To run a small business in Australia you'll need an Australian Business Number (ABN).
What is an ABN?
An Australian Business Number (ABN) is a unique 11-digit identifier issued by the Australian Business Register (ABR) to identify businesses and organizations operating in Australia. It is used to identify a business to the government and other entities, including customers, suppliers, and banks.
All businesses operating in Australia must have an ABN, except for some sole traders who are not required to register for an ABN if their annual turnover is less than $75,000. The ABN is used to register for Goods and Services Tax (GST), which is a value-added tax of 10% that applies to most goods and services sold in Australia.
Having an ABN can also make it easier for businesses to deal with other businesses and government agencies, as it helps to establish the legitimacy and credibility of the business. It can also provide access to certain government benefits and services, such as business grants and loans.
Who needs to apply for an ABN?
Most businesses in Australia are required to apply for an Australian Business Number (ABN). This includes:
- Sole traders: If you operate as a sole trader and your business has an annual turnover of $75,000 or more, you must apply for an ABN.
- Companies: All companies registered with the Australian Securities and Investments Commission (ASIC) must have an ABN.
- Partnerships: All partnerships must have an ABN.
- Trusts: All trusts must have an ABN.
- Non-profit organizations: Non-profit organizations that have a turnover of $150,000 or more must apply for an ABN.
- Other organizations: Other organizations, such as government bodies and superannuation funds, may also need to apply for an ABN.
It's important to note that even if your business is not required to have an ABN, it may still be beneficial to apply for one, as it can make it easier to do business with other organizations and government agencies.
What are the advantages of having an ABN?
Having an Australian Business Number (ABN) can offer several advantages for businesses operating in Australia, including:
- Registering for Goods and Services Tax (GST): An ABN is required to register for GST, which is a 10% tax that applies to most goods and services sold in Australia. By registering for GST, businesses can claim back the GST they have paid on business expenses and charge GST on sales, which can improve cash flow.
- Establishing credibility: An ABN can help to establish the legitimacy and credibility of a business, making it easier to do business with other organizations and government agencies.
- Accessing government benefits and services: Having an ABN can provide access to certain government benefits and services, such as business grants and loans.
- Simplifying business dealings: An ABN can simplify business dealings by providing a unique identifier that can be used to identify a business to customers, suppliers, and banks.
- Claiming business expenses: With an ABN, businesses can claim a wide range of business expenses as tax deductions, which can help to reduce their taxable income and save money on taxes.
- Providing a basis for business expansion: An ABN can provide a basis for business expansion by enabling a business to register for other government identifiers and licenses, such as an Australian Company Number (ACN) or Australian Business License (ABLIC).
To read more detail starting a business in Australia:
How to start a business in Australia