Guide to setting up an ABN for small business
Starting your own business. It may feel like there is so much to think about and so little time to do it in, but there are a few things that you should prioritise on that to-do list, like getting your ABN sorted. An ABN is an Australian Business Number, and getting one is a vital step in the process of setting up a business.
In this quick guide, we cover applying for your ABN so you can start operating your business quickly.
What is an ABN?
An Australian Business Number (ABN) is your business’ unique 11-digit number that is used to identify your business.
An ABN is essential for most business activities, such as:
- Opening a business bank account
- Registering for GST
- Paying your staff
- Claiming some tax credits and concessions
Your ABN is not the same as your tax file number (TFN). However, you may need to supply both when filing some business paperwork.
What is the difference between an ABN and ACN?
An Australian Company Number (ACN) is a unique 9-digit number issued to registered Australian companies by the Australian Securities and Investments Commission (ASIC). This number allows ASIC to monitor a company’s activities.
Every Australian business needs an ABN, but you only need an ACN if your business is registered as a company. An ABN is required to identify and track your business for tax purposes. An ACN identifies and tracks companies, so that government bodies can insure that the company is operating legally and following relevant regulations.
Why do I need an ABN?
Most businesses are required to have an ABN, regardless of the type of industry you work within. An ABN is necessary to carry out many business functions, such as:
- If your business earns over $75,000 or more in a financial year, you will need to register for Goods and Services Tax (GST). To register, you will need an ABN.
- You will need an ABN for invoicing your clients and ordering from suppliers.
- It helps to avoid Pay as You Go Tax (PAYG) on any payments that you may receive.
- You may be entitled to claim energy grant credits that require an ABN.
- It may be a requirement to register for an Australian domain name.
Having your ABN is going to help your business, especially when it comes to the financial side of things. Plus, it also makes your business look professional. It is generally required before you begin earning money or generate expenses for your business.
If you are still unsure if you need to apply for an ABN, the Australian Business Register site can help answer your questions.
What do I need to apply for an ABN?
One of the most important things you will need when applying for an ABN is your tax file number. This helps to identify you in the system and helps with the process of getting your ABN. If you don’t have a tax file number, you can apply for one via the Australian Taxation Office.
You may also need these when applying for an ABN:
- The registration number of your tax agent
- If applicable, your professional advisor’s number
- The date when your ABN is required
- Details about your business activities
- The location of your business
- If you previously held an ABN, you may need to provide that number
How much does an ABN cost?
Registering for an ABN is free. This can be done directly through the Australian Business Register website.
Be aware that there are a few spammy websites that offer ‘speedy ABN applications’ and will request a fee. Always check the site and only use ones created by the Australian government.
If you have a tax agent or accountant, you may prefer to provide them with the required business details and get them to complete the process on your behalf. They will likely charge a fee for this service.
How to register for an ABN?
The process for registering for an ABN is straightforward. You can apply for your ABN online through the Australian Businesses Register website.
Simply complete their online application form and submit it. The application provides assistance throughout the process to help answer your questions and ensure that you register an ABN as a sole trader (Individual) or a Company/Partnership/Trust/Other organisation correctly.
How long does it take to receive an ABN?
If your application for your ABN is approved, you will receive your 11-digit number straight away, along with a letter that outlines the details of your number and your responsibilities as a business owner.
If your ABN application isn’t approved straight away, you may need to provide more information for your ABN registration. If your application needs further review, it usually will be processed within 28 working days.
Once your ABN is approved, you can use it to continue with other administrative processes like registering your business name and registering for GST (if you need to).
Can I reactivate an old ABN?
If you previously held an ABN that was deactivated, you can apply to reactivate it. You may need to prove that you are taking steps to open a business, such as:
- Building a website
- Creating business social media accounts
- Applying for finance
- Obtaining licenses or business insurance needed to operate
- Purchasing or leasing a premises, equipment, or stock
You can reapply for an ABN at the Australian Business Register’s website.
Do I need to renew my ABN?
You do not need to renew an ABN. As long as you meet certain ABN requirements, such as keeping your tax returns and activity statement lodgements up to date, you can keep yours for life.
What if my business details change?
It may be necessary to update your ABN details from time to time. This helps ensure that your correct contact details are on file, that your ABN accurately reflects your business activities, that you can apply for government services when they become available, and that the right people can act on behalf of your business.
Update your ABN at any time online.
How can I cancel my ABN?
There may come a time when you need to cancel your ABN, such as selling your business, closing your business, or operating exclusively outside of Australia.
You can cancel your ABN online, but you’ll need to cancel your pay as you go withholding first. You are also required to meet any outstanding lodgement, reporting, or payment obligations with relevant government agencies.
ABN Registration Recap
Here’s a quick recap of how to apply for an ABN for your small business:
|Who can apply for an ABN?
|Australian businesses that aim to make a profit
Sole traders, partnerships, trusts, and other organisations
|When do I apply for an ABN?
|Before you begin setting up your business, generating business expenses, or start earning an income from your business activities.
|How much does an ABN cost?
|An ABN is free. You may be charged a fee by your accountant or tax agent if they apply on your behalf.
|What do I need to apply for an ABN?
|Basic business details, like:
|Where do I register for an ABN?
|Visit the Australian Business Register website.
|How long does it take to get an ABN?
|Usually, immediately or within 28 days if more information is needed.
|Do I need to renew my ABN?
|No. You can hold an ABN for life so long as your business is in operation.
|Where can I reactivate or cancel my ABN?
|On the Australian Business Register website
Building a Better Small Business
There’s a long list of things to tick off that list when establishing your small business, like getting your ABN sorted. Another important thing to consider is getting your business insurance sorted to help protect your small business.
With BizCover, you can get your policy sorted in minutes without the drama and hassle of having to shop around. Experience insurance made easy today.
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