How and When to Register an ABN

An Australian Business Number (ABN) is the important first step to begin trading and building your successful business. Company123 offers quick and simple ABN registration as tax agents at our ABN registration form.

The following points can guide you on whether you currently need an ABN and answer various other related queries.

Call us today on 0398320660 to get in contact with a business consultant.

ABN Registration Explained:

Is an individual entitled to an ABN?

Yes, if the individual is a sole trader.
’Individuals carrying on an enterprise are entitled to an Australian business number (ABN) and are known as ‘sole traders’, which is the simplest and cheapest business structure.

If you're a sole trader, you are:

• the only owner of the business
  
• legally responsible for all aspects of the business, including debts.
  
• You can employ other workers, but you cannot employ yourself.

As a sole trader, you are responsible for your own super and the super of any other workers you employ.

You can begin trading by registering now.

When are individuals not entitled to an ABN? 

If you have been engaged to carry out activities as an employee, you are not entitled to an ABN for that activity.

Therefore, employees are not entitled to their own ABN.

What if I am carrying on a business with more than one person?

If you do not meet the criteria of a sole trader, than you can pursue other business structures.

The next cheapest to set up is a partnership structure.

A partnership is a group or association of people who carry on a business and distribute income or losses between themselves. For example, if you and a friend or family member decide to set up a business together, you might operate it as a partnership.

A partnership is relatively inexpensive to set up and operate. The partners share income, losses and control of the business.

A written partnership agreement is not essential for a partnership to exist, but is a good idea. A partnership agreement should outline how income or losses will be distributed to the partners and how the business will be controlled.

A partnership agreement can help prevent misunderstandings and disputes about what each partner brings to the partnership, and what they are entitled to receive from the income of the business. This is particularly important for tax purposes if the profit or losses are not distributed equally among partners.

The partners in a partnership are not employees, therefore still eligible for an ABN, but the partnership might also employ other workers.

Partners are responsible for their own superannuation arrangements. However, the partnership is required to pay superannuation for its employees.

As a partner you can't claim deductions for money drawn from the business. Amounts you take from a partnership are not wages for tax purposes.

What are the essential features of a partnership?

In a partnership business structure:

  - income, losses and control of the business are shared among the partners
  -  the partnership has its own TFN and must lodge an annual partnership return showing all income and deductions of the business
  -  the partnership doesn't pay income tax on the profit it earns – each partner reports their share of the partnership income in their own tax return
  - each partner pays tax on their share of the partnership profit at the individual tax rate and may be eligible for the small business tax offset
  -  the partnership must apply for an ABN and use it for all business dealings
  - the partnership must be registered for GST if its annual GST turnover is $75,000 or more.

You can set up a partnership here.

What are the different types of partnership ABNs?

A partnership can be a:

•    family partnership – where two or more partners are related
•    limited partnership – where liability of debts and obligations for one or more partners is limited
•    'other' partnership – where partners are equally responsible for the business and have unlimited liability for the debts and obligations (commonly known as a general law partnership).

If these structures are relevant to your current situation, you can proceed with your ABN application here.

When should a company apply for an Australian Business Number (ABN)?

ABNs are not compulsory. However, there are many good reasons to have one, for example, ABNs help you:

 - to deal with the ATO;

 -  in dealing with other businesses when supplying goods or services to them, or when purchasing goods and services.

-  confirm your business identity to others when ordering or invoicing

 -  avoid Pay As You Go (PAYG) tax on payments you receive.

  - claim energy grants credits

  - obtain an Australian domain name

Also, you need an ABN to register for GST. Entities carrying on an enterprise in Australia with a GST turnover of $75,000 must register for GST.

More information can be found at ato.gov.au.

To obtain an ABN, your company must:

• be able to demonstrate that the business structure is in place;
• be carrying on an enterprise in Australia;
• in the course of carrying on an enterprise, make supplies connected with the indirect tax zone or have undertaken sufficient activities to commence an enterprise; or
• be a Corporations Act company.

More information on ABNs, including who is entitled to apply, is set out on the ATO's website.

If you believe your company is eligible, you can register your ABN here.

How can I find my company’s ABN?

If you want to look up information about a registered ABN, such as to check that your details are up to date or check the details of a supplier, you can do this on the ABN Lookup website. ABN Lookup allows you to search publicly available information supplied by businesses when they register for an ABN.

You can find the Australian Business Registry here

If you cannot find your ABN, you may not have one already. You can register one here.

What is GST?

Goods and services tax (GST) is a tax of 10% on the sale (supply) of most goods and services consumed in Australia. In general, an organisation that is required by law to 'register' for GST purposes:

• is required to pay GST to the Australian Taxation Office (ATO) if it sells something (ie, goods, services), and
• can claim an 'input tax credit' from the ATO for the amount of GST included in the price of goods and services it purchases.

Your organisation may be required by tax laws to pay GST on any goods and services it supplies.

For further information see the ATO website.

