ABN vs. ACN: Your Essential Guide to Starting a Fully Compliant Business in Australia
Starting a business in Australia requires careful planning and legal compliance. A key step in this process is understanding whether you need an Australian Business Number (ABN) or an Australian Company Number (ACN). These identifiers are essential for ensuring that your business adheres to Australian tax, legal, and regulatory requirements.
This guide outlines the significance of ABNs and ACNs, the processes for obtaining them, and important insights to help you operate a fully compliant business in Australia.
What is the Australian Business Number (ABN)?
The Australian Business Number (ABN) is a unique 11-digit numerical identifier provided by the Australian Business Register (ABR). It is essential for identifying your business to the public and government agencies. The Australian Taxation Office (ATO) uses your ABN to track your business activities and ensure tax compliance.
Key Points about ABN:
An ABN is necessary for all business types, including sole traders, partnerships, and companies.
It facilitates dealings with the ATO and other government agencies.
You must display your ABN on invoices and receipts.
What is the Australian Company Number (ACN)?
The Australian Company Number (ACN) is a unique 9-digit numerical identifier issued by the Australian Securities and Investments Commission (ASIC). It is assigned only to registered companies and is used to identify your business in all official transactions.
Key Points about ACN:
An ACN is required if you register your business as a company.
It must be displayed on official documents such as invoices, business letterheads, and advertisements.
ASIC regulates companies to ensure compliance with corporate laws.
What’s the difference between ABN and ACN?
Purpose
An ACN identifies registered companies in Australia and is issued by the Australian Securities and Investments Commission (ASIC), while an ABN identifies businesses for taxation and government dealings and is issued by the Australian Taxation Office (ATO).
Issuance
An ABN can be issued to all types of businesses, whether you’re operating as a sole trader, a partnership, or a company. You will need to register for an ABN. In contrast, an ACN is only issued if the entity registers as a company and is regulated by ASIC.
Registration Cost
The application for an Australian Company Number (ACN) from ASIC costs $597 as of July 1, 2024, while there is no cost associated with registering or obtaining an Australian Business Number (ABN).
How to Register for an ABN
To obtain an ABN, follow these steps:
Check Eligibility: Ensure you meet the criteria outlined on the ABR website. Generally, you need to be carrying on an enterprise in Australia.
Gather Information: Provide details such as your entity’s legal name, business address, and contact information.
Apply via ABR: Submit your application online through the Australian Business Register (ABR) website.
Approval: If successful, you will receive your ABN immediately or within a few days.
How to Register for an ACN
If you choose to register your business as a company, follow these steps to obtain your ACN:
Choose a Company Name: Ensure it is unique and complies with ASIC naming regulations.
Determine Governance Structure: Decide how your company will be governed—by replaceable rules, its constitution, or a combination of both.
Understand Officeholder Duties: As an officeholder, you are responsible for ensuring the company complies with the Corporations Act.
Obtain Consents: Secure written consent from all officeholders, members, and occupiers of registered addresses.
Register with the BRS: Use the Australian Government’s Business Registration Service (BRS) to complete your company registration. This platform integrates several business and tax registrations for convenience.
Payment: Pay the registration fee of $597 (as of July 1, 2024).
Conclusion
Understanding the roles of ABN and ACN is crucial for first-time business owners in Australia. Your ABN facilitates tax compliance and business dealings, while your ACN is vital for company identification and regulation. By completing the registration processes correctly and staying informed about your obligations, you set a strong foundation for a compliant and successful business.
What’s Next After Becoming ABN/ACN Compliant?
Now that you are fully compliant with Australian laws as a legal entity, you can streamline essential business operations such as hiring employees, managing marketing activities, and opening accounts. One valuable option is a Multi-Currency Account, which allows you to easily manage funds in over 36 currencies without the need for separate accounts. This account helps you keep your money in the currency you need, avoiding unnecessary conversions and saving on fees.
