check an ABN’s status, you need to contact the Australian Business Register directly.
If you have omitted information or your information you provided can’t be verified, the application will need to be processed manually and can take up to 28 days.
When you finally receive your ABN, you’re all set to begin adding it to your invoices, emails and critical business stationery.
It’s also the perfect time to begin working with your bookkeeper or accountant to set up an online accounting system. This will allow you to automate many of the administrative tasks associated with your business finances.
If you’ve stopped business operations or have sold your business, you need to cancel your ABN. Before you do so, speak to your bookkeeper or accountant to make sure you meet any lodgement or payment obligations.
Important: If you want to cancel your pay as you go withholding (PAYG), you must cancel it before you cancel your ABN.
You can cancel your ABN the following ways:
The Australian Business Register is responsible for making sure only genuine businesses get, and keep, an ABN.
Be aware that if you want to reactivate or re-apply for your ABN, you may be required to supply evidence that you have undertaken or are planning to undertake business activities, such as:
If you’re confident you meet the criteria for being in business, reactivate (or re-apply) for your ABN using this form.
To find an ABN, use the handy ABN Lookup tool provided by the Australian Business Register.