Do I need to get an ABN for my Trust?

ABNs are not compulsory. However, there are many good reasons to have one - for example, ABNs help:

• You to deal with the ATO; and
• You in dealing with other businesses when supplying goods or services to them, or when purchasing goods and services.

Also, you need an ABN to register for GST.

Entities carrying on an enterprise in Australia with a GST turnover of $75,000 must register for GST.

More information can be found at www.abr.gov.au.

Is my trust eligible for an ABN?

 A trust must meet either one of the following 2 criteria to be eligible for an ABN:

Criterion 1

The entity is any one of:

    A company incorporated under the Corporations Act 2001 in Australia;
    A charitable institution or trustee of a charitable fund in Australia;
    A deductible gift recipient in Australia; or
    A religious institution in Australia.

Criterion 2

The entity can answer 'Yes' to each of the following statements:

1. Its activity is carried out in any of:
    1.1 the form of a business
    1.2 the nature of trade, or
    1.3 the form of a regular or continuous grant of a lease, licence or interest in property.
2. Its activity is carried out in Australia or it makes supplies that are connected with Australia.
3. Its activity is not a private recreational pursuit or hobby.

What can I do once receiving my ABN for my trust?

After acquiring an ABN and a TFN, the trust can then open a bank account.

A bank account should be opened for the trust in the name of the trustee as trustee for the trust. This should occur after the discretionary trust has been established and the trust deed stamped (if stamping is necessary). The bank may require the trust ABN before it will open the account.

Do I need an ABN for my self-managed superfund?

You can apply for an ABN along with a tax file number (TFN) as part of registering your fund with the ATO. Your fund will be eligible for tax concessions, and can receive contributions and rollovers after it is registered with the ATO.

A superannuation entity must be set up correctly – in line with the superannuation legislation – to be entitled to an ABN.

This requires the following steps:

• Appointing professionals to help set up your SMSF
  
• Chosen either individual or corporate trustees
  
• Appointed trustees or directors
  
• Created the trust and trust deed
  
• Checked your fund is an Australuan super fund
  
• Registered your fund
  
• Set up a bank account
  
• Got an electronic service address
  
• Prepared an exit strategy
  
• Prepared an investment strategy

You can set up your self-managed superfund with our qualified professionals here.

If you would like further inquire about SMSF ABNs feel free to email our consultants at support@company123.com.au or call 03 9832 0660.

What other kinds of ABNs can be registered?

Other types of ABNs include:

Deceased estate

A deceased estate's entitlement to an ABN is dependant on the legal personal representative (LPR) carrying on an enterprise so as to finalise the affairs of the estate.

Applicants must be one of the following:

• executor or administrator with grant of probate or letters of administration
• public trustee with a certificate of authority
• appointed as administrator of the deceased estate by a court.

You cannot use an ABN held by the deceased person as an individual sole trader for business purposes after the person's death.

The LPR may only need to apply for an TFN if they are not carrying on an enterprise but required to manage post date of death income.

Cooperative

Cooperatives carrying on an enterprise and registered with the relevant state or territory authorities are entitled to an ABN.

Incorporated entity

Incorporated entities entitled to an ABN if carrying on an enterprise are:

• a body corporate established under common law or an Act of Parliament
  
• a corporation sole established under common law, an Act of Parliament
  
• a foreign company registered with ASIC under the Corporations Act with an Australian registered body number (ARBN) or making supplies connected with Australia's indirect tax zone
  
• an incorporated association, including a strata title, registered with the relevant state or territory authority.

Other entities

If carrying on an enterprise, the following can also be entitled to an ABN:

• an unincorporated association or entity consisting of a group of individuals with a common interest (for example, a sporting club or social club) without a legally recognised structure
  
• a strata corporation (legal entity formed to administer a strata title)
  
• a not-for-profit (NFP) organisation.
  

When do I need to update my ABN details?

It's your responsibility to maintain your Australian business number (ABN) details.

You must update your details within 28 days of becoming aware of any changes, including changes in addresses etc.

Updating your ABN details will ensure:

• the right people have the right permissions to act on behalf of a business
• government agencies have current information – for example, if emergency services need to contact businesses during natural disasters you are ready for new government services when they become available.

How do I updates my ABN details?

The fastest way is using your myGovID online. 

You can see how to create an account at the video below.

For further information, please see the ATO website.

What cannot be updated in your ABN online?

You can't update:

• business names
• legal names for individuals and sole traders who need to contact the ATO directly
• legal names for companies registered with the Australian Securities & Investments Commission (ASIC).

You will need to contact the ATO directly.

Name changes made by the ATO and ASIC will update the ABR.

Do I need to cancel my ABN?

If you're closing your business, or changing your business structure, it's likely you'll need to cancel your ABN.

You'll need to cancel your ABN when changing from a:

• Sole trader to a company
  
• sole trader to partnership
  
• partnership to company.
  

If your business is no longer operating you need to cancel your ABN on the ABR website.