^{The content in this blog is intended to provide general information only, and has been prepared without taking into account your personal circumstances. Nothing in this presentation is intended to constitute legal or financial advice. Before acting on any information, you should consider whether it’s appropriate for you. Tyro recommends you obtain professional advice on the business structure that will meet your business and tax requirements.}

Everything you need to know about ABNs

If you’re planning on starting a business, whether offline or online, from your home or otherwise, you’ll need an ABN. This article covers everything you need to know about an ABN, including what it is, what it does, and why it’s crucial to get one before you start trading.¹ 

What is an ABN?

ABN, short for Australian Business Number, is a 11-digit number that identifies your business to the government, other businesses, and the public. Unique to you, it distinguishes your business beyond branding and gets you on the official register of businesses in Australia. 

What is the purpose of an ABN?

An ABN is designed to make doing business easier. Having an ABN makes dealing with suppliers, clients, and government agencies, including the Australian Taxation Office (ATO), simpler and smoother, as they can easily identify who you are. 

Identification and management of business

ABNs form what’s known as the Australian Business Register (ABR), a database managed by the ATO on behalf of the Commonwealth Government. This means when you register for an ABN, your business’ identifying details are automatically stored in the ABR and made available to the public, so you can find other businesses’ information and they can find yours. 

All registered ABNs can be found on the ABN Lookup page. 

What’s the difference between an Australian Business Number and Tax File Number (TFN)?

An ABN isn’t the same thing as a TFN. A TFN is a personal number that identifies you as a taxpayer in Australia and is used for your dealings with the ATO. An ABN, although attached to your TFN, is a public number that identifies you as a business in Australia and is used for your dealings as a business. One does not replace the other, and if you have an Australian business you’ll need both to keep your operations up. 

Learn more about ABN entitlement. 

Benefits of having an ABN

Besides identifying your business, there are many advantages to setting up an ABN. 

An ABN can be used to: 

• get an Australian domain name (.com.au, .org.au or .net.au) 
• sign up for a business account with suppliers e.g. telco, energy, stock 
• secure business pricing on the purchase of a motor vehicle 
• get a business bank account or EFTPOS device like Tyro 
• register for eInvoicing 
• obtain a trademark 
• help you qualify for business grants and support payments 
• employ people and offer fringe benefits to your employees 

Tax credits and deductions

An Australian Business Number can also help you out in the tax department. With it, you can claim business expenses as tax deductions, reducing your taxable income and thus saving yourself money, which you can put away for a rainy day or inject back into your business. 

An ABN also allows you to claim goods and services (GST) credits (when registered for GST), avoid pay as you go (PAYG) tax on payments you receive, and claim fuel tax or energy grants credits (if you qualify) – all of which can greatly benefit your business. 

Keep in mind your tax credits and deductions will vary according to the type of business you run, you should seek a tax professional’s advice on this.  

Learn more about deductions  

Trading with other businesses

An Australian Business Number identifies your business to others when ordering and invoicing, confirming who you are and keeping everything official. Not all businesses are legitimate, so having an ABN is an easy way to show that yours is. 

How to get an ABN

Now that you know why you need an ABN, let’s look at how to get one.

Application process

Getting an ABN is as simple as filling out an application form on the ABR website, which should only take a few minutes to complete. You can complete the application in one go or several sessions, simply by saving your progress and returning to it when you’re ready. 

While you’re setting up an ABN, you can also choose to apply for an Australian Company Number (ACN) and business name if necessary. 

Required information

When you apply for an ABN, you’ll be asked to provide certain information. Here’s a rundown of the details you’ll need to provide to secure your 11-digit number: 

• The business structure you’ll be operating as (i.e. sole trader, company, partnership or trust) 
• proof of identity 
• details of your business activities and associates 

ABN cost

It’s completely free to apply for an ABN, so you don’t need to worry about forking out any funds for this essential registration and getting your business’ show on the road.  

Though, if you get an accountant, business manager or tax agent to set up the ABN for you, that of course may incur a fee. 

Processing time and rejection 

In most cases, an ABN will be issued to you instantly. However, if your identity can’t be confirmed or more information is needed, the application will be reviewed within 20 days. The ATO may get in touch with you for more information, if needed. 

You can track the progress of your ABN registration online, at any time. 

If you apply for an ABN and you’re not entitled to one, your application may be refused. The ATO will let you know what that reason for refusal is, so you know why the decision was made.  

ABN responsibilities 

Having an Australian Business Number comes with a number of responsibilities that you’ll need to follow to be in the good books. Let’s run through them below. 

Registering for GST and paying tax 

When starting a new business, register for GST if you expect a turnover of $75,000 or more within the first year. Registration must occur within 21 days of realizing your turnover will surpass this threshold. You should monitor this monthly to avoid exceeding the limit.²  

Voluntary registration is available for businesses below the threshold, but they must then include GST in sales prices, claim GST credits for purchases, and submit activity statements reporting sales and GST details. 

Updating your ABN details

It’s your job to ensure your ABN details are up to date. You’ll need to update your details within 28 days of becoming aware of the changes, to ensure your information is always accurate. 

Updating your ABN details will ensure: 

• the right people have the right permissions to act on behalf of your business 
• government agencies have current contact information  
• you’re ready for new government services when they become available 

If you change your business structure, you may have to register for a new ABN.

Wrap-up 

An ABN is your ticket to an official Australian business. It makes your business easy to find and makes it easier to do business. Make sure to add ‘apply for an ABN’ to your business launch to-do list, so you start off your entrepreneurial journey on the right foot. 

^{1 Tyro provides this article for general information and educational purposes and does not take into account the financial situation or needs of any reader. The information provided must not be relied upon as financial product advice. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information}   

^{2 This doesn’t apply to taxi or ride-share operators – they must register for GST at any level of turnover.}