When you start a business in Australia, you’ll often hear about ABN and ACN. But what are they, and why do you need them? Let’s dive into the difference between an ABN and an ACN, and how ISM Accountants & Advisors Pvt. Ltd. can help you navigate this essential part of business registration.
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Your company can be uniquely identified by its ABN and ACN, which are unique numbers. Nevertheless, the kind of corporate structure you have will determine the number you utilize. This article will explain ABNs and ACNs, their advantages, how to get them, and their potential uses for your company.
Feature Comparison: ABN vs ACN
| Feature | ABN | ACN |
|---|---|---|
| Full Name | Australian Business Number | Australian Company Number |
| Purpose | Identifies a business entity for tax purposes | Uniquely identifies a company registered with the Australian Securities and Investments Commission (ASIC) |
| Applies To | Businesses, including sole traders, partnerships, trusts, and companies | Companies registered with ASIC |
| Issued By | Australian Business Register (ABR) | ASIC |
| Mandatory | Yes, for most businesses | Yes, for companies registered with ASIC |
| Length | 11 digits | 9 digits |
| Example | 12 345 678 901 | 123 456 789 |
What is an ABN?
An ABN (Australian Business Number) is an 11-digit number that uniquely identifies your business to the government and community. It is used for various business activities such as:
- Invoicing and payments
- Claiming GST credits
- Business registrations
ABN Lookup
To find information about any business, you can use the ABN lookup tool provided by the Australian Business Register. This tool helps verify the details of any business in Australia.
What is an ACN?
An ACN (Australian Company Number) is a unique 9-digit number issued by the Australian Securities & Investments Commission (ASIC) to all registered companies in Australia. It is used to:
- Identify a company
- Register the company with ASIC
- Assist in managing company records
ACN Lookup
Similar to ABN lookup, you can use the ACN lookup tool to find details about any registered company in Australia.
Can I Have More Than One ABN?
Yes, you can have more than one ABN (Australian Business Number) in Australia, but there are specific conditions and guidelines you must follow. Here’s an overview based on the search results:
Multiple ABNs Under One Business Structure
Theoretically, it is possible to register multiple ABNs linked to a single business structure. For instance, if you operate a company that has both a retail store and a wholesale division, you could apply for separate ABNs for each division. However, this is not common practice and may expose you to operational risks, as liabilities and risks from one business could affect the other if they are not legally separated.
Conditions for Having More Than One ABN
- Same Business Structure: You can only register multiple ABNs if the businesses operate under the same legal structure. If you have different structures (e.g., a sole trader and a company), you must apply for separate ABNs for each structure.
- Multiple Business Names: You can register multiple business names under one ABN, provided they all operate under the same business structure. This can help streamline operations and reduce registration costs.
Registering for an ABN in Australia
Through a licensed tax agency or the Australian Business Register (ABR), you can apply online for an ABN.
- You must first determine your company’s structure and determine whether your enterprise is eligible for an ABN before starting the application process. You can check your eligibility for an ABN by going to the Australian Business Register website.
- For the application, gather data such as tax file numbers, previously held ABNs, ACNs, the legal name of the firm, business contact information, and more.
- Then, to register for an ABN, visit the ABR website’s ABN application portal and follow the instructions.
For example, if you run a small cafe, you would apply for an ABN to legally operate and manage your business finances.
Registering for an ACN in Australia
The ACN registration process is straightforward but involves paying a small fee. This number is essential for legal and financial documentation. Establishing and registering a corporation is the initial step in the more involved process of obtaining an ACN.
Here’s a broad rundown of the procedure:
- Initially, you must determine if starting a business is the best choice for you or if an alternative kind of organizational structure would be preferable.
- Select a company name that is unique and not already in use, then reserve it.
- Choose the operational or governing structure for your business.
- Recognize and fulfill your legal commitments.
- Obtain the signatures of the individuals who will serve as the company’s directors, secretaries, and members.
- Use the Business Registration Service (BRS) provided by the Australian government to register the company.
- Your firm will ultimately be registered upon processing of your application, and you will be issued an ACN.
