What is an ABN and why do you need one?

ABN stands for Australian Business Number. It is a unique 11-digit identifier issued by the Australian government's Australian Business Register to businesses operating in Australia.

An ABN is required for businesses that:

1. Are registered for Goods and Services Tax (GST) - businesses with a turnover of $75,000 or more per year must register for GST.
2. Want to operate as a business - this includes being able to claim business expenses and certain tax deductions.
3. Want to get paid by other businesses - an ABN is often required to invoice other businesses for goods or services provided.
4. Want to avoid paying Pay as You Go (PAYG) tax at the highest marginal rate - if you don't provide an ABN to your employer, they are required to withhold the highest marginal rate of tax from your payments.
5. Want to register a domain name for their business - an ABN is required to register certain domain names.

An ABN is an essential component of doing business in Australia, as it allows businesses to operate legally and access certain tax benefits and deductions.

Read more details about what an ABN is

Things to check before you apply for an ABN

Before applying for an ABN in Australia, there are several things you should check to ensure that you are eligible and prepared to apply. Here are some things to consider:

1. Determine if you are eligible: Not all businesses are eligible for an ABN. You must be carrying on an enterprise in Australia or intending to carry on an enterprise in Australia. You can check if you are eligible by visiting the Australian Business Register website.
2. Decide on the business structure: Before applying for an ABN, you must have decided on your business structure. This includes whether you will operate as a sole trader, partnership, trust, or company. Different business structures have different requirements, so it's important to choose the right one for your needs.
3. Register for other necessary licenses and registrations: Depending on the nature of your business, you may need to register for other licenses and registrations before applying for an ABN. For example, if you are starting a food business, you will need to register with your local council's environmental health department.
4. Gather the required information: You will need to provide certain information when applying for an ABN, such as your business name, business structure, business address, and contact details. You may also need to provide information about your business activities and employment arrangements.
5. Familiarise yourself with your tax obligations: Once you have an ABN, you will be required to meet certain tax obligations, such as registering for GST if your business has a turnover of $75,000 or more per year. Make sure you understand your tax obligations before applying for an ABN.

It's important to do your research and make sure you are prepared before applying for an ABN in Australia. This will help ensure a smooth and successful application process.

What happens when you apply for an ABN?

When you apply for an ABN (Australian Business Number), the Australian Business Register (ABR) will review your application to ensure that you meet the eligibility requirements. Here's what happens when you apply for an ABN:

1. Application process: You can apply for an ABN online using the Australian Business Register's online application form. The application process usually takes around 15 minutes to complete. You will need to provide information about your business, such as your business structure, business activities, and contact details.
2. Verification process: After you submit your application, the ABR will review it to ensure that you meet the eligibility requirements. If there are any issues with your application, the ABR may contact you for additional information.
3. ABN issuance: If your application is approved, the ABR will issue you with an ABN. This is usually done within 20 minutes of submitting your application. Your ABN will be sent to the email address you provided in your application.
4. Confirmation of ABN: Once you receive your ABN, you should confirm that the details are correct. You can do this by visiting the Australian Business Register website and entering your ABN. This will show you the details associated with your ABN.
5. Tax obligations: Once you have an ABN, you will be required to meet certain tax obligations. This may include registering for Goods and Services Tax (GST) if your business has a turnover of $75,000 or more per year. You may also need to register for other taxes, such as Pay As You Go (PAYG) withholding, if you have employees.

Applying for an ABN is a straightforward process. Once you have your ABN, you will be able to operate your business legally and access certain tax benefits and deductions.

What happens once you have my ABN?

Once you have your ABN (Australian Business Number), there are several things you will need to do to ensure that you are meeting your legal and tax obligations. Here are some things that happen once you have your ABN:

1. Register for Goods and Services Tax (GST): If your business has a turnover of $75,000 or more per year, you will need to register for GST. You can do this using your ABN through the Australian Business Register's online portal.
2. Keep accurate records: You are required to keep accurate records of your income and expenses for tax purposes. This includes invoices, receipts, and other financial documents related to your business.
3. Lodge tax returns: As a business owner, you are required to lodge tax returns each year. This includes an income tax return, and if applicable, a GST return. You may also need to lodge other returns, such as a Fringe Benefits Tax (FBT) return if you provide fringe benefits to your employees.
4. Comply with other legal obligations: Depending on your business activities, you may need to comply with other legal obligations, such as workplace health and safety regulations, industry-specific regulations, and data privacy laws.
5. Update your details: It's important to keep your ABN details up to date. You can do this using the Australian Business Register's online portal. You should update your details if there are any changes to your business structure, contact details, or business activities.

Having an ABN is an important step in starting and operating a business in Australia. However, it's important to understand your legal and tax obligations and ensure that you are meeting them to avoid any penalties or legal issues.

What other registrations do you need?

In addition to an ABN (Australian Business Number), there may be other registrations and licenses that you need to obtain depending on the nature of your business. Here are some examples:

1. Australian Company Number (ACN): If you plan to operate as a company, you will need to register for an ACN through the Australian Securities and Investments Commission (ASIC).
2. Tax File Number (TFN): As a business owner, you will need to obtain a TFN for your business. You can do this through the Australian Taxation Office (ATO).
3. Goods and Services Tax (GST): If your business has a turnover of $75,000 or more per year, you will need to register for GST. You can do this using your ABN through the Australian Business Register's online portal.
4. Pay As You Go (PAYG) withholding: If you have employees, you will need to register for PAYG withholding. This involves withholding a certain amount of tax from your employees' wages and remitting it to the ATO on their behalf.
5. Business name registration: If you plan to operate under a business name that is different from your own name or the name of your company, you will need to register your business name with ASIC.
6. Industry-specific licenses and permits: Depending on your industry, you may need to obtain licenses or permits to operate legally. For example, if you plan to operate a food business, you will need to obtain a food business license from your local council's environmental health department.
7. Australian Business License and Information Service (ABLIS): ABLIS is an online service that helps businesses find out about the licenses and permits they need to operate in their state or territory.

It's important to research the specific requirements for your business and ensure that you have obtained all the necessary registrations and licenses to operate legally.

Conclusion

In conclusion, obtaining an ABN (Australian Business Number) is a crucial step in starting and operating a business in Australia. It allows you to identify your business to the government, customers, and other businesses, and provides access to certain tax benefits and deductions. Before applying for an ABN, it's important to ensure that you meet the eligibility requirements and have all the necessary information ready. Once you have your ABN, there are other registrations and licenses you may need to obtain depending on the nature of your business. It's important to research these requirements and comply with your legal and tax obligations to avoid any penalties or legal issues. By doing so, you can establish and run a successful business in Australia.

Read how to start a business in Australia