ACN vs ABN: what you need to know

HomeBlogACN vs ABN: what you need to know

When starting up a business, it is essential that you understand crucial elements to running a successful enterprise, which include acquiring an Australian Company Number (ACN) or Australian Business Number (ABN). By having an ACN or ABN, your company or business will enjoy certain benefits and advantages, but will in turn be required to comply with certain obligations. However, it is important to recognise and appreciate the difference between an ACN vs ABN, as your circumstances may require one but not the other.   

Key points:

  • An ABN is used by all Australian businesses, but an ACN is used by registered companies only
  • ACNs and ABNs have different benefits and uses 
  • ACNs and ABNs are acquired through registration
  • You can cancel or deregister your ACN or ABN through the requirements as set out by the respective Government bodies 

What is an ACN and when is it required?

An ACN, is an Australian Company Number, which is given to a company by the Australian Securities and Investments Commission (ASIC) upon registration of your company. A key benefit of an ACN is that it acts as a unique identification tool, allowing stakeholders (such as shareholders and customers) and other businesses, to identify your company. Furthermore, it signals to the public that your company is an incorporated entity, validly and legally registered with ASIC. ACN numbers, generally printed in three groups of three digits, must be displayed on all company documents, public documents and eligible negotiable instruments. 

These documents include, but are not limited to: 

  • All documents lodged with ASIC
  • Orders for goods and services
  • Statements of account (including invoices)
  • Any receipts that are not machine-produced
  • Official company notices
  • Cheques, promissory notes and bills of exchange
  • Written advertisements making a specific offer

Your ACN and the subsequent company name must appear clear, readable and obvious on the first page of any document. If there are multiple companies on a document, their respective ACNs must be beside their corresponding company names. 

What is an ABN and when is it required?

An ABN, is a unique eleven digit number issued to you by the Australian Taxation Office (ATO) upon registration, which identifies your business to both the government and community. It is important to note that this number does not replace a tax file number, and must be obtained in order to run a business or other enterprise. 

ABNs are primarily used to:

  • Identify the business to other companies when ordering and invoicing
  • Avoid paying as you go (PAYG) on tax payments a business receives
  • Claim goods and services tax credits
  • Get an Australian domain name
  • Claim energy grants credits
  • Obtain tax returns

What is the difference between an ACN and ABN?

There are many differences between a business having an ACN vs ABN. An ABN is given to every Australian business which is trading and registered with the Australian Business Register (ABR). It can be given to an individual trading as a sole trader, a group of individuals acting as a partnership, or a company. An ACN, in contrast, is only given to companies registered with ASIC. This is because companies are a separate legal entity in of themselves, and require a unique identification number separate to that of an ABN to recognise its existence. An ACN vs ABN’s unique identity code allows ASIC to monitor a company’s activities within the guidelines of the Australian Corporations Law. An ABN consists of eleven digits, whereas an ACN consists of nine. For companies, the ATO will base their ABN off of their ACN, with two initial digits followed by their ACN. This is because, generally, a business will register with the ATO as a business long before they become a company and obtain an ACN. Further, an ABN is issued by the ATO on behalf of the Commonwealth, whereas an ACN is issued by ASIC. Lastly, with ABN vs ACN, if a business does not exceed $75 000 per year, they are not required to register for GST with the ATO. Both ACNs and ABNs serve extremely different, yet important, purposes in running a business or company.

How can I get an ACN?

When you decide to incorporate your business you should check the ASIC register, which you can do by clicking here, to see if your chosen company name is available. Once you have successfully selected a company name that is not already registered, or is not registered under a trademark (existing trademarks can be searched through the Australian Trademark Lookup), you can begin the process of setting up your company either yourself or with the help of a lawyer or accountant. The response time from ASIC to your registration request is relatively quick, usually only 10 minutes, so long as there are no errors and the application approves automatically. Lastly, it will cost approximately $495 to register your company and receive an ACN, in addition to any other costs from the assistance of a lawyer or accountant. 

How can I get an ABN?

To be eligible for an ABN, you must be running a business, otherwise your application to the ATO is likely to be rejected. To determine whether you are a running a business within the meaning demanded by the ATO, your business’ conduct may include the following features:

  • Significant commercial activity involving commercial sales of products or services, of a reasonable size and scale
  • The activity is repeated systematically
  • There is an intention to make a profit from the activity as demonstrated by plan
  • The activity conducted is organised and records are kept
  • The activity is similar to those conducted by businesses in the same or similar industries

If your conduct equates to any of the above features, you are likely to be eligible for an ABN. To apply for an ABN, click here, however if you are unsure of the process, seeking assistance from a lawyer or an accountant is always advisable. You can also register your business name concurrently with your ABN application through this link. The ATO will process your completed application immediately, and you will find out about your ABN within the business day. Importantly, there is no registration fee when applying for an ABN. 

How do I find an ABN or ACN?

If you are searching for an ABN and it is not listed on any websites or documents, you can search for an ABN via this link. This site provides publicly available information supplied by businesses when they first register for an ABN.  If you are searching for an ACN and it is not listed on the first page of any documents, or is not clear and easily readable, you can search for it on the Australian Business Register, through the same link aforementioned. 

How and when do I cancel my ABN?

If you are closing down, no longer operating, or changing your business structure, you should consider cancelling your ABN. This can be completed directly through the ABR’s website. However, this is only to be done after a proper assessment of your business’ circumstances and needs, as the tax obligations associated with operating with or without an ABN differ. Additionally, you will need to cancel your ABN and re-apply if your business structure has shifted from either a sole trader to a company, a partnership to a company or a sole trader to partnership. 

How and when do I cancel my ACN?

If your company has ceased trading, you should consider voluntarily deregistering your ACN so you can be unburdened by the stringent legal obligations required by registered companies, and also reduce the amount of money required to be paid annually for keeping an ACN. A company cannot be deregistered if it still owes money, or if all members of the company do not agree to deregister. The company can also not be deregistered if it is still conducting business, or if their assets are worth more than $1000. Lastly, the company must have paid all fees to ASIC and cannot be currently undergoing any legal proceedings. 

Can I reinstate my deregistered company and retain my ACN?

Yes, you can apply to ASIC for reinstatement, or apply to the court to order ASIC to reinstate your company and subsequent ACN. Either of these processes will restore a company to the ‘registered’ status. 

Having either an ABN or ACN will benefit an business owner immensely in business activities, as registering for an ACN allows a company to act as a separate legal entity separate to yourself, and registering with an ABN helps with an easily accessible pathway to all Australian government services. 

If you’re thinking about starting your own business but unsure about the start-up process, or what is legally required of you, you should consider seeking legal advice. Legal Kitz specialises in corporate and business structure, and our team of friendly solicitors can assist you every step of the way. Click here to book a FREE consultation with one of our highly experienced team members today or contact us at info@legalkitz.com.au or by calling 1300 988 954.