Updating or Cancelling Your ABN
To cancel your ABN, notify the ABR and they will process your request. It is your responsibility to maintain your ABN information current on the business registry. This contains information on your:
- associates (i.e. directors and shareholders);
- address;
- contact information; and
- GST registration status.
After the modification, you have 28 days to amend these details.
It is your responsibility to notify the Australian Business Register of your desire to cancel your ABN and to ensure that the ABN is shown as “cancelled” on the register.
Updating or Cancelling Your ACN
Changes to your company details must be updated with ASIC. To cancel your ACN, you must deregister your company with ASIC.
Here are the key points about updating or cancelling your ACN (Australian Company Number):
- If your company structure changes, you may need to update or cancel your ACN by informing the Australian Securities and Investments Commission (ASIC). This is separate from updating your ABN.
- To update your ACN details, you can lodge forms with ASIC online or by mail. Common changes include updating your company name, registered office address, principal place of business, or officeholder details.
- To cancel your ACN, you will need to lodge a Form 6010 Notification of ceasing to carry on business in Australia with ASIC if your company has ceased operations or been deregistered.
- Failure to keep your ACN details up-to-date can result in penalties from ASIC. It’s important to notify them of any changes within the required timeframes.
- If your company has been deregistered, you will need to apply for reinstatement of registration with ASIC before you can reactivate your ACN. Fees may apply.
- Updating or cancelling your ABN is a separate process handled by the Australian Business Register (ABR). The ABN and ACN are different identifiers for businesses and companies.
Do You Need an ABN and/or ACN for Business in Australia?
Yes, you need an ABN to run any business in Australia. If you operate as a company, you will also need an ACN. Both numbers are crucial for legal and operational purposes.
The advantages of having an ABN
Using an ABN has many advantages for your company, some of them are as follows:
- Your ABN can serve as a unique identification for other companies you do business with or want to do business with.
- It makes your company easily recognizable to other companies when processing orders and invoices.
- It enables you to avoid paying pay as you go (PAYG) taxes on the money you get.
- You can obtain goods and services tax (GST) credits if you have an ABN.
- Energy Grant Credits are available to you.
- Obtaining a domain name is possible if you have an ABN.
- Having an ABN makes it simple to identify your company.
- Having an ABN makes it simple to identify your company.
- Because other companies may use a name that is similar to yours but differ in their unique identification number, your company will not be confused with them.
- You won’t experience a little decrease in pay since, in the event that you don’t have an ABN, you might have to deduct 47% of your earnings and provide the ATO this sum.
- If your company has an ABN, you can claim tax deductions for purchases made while the business is in operation.
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The Advantages of having an ACN
The following are some advantages of having an ACN for your company:
- You can lower your risks and personal liability by obtaining an ACN.
- Customers, partners, other companies, and shareholders can obtain company information and recognize your business with ease when you have an ACN.
- Possessing an ACN enables you to comply with the law and certifies that your business has been duly and properly registered with ASIC.
- It indicates that your company has been incorporated.
Summing Up:
ABNs and ACNs are essential to your company. You’ll be breaking both company and tax rules if you deal without the necessary identifiers. To be legally compliant, it is therefore imperative to understand which number your organization needs as well as when and how to utilize them.
Whether you’re a sole trader or a large company, having the right identification numbers helps you stay compliant with government regulations. ISM Accountants & Advisors Pvt. Ltd. can assist you with all your business registration needs, ensuring you start on the right foot.
FAQs on ABN vs. ACN: What’s the Difference?
No, an ABN identifies a business, while an ACN identifies a company. They serve different purposes.
Yes, applying for an ABN is free.
No, an ABN is a business identifier, while GST (Goods and Services Tax) is a tax you collect on behalf of the government.
Yes, all businesses operating in Australia need an ABN.
Yes, non-Australian residents can apply for an ABN if they meet certain criteria.
Operating a business without an ABN can result in penalties, including fines and difficulty in claiming GST credits. It’s essential to apply for an ABN if you are starting a business in Australia.
