Are you setting up your own business in Australia? Is your business entitled to ABN? Is it necessary to have one? If yes, how can you apply for one?
Here’s everything you need to know about the unique ABN number.
Australian Business Number
Australian Business Register (ABR) has issued a unique 11 digit identifier number to the community and government as a part of major tax reform. Australian Business Number is used for tax-related purposes and business trading like your Tax File Number (TFN).
While registering for your ABN, ATO also offers you the option of registering for PAYG (Payment Summary Statement) and GST. After complete verification and several identity checks, you receive an ABN which is then recorded in the ABR (Australian Business Register).
With an ABN, you are able to:
- Claim GST credits
- Obtain an Australian domain name for your business
- Confirm your business identity when invoicing, ordering or trading
- Avoid hefty PAYG tax on payments from your suppliers or traders
Do I need an ABN?
Ideally, not every entity needs it. To register for one, it is compulsory that the entity must own an enterprise or business entity.
If an entity wants to get entitled to an ABN, the person or business must fall under the criteria set by ATO. ATO may reject the ABN application if not entitled to have one. The entity shall be informed with a letter for justification of the same.
If you own a company and do not work as an employee for someone, then it’s a business and you are entitled to an ABN. Hence, if you are working intentionally towards earning money from your business, you should get your business an ABN.
Is it possible to not have an Australian Business Number and still run a business? Yes, but without an ABN, you will not be able to register for GST. Businesses with an annual turnover of $50,000 and more must have a GST registration.
How can one apply for an ABN?
Applying for an Australian Business Number is cost-free. You must have a TFN (Tax File Number) before you apply for your ABN. You can do your business registrations from the ABR. Also, make sure your documents are ready to submit for ABN application.
Any entity can apply for an ABN through:
- The online ABR portal
- A registered tax agent
- An offline application with the ATO
Once you get your ABN, the ABR keeps a record of your details which will be publicly available. As an entity or business, you have the right to request the suppression of your information.
Is it essential to register an ABN and a business name separately?
You are eligible to file your ABN application at the same time when you register your business name with ATO. Also, you can opt-out to not register both at the same time. Ideally, you will have to get your ABN first and then return to the ABR service for the registration of your business name.
One most important thing to know is the key difference between your registered business name and your entitled ABN. This is because it might happen that your business name may be referred to as Australian trading or business name.
How long does it take to get a registered ABN?
Provide all the required information in the online or offline application form. After completion of the application, you will receive a notification of your ABN. You should also receive a confirmation via mail within the next 28 days. Offline application forms will have to wait for a paper confirmation.
ATO may take up to 20 business days to review the application if:
- The information does not comply with the laws or
- Entity identity is still unconfirmed or
- Additional information is required
ATO can even contact the concerned entity for the same.
How can I find an ABN?
Once you have successfully registered and you receive your Australian Business Number,
- Lookup details of a supplier,
- Check if your details are accurate and up-to-date.
You can find all this information on the ABN lookup website.
How many ABNs does an entity need?
This depends on the type of business and its functions.
Do you own multiple services under your business name? If yes, then you need only one ABN. For instance, if Business ABC has an Ecommerce offline and online store, and other employment services, then it is entitled to only one ABN. Thus, irrespective of the number of functions carried out by any business, it should have one registered ABN.
If you own two distinct businesses with diverse functions, then you require two separate ABNs.
In some cases, if you are recommencing your old business, reactivate your ABN, if you already have one. Check the Reactivation policy for further details.
Proof of identity for ABN
To complete your online or offline application, you need to provide POI (Proof of Identity) depending on your age, gender, citizenship:
- Australian full birth certificate
- Australian citizenship certificate
- Australian passport
- Foreign passport
- Medicare card
- Marriage certificate
- Account statement from Australian bank
- The Student ID card, guardian’s information, and signature if you are student <16 years old.
- Tax File Number (TFN)
Thus, ABN is an important identifier for your business name and the related services. The entity must fall under the dedicated criteria for ABN and should have all the POIs for application.
You can also contact a Professional Tax Agent or visit the ATO website for any details.