Does your business need an ABN?

It’s not mandatory for a business 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%.

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 much smoother.

Where to register
To get an ABN, you can apply online at the Australian Business Register, but before you do you need to determine if you are indeed entitled to an ABN. There is an online entitlement checklist here to help you decide if you are entitled.

The Australian Business Register is also the central collection point for basic information about every business with an ABN. Separate registrations are needed for GST, PAYG and so on, as well as business name registration.

If your turnover is more than $75,000 a year (before GST), you are required to register for GST, and to do that you need an ABN. (Taxi drivers, by the way, need to be in the GST system no matter what.)

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, a separate ABN will be needed for it.

You will also need an ABN to register a website domain name with an extension that ends in ‘.au’, if your business intends to have an online presence.

If you choose a company structure for your business, the first registration undertaken will probably be with the Australian Securities and Investments Commission, which will issue you with an Australian Company Number (ACN). You need this when registering for an ABN (and the ABN will actually be the business’s ACN plus two digits at the beginning). You don’t need to show both numbers on invoices or stationery, just your ABN.


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