September 03, 2017 / News
What Is An ABN?
An ABN, also known as an Australian Business Number, is a unique 11 digit number that identifies and verifies your business or company to the government, other businesses, and the general public. Australian Business Numbers are registered with the Australian Business Register (ABR) and can be searched for in the ABN Lookup website, since it is public information. The data gathered by the Australian ABR to acquire this identification number, is also used to assist government agencies with decision-making surrounding investments, infrastructure development, disaster recovery, etc.
As an individual, having an Australian Business Number (ABN) allows you to to conduct business as a sole trader.
So, what exactly is a sole trader? A sole trader is the simplest business structure and is the cheapest to establish. Sole traders have unlimited liability, which means that they are personally responsible for every part of the business, including all debts and losses. As a sole trader, you are also personally responsible for paying tax on all the income that you have earned through your ABN. However, as a sole trader you enjoy complete control over all assets and decisions associated with your business, you are exempt from paying payroll tax, and there are fewer reporting requirements compared to other structures.
It is important to note that an ABN does not replace your Tax File Number (TFN). As a sole trader, you are not required to apply for a separate business TFN, since you can use your individual TFN when dealing with the ATO (Australian Taxation Office).
Keeping your ABN details up-to-date is crucial, as it helps to ensure the information provided is accurate, and you are conducting your business legally.
If your details change, or if your businesses stops operating, you are legally required to notify the Australian Business Register (ABR) within 28 days.
ABNs do not have an expiry date. However, it can be cancelled if your ABN comes under review and it is evident that you are no longer eligible for an ABN, or you weren't entitled to one from the beginning.
Click here for more information about ABN cancellations and keeping your ABN updated.
Do I Need An ABN?
Not everyone is required to have an ABN. An Australian Business Number is necessary if you have your own business, intend on establishing your own business, are selling commercially, or interacting with other businesses, the government, and government agencies on a professional basis. ABNs are compulsory for businesses that earn over $75k. If earnings are less than, or expected to be less than $75k, it is up to the business to decide whether or not to register.
To be eligible for an ABN as a sole trader, you must meet the following criteria:
- You are currently running a business
- You are in the process of establishing a business (e.g. you have consulted a financial advisor, applied for a business loan, made a business plan, etc.)
- You haven't been asked by an employer to get an ABN. This is because an ABN may mean you are getting underpaid by the employer that requested it, and/or not receiving the necessary entitlements, such as annual leave, sick leave, superannuation, etc.
To check your entitlement to an ABN, click here.**Benefits Of An ABN:**
Having an ABN can provide many benefits. Here are some reasons why you should apply for one:
- You are recognised as an 'active' business and able to operate
- You are exempt from withholding tax on your invoices
- You are able to open a '.com.au' website
- You are able to set up a business name
- You have access to government grants, rebates, and contracts
- It appears more professional, especially for freelancers
How Do I Get An ABN?
Australian Business Numbers are relatively easy to apply for and usually only takes about 15 minutes, if you have all the necessary information available on hand. There is no charge when you apply for an ABN online. However, if you hire the services of a third-party to set up an ABN on your behalf, a fee will be involved.
Before you apply for an ABN, you need the following information:
- Personal details (i.e. name, DOB, contact details)
- Your Tax File Number (TFN)
- Previous ABNs, if you've held one before
- The date you need your ABN issued
Click here for more information on what you need for your ABN application.
To register for an Australian Business Number, all you have to do is click the button below and fill in your details.
Most ABN applications are approved within 24 hours. A small portion of ABN applications are chosen for review before an ABN is issued. This review process can potentially go for 28 days.
Are you an ABN holder looking for flexible labour hire job opportunities? Contact us at Workfast today and we can help you! Call 1300 824 403 or sign up on our website.