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As a business owner in Australia, it can be challenging to understand every requirement your business must meet. For instance, you must determine whether your business requires an Australian Business Number (ABN). However, whether your business needs an ABN will depend on several factors, such as its annual turnover. This article will explain an ABN and help you determine whether your business needs one.

What is an ABN?

An ABN is a unique identification number issued by the Australian Business Register (ABR) to businesses operating in Australia. The ABN is an 11-digit number and identifies your business for tax and other government purposes. It is similar to a Tax ID or Social Security Number in the United States.

It is important to note that an ABN is not the same as an ACN (Australian Company Number). Instead, the Australian Securities and Investments Commission (ASIC) allocates an ACN to companies upon registration. However, the two numbers are closely linked, and the ACN is often included with the ABN on invoices and other business documents. Additionally, it is common for businesses to apply for a tax-file number (TFN) while applying for an ABN.

You can check the ABN of a company by visiting the ABR website or by asking for the ABN directly from the business.

Does My Business Need One?

If you are operating a business in Australia, it is crucial to determine whether or not you need an ABN. 

An ABN is mandatory for businesses with an annual turnover of $75,000 or more. If your business falls under this threshold, you can still apply for an ABN, although it is not mandatory. However, you will need an ABN if you wish to claim the GST on any goods or services you purchased to use in your business. This also applies if you wish to sell goods or services to the government, also known as government procurement.

It is always best to consult with a tax professional or the ABR to understand your business needs clearly.

Why is an ABN Important?

ABNs are a legal requirement for businesses with an annual turnover of $75,000 or more. However, they are also necessary for taxation purposes as they allow businesses to report their income and claim GST credits correctly. Moreover, if your business wishes to claim GST, you must first register your business on the ABR, which you cannot do without an ABN. 

What Are The Benefits?

Having an ABN allows you to access specific concessions and benefits, such as fuel tax credits and registering for the ABR. With an ABN, you can also improve your business’ legitimacy for: 

• your customers; 
• suppliers; and 
• other businesses. 

Furthermore, having an ABN makes it much easier for your business to keep records and track financial information. This is especially important if you have a large company with strict record-keeping obligations. An ABN also allows for easy transactions with government agencies and other businesses, making it easier for you to participate in government procurement.

Are There Any Disadvantages?

Registering for an ABN will be particularly beneficial for your business, but there may be a few potential disadvantages to having one. Firstly, navigating the process of obtaining and maintaining an ABN can be challenging, especially if you are a new business owner or do not have a strong understanding of business and tax laws.

Crucially, you must be aware that your business’s public information will be available on the ABR website. This information includes the entity type and GST registration status. Although this is not necessarily a disadvantage, you may be concerned if you value your business’ privacy. 

Maintaining an ABN can also be difficult. You must keep your business records current and fulfil your ongoing obligations. For instance, you may need to lodge an annual income tax return.

However, you can easily overcome this issue by creating an ABN checklist. Doing so will help ensure you are keeping up to date with the requirements of your ABN. 

Searching For An ABN

If you are searching for another business’ ABN, this is a simple process that you can do through the ABR website. It is a valuable tool to verify a business’s legitimacy and access more detailed information. On the ABN Lookup page, there will be a search bar where you can enter the ABN or business name of the company you are searching for. The search results will display the:

• business name; 
• ABN; 
• status; and 
• other relevant information.

If you cannot find the ABN you are searching for, it could mean that the ABN is not currently valid or the business needs to register with the ABR. Notably, the ABR website is updated regularly but may contain only some recent information. Therefore, verifying the ABN with the business is always best.

Key Takeaways

An ABN is a unique 11-digit identification number issued by the ABR to businesses operating in Australia. It is useful to establish your business as legitimate. Any business can apply to have an ABN, but an ABN is mandatory if your business:

• has an annual turnover of $75,000 or more;
• wishes to claim GST credits; or
• participate in government procurement. 

Furthermore, there are both pros and cons to obtaining an ABN. However, consulting with a tax professional or the ABR is always best to clearly understand your business needs.

For legal assistance, visit LegalVision.