- When starting a business, many entrepreneurs get confused between the Australian Business Number (ABN), Australian Company Number (ACN), and a business name.
- An ABN identifies your business and is a must-have if you're operating in Australia, while an ACN is needed only if your business is a company.
- A business name is the trading name you are operating under if it is different to your name or company's name.
- In this article, we highlight the key differences between an ABN, ACN and a business name and how you can register your new business.
Editor's Update 06/07/20:
To be entitled to an ABN, you must be able to prove that a business structure is in place. The three essential elements of a business structure are: a trustee; a trust property; and a beneficiary, object or purpose of the business.
Can you use the same ABN for more than one business? As a sole trader, you can use the same ABN to operate more than one business. If you register more than one business under the same ABN, you must ensure they are the same business structure. Sole traders business owners can use their personal TFN for their business, while other business structures such as companies are required to have a separate TFN for their business.
Do you need an ACN If you are a sole trader? As a sole trader, you are required to register for an ABN only. Only businesses who want to register as a company are required to register for an ACN through ASIC.
A lot of new businesses tend to think that an Australian Business Number (ABN) is the same as a business name. This confusion may land them in hot water later when they discover that the business name they want is already taken.
First of all, do not confuse a business name with an ABN.
What is an ABN?
An ABN (Australian Business Number) is an 11-digit identification number that is issued by the Australian Taxation Office (ATO). An ABN is unique for each business. If you are running a business in Australia, then you must have an ABN, unless what you are doing is deemed to be a hobby.
How do I register for an ABN?
You can register for an ABN by applying online at www.abr.gov.au and its free. You can also get your BAS Agent or Tax Agent to apply for the ABN on your behalf, however, they will charge you a fee for doing this.
What information you will need will depend on what structure you are applying the ABN to – sole trader, partnership, company or trust. Generally, you will need the name, date of birth, physical address, email address and TFN of the persons associated.
If you apply for an ABN online, it should take no more than 24-48 hours for the ATO to assess your application and process your ABN.
If you are registering a company, you will need the Australian Company Number (ACN) instead.
What is the difference between an ABN and an ACN?
An ACN is a unique 11-digit number issued upon registration of a company, while an ABN is a unique 9-digit number issued upon registration of a sole trader business. A company still needs to lodge its own tax return and to do that you also need a Tax File Number for the company.
What can I use an ABN for?
Your ABN needs to be on invoices you issue irrespective if you are registered for GST or not, and invoices you receive (if above $1,000).
You can search on the Australian Business Register: https://www.abr.gov.au to check on ABNs of your suppliers to ensure that they are valid, and whether they are registered for GST or not. This is something I do every time before I pay a supplier for the first time (or enter as a purchase where doing bookkeeping work for clients). You can search by name or by the ABN provided on the invoice.
What is an ACN?
An ACN (Australian Business Number) is a nine-digit number given to companies only. A company is different to a sole trader business as the structure of a company means that it's legally separate from its owners. An ACN is issued by the Australian Securities and Investments Commission (ASIC) as opposed to the ATO. Similar to an ABN, an ACN can be used for identification purposes and to monitor companies.
How do I register for an ACN?
You will automatically receive an ACN when you set up a company. You can either choose to set up a company yourself through ASIC, or get assistance from a lawyer or an accountant.
What is a business name?
A business name is a trading name or title under which you conduct business. You need to register a business name if you conduct business in Australia and aren't trading under your own name. Here's some other important information about business names:
- You may register more than one business name - however, they must all operate under the same structure. So, if the ABN was originally set up as a Sole Trader, then all business names attached to that ABN are also operating as a Sole Trader.
- If you intend to operate under a company business structure – the company name needs to be registered with ASIC, but you don’t need a separate business name (unless you will trade under a separate name). For example,
|Legal Name||Business or Trading Name||
Do I need to register?
|Joe Blogs Swimming School||Yes|
Joe Blogs and John Brown
|Blogs and Brown Swim Academy||Yes|
Joe Blogs and John Brown
|Joe Blogs and John Brown||No|
Joe Blogs Pty. Ltd.
|Little Flippers Swim School||Yes|
Just remember, registration of a business, company or domain name does not give you exclusive ownership. You may need to register a trademark if you want exclusive use of that name throughout Australia.
How much does it cost to register a business name?
The cost to register or renew a business name with ASIC (2020) are:
- $36 for one year
- $85 for three years
ABN vs ACN vs Business Name
A sole trader’s ABN will be issued in the name of the individual. A company’s ABN will be issued in the legal name of the company. You will need to register a business name if you trade under a name that is not your individual name or the legal name of the company.
A business name is registered nationally with ASIC (Australian Securities and Investment Commission). You register a business name on the ASIC website, using the ASIC Connect Services. You need your ABN to register the business name. It is also free. You can also check name availability. Current costs to register a business name is $35 for a one-year period, or $82 for three years – payable to ASIC.
That’s it, folks. ABN, ACN and Business Name in a nutshell. Hopefully, you are not running in the opposite direction. Compliance is tough, but its part of being in business. Remember – if this hurts your brain – you can get assistance from those number nerds who thrive on this. Partner with a decent bookkeeper or accountant.
They are worth their weight in gold – saving you time and money and giving you peace of mind. Allows you to focus on what you do best – your business.
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