Before you can invoice a customer, register for GST, or register a business name, you need one thing: an Australian Business Number. The good news is it is free and, for most people, quick. The catch is that you have to be genuinely entitled to one, and getting the application wrong can hold up everything else.
This guide walks through what an ABN is, whether you are entitled to one, how to apply, and the mistakes that cause applications to be delayed or reviewed. It is written for Melbourne business owners who want to start on the right foot.
What is an ABN?
An Australian Business Number (ABN) is a unique 11-digit number that identifies your business to the government, the ATO, and the people you do business with. It is issued through the Australian Business Register (ABR) and it is free to apply for.
Your ABN is used to:
- Invoice customers and be identified on your tax invoices;
- Register for GST and lodge your BAS;
- Claim energy grants and fuel tax credits where eligible;
- Deal with the ATO and other government agencies; and
- Confirm your business details to other businesses through the free ABN Lookup service.
The 47% reason you need an ABN
Here is the one that costs people money. If another business pays you for goods or services and you do not quote an ABN, they are generally required to withhold 47% of the payment and send it to the ATO. You eventually reconcile it through your tax return, but in the meantime your cash flow takes a serious hit. For any business dealing with other businesses, an ABN is non-negotiable.
Are you entitled to an ABN?
Not everyone who wants an ABN can get one. To be entitled, you must be carrying on an enterprise in Australia, broadly, running a business or commercial activity with a genuine intention to make a profit. A one-off private sale or a hobby does not qualify.
Signs you are carrying on an enterprise include operating in a business-like way, keeping records, invoicing clients, having repeat customers, and intending to make a profit. If you apply without a genuine enterprise, the ABR can refuse or cancel the ABN.
Your business structure determines who actually holds the ABN: a sole trader applies as an individual, while a company, partnership or trust applies as that entity. Choosing the right structure first saves you re-applying later.
ABN vs ACN: what is the difference?
These get confused constantly. An ABN is for any business type and is issued by the ABR. An ACN (Australian Company Number) is a 9-digit number issued by ASIC that only companies receive when they are registered as a company. If you operate through a company, you will have both: an ACN for the company itself and an ABN for doing business. Our guide on moving from sole trader to company explains when a company structure is worth it.
Not sure which structure, and which numbers, you actually need?
At Pinnacle Accounting & Advisory, we help Melbourne business owners choose the right structure and register the right way, so you are set up to grow and protect your assets from day one. Book a consultation with Mina to get it right the first time.
Book a Consultation →How to apply for an ABN
You apply through the Australian Business Register, and it is free; be wary of third-party sites that charge a fee to do it for you. Before you start, have these ready:
- Your tax file number (and those of any associates such as partners or directors);
- Your chosen business structure (sole trader, company, partnership or trust);
- Details of your business activity and start date; and
- Your business contact and location details.
You can apply directly through the Australian Business Register, or have your accountant lodge it as part of setting up your business correctly. Many applications are approved instantly; others are held for review if the details are incomplete or the entitlement is unclear.
ABN, business name and GST: how they fit together
An ABN is one piece of the set-up puzzle. Depending on your plans you may also need to:
- Register a business name with ASIC: required if you trade under anything other than your own personal name;
- Register for GST: compulsory once your turnover reaches $75,000; and
- Register a company with ASIC (getting an ACN) if you choose a company structure.
Doing these in the right order, under the right entity, is what keeps things clean. Our full guide on how to start a business in Australia puts the whole sequence together.
Frequently Asked Questions
How much does an ABN cost?
Applying for an ABN through the Australian Business Register is free. Some third-party websites charge a fee to lodge it for you, but you can apply directly at no cost, or have your accountant include it in your business set-up.
How long does it take to get an ABN?
Many applications are approved immediately if your details are complete and your entitlement is clear. If the ABR needs to review your application, for example, if information is missing, it can take up to around 20 business days.
Do I need an ABN to work as a sole trader?
If you are carrying on a business, yes, you need an ABN to invoice clients and to avoid having 47% withheld from your payments. Casual or hobby income that is not a genuine business does not require, and may not be entitled to, an ABN.
What is the difference between an ABN and a business name?
An ABN identifies your business to the ATO and others. A business name is the trading name the public sees, registered separately with ASIC. You need an ABN before you can register a business name.
Can I have more than one business under one ABN?
Yes. A single entity can run multiple business activities under the one ABN. However, if those activities sit in different structures, for example a separate company or trust, each entity needs its own ABN. Structuring this correctly has tax and asset-protection consequences worth advice.
General Advice Disclaimer: The information in this article is general in nature and does not constitute personal financial, tax, or legal advice. It has been prepared without taking into account your personal objectives, financial situation, or needs. Before acting on anything in this article, consider its appropriateness to your circumstances and seek advice from a registered tax adviser or CPA. Liability limited by a scheme approved under Professional Standards Legislation.
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