What is an ABN and do you need one? A plain-English guide
If you are starting a business in Australia, or even doing freelance work on the side, you have probably come across the term ABN. Here is everything you need to know.
What is an ABN?
ABN stands for Australian Business Number. It is an 11-digit number that uniquely identifies your business to the government and the ATO. Think of it as a business identity card. When you put it on an invoice, it tells the payer they do not need to withhold tax from the payment.
What does an ABN do?
• Goes on invoices so clients can pay you without withholding tax
• Required to register for GST
• Used when lodging tax returns with the ATO
• Required to register a business name through ASIC
• Confirms to clients that you are a legitimate, registered business
Who needs an ABN?
You need an ABN if you are carrying on an enterprise in Australia, including running a business of any size, working as a sole trader or freelancer, operating a partnership or trust, or leasing property for commercial purposes. You do not need one if you are an employee.
Side hustle? The answer is probably yes. If you are regularly providing services or selling goods for money, the ATO considers you to be carrying on an enterprise. The threshold is not about how much you earn; it is about whether you are operating in a business-like way.
ABN vs ACN: what is the difference?
| ABN | ACN |
Full name | Australian Business Number | Australian Company Number |
Who gets one | Any business entity | Registered companies only |
Issued by | Australian Taxation Office | ASIC |
Digits | 11 digits | 9 digits |
On invoices? | Yes, mandatory | Yes, mandatory for companies |
How to apply
Through the eCompanies wesbite, you can apply for your ABN at the same time as registering your company or business name.
What happens if you don't have an ABN?
If you invoice another business without quoting your ABN, they are legally required to withhold 47% of the payment and send it to the ATO. You can claim it back in your tax return, but having nearly half your invoice withheld in the meantime is painful. Operating without an ABN when required also attracts ATO scrutiny.
Apply for your ABN through eCompanies, fast, simple, and done right the first time. Visit ecompanies.com.au.
The content provided in this blog is intended solely for general information and awareness around our product offerings. It does not constitute personalised advice for any specific individual or organisation and should not be solely relied upon. All information within this blog post is generalised and does not consider the unique situations, circumstances, or requirements of any individual or organisation. Always seek professional advice and consider the suitability of the information to your specific goals and needs before taking any action based on the information presented.
