Applying for an Australian Business Number (ABN) is an essential step for individuals and organisations looking to operate a business in Australia. The ABN serves as a unique identifier for your business and unlocks access to critical benefits, such as GST registration and business dealings with other organisations.
Before diving into the application process, here are seven key things you should know to ensure a smooth start to your business journey.
1. Who needs an ABN?
Not everyone in Australia requires an ABN. You’ll need one if you’re carrying on an enterprise as a sole trader, partnership, company, or trust. It’s also essential for those who are self-employed and want to invoice clients or provide goods and services.
If you’re unsure whether your activities qualify you for an ABN, consider factors like the intention to make a profit, the size of your operation, and the regularity of your transactions. If you’re really stuck, reach out to a reliable Australian tax accountant for professional advice—they can help you sort out if your side hustle or hobby needs an ABN.
2. What benefits are there to having an ABN?
An ABN provides several advantages beyond simply legitimising your business. It allows you to:
- Register for the Goods and Services Tax (GST) if your annual turnover exceeds $75,000 (more on that below).
- Add GST credits to business expenses.
- Avoid having tax withheld from payments by other businesses.
- Simplify interactions with the Australian Taxation Office (ATO).
Additionally, an ABN makes it easier to establish credibility with suppliers, clients, and government agencies.
3. How to check your eligibility
Before applying, ensure you meet the eligibility requirements for an ABN. You must either be:
- An Australian resident carrying on an enterprise in Australia
- An Australian resident starting a new enterprise in Australia
- A foreign resident carrying on an enterprise in Australia
- A foreign resident who can demonstrate a direct connection to Australia (for example, having an Australian-based business partner)
As you can see, non-residents are eligible to apply, but they must demonstrate a connection to Australia, such as having an Australian-based business partner. Make sure your personal and business details, such as Tax File Numbers (TFNs) and addresses, are accurate and up to date.
4. The application process
The ABN application is free and can be completed online through the Australian Business Register (ABR) website. The process typically involves:
- Providing personal and business details, including your TFN.
- Stating the structure of your business, such as sole trader or company.
- Describing the nature of your enterprise.
While most applications are processed immediately, some may require additional verification, causing delays. To avoid unnecessary delays, be ready to submit supporting documents if requested.
5. Your responsibilities after getting an ABN
An ABN comes with ongoing obligations. You must keep your ABN details up to date, especially if there are changes to your business name, structure, or address. The ABR may cancel your ABN if your business is inactive, so it’s crucial to notify them if you cease trading.
Furthermore, ensure that you comply with tax obligations, such as lodging BAS statements if you’re registered for GST. Failure to do so can land you penalties.
6. Do you need to register for GST?
While an ABN and GST registration are separate processes, they often go hand in hand. If your business is going to have an annual turnover of $75,000 or more, you’ll need to register. Even if your turnover is below this threshold, voluntary GST registration can benefit businesses with significant expenses, as it allows you to claim GST credits.
Be mindful of your reporting obligations, as GST-registered businesses must submit regular BAS statements to the ATO.
7. Protecting your ABN
Once you have an ABN, it’s important to be wary of the scams that may target you. Fraudsters may impersonate the ABR or other organisations. So always verify the legitimacy of any communication you receive regarding your ABN, and avoid sharing sensitive details unless necessary.
Applying for an ABN is a vital step in establishing a business in Australia, but it requires careful consideration and ongoing responsibility. By understanding who needs an ABN, the benefits it provides, and the obligations it entails, you can set your business up for long-term success. Use these seven steps as a guide to confidently navigate the ABN application process and beyond.
