When starting a business in Australia, one of the first things you need to do is register your company. This is where the ACN or Australian Company Number comes into play. In this Business Kitz article, we'll discuss everything you need to know about ACN, including its definition, how to obtain it, and the difference between ACN and ABN.

What is an ACN?

ACN or Australian Company Number is a unique nine-digit identifier issued by the Australian Securities and Investments Commission (ASIC) to every registered company in Australia. It's a crucial part of a company's identification and is used for various purposes such as taxation, financial reporting, and legal proceedings.

ACN is not the same as an ABN or Australian Business Number. An ABN is a unique eleven-digit identifier that businesses use for tax purposes. In contrast, ACN is only used to identify companies and not sole traders, partnerships, or trusts.

How to Obtain an ACN:

Obtaining an ACN is a straightforward process, and you can apply for it through ASIC's website. To register a company, you need to:

1. Choose a company name: The name must be unique, not already registered, and not similar to any existing company name. ASIC has a name availability search tool on its website to help you check if your chosen name is available.
2. Choose a company type: You need to decide on the type of company structure you want. The most common types are proprietary companies (Pty Ltd) and public companies (Ltd).
3. Appoint a director: A director is responsible for managing the company's affairs and ensuring that it complies with legal obligations.
4. Register the company: You can register the company online through ASIC's website. You'll need to provide details about the company's directors, shareholders, and registered office address.
5. Obtain an ACN: Once you've registered your company, ASIC will issue you with an ACN.

It's worth noting that registering a company incurs a fee, and the cost varies depending on the company type and the state or territory where it's registered. The registration process can take several days, but you can pay an additional fee for expedited processing.

The Importance of an ACN:

The ACN is an important identifier for any company operating in Australia. It is required by law, and failure to obtain and display an ACN can result in fines and penalties. Additionally, having an ACN can provide benefits to a company, such as increased credibility with customers and suppliers, as well as the ability to access certain government services.

One of the most important benefits of having an ACN is that it provides limited liability protection for company directors. Limited liability protection means that the personal assets of directors are protected in the event that the company is sued or goes bankrupt. This protection only applies to companies that have been properly registered and have obtained an ACN.

Another benefit of having an ACN is that it can increase the credibility of a company with customers and suppliers. By displaying an ACN on invoices, contracts, and other business documents, a company can demonstrate that it is a legally registered entity and is serious about its business operations.

Finally, having an ACN is necessary for companies to access certain government services. For example, in order to apply for an Australian Business Account with the Australian Taxation Office, a company must have an ACN.

The Difference Between an ACN and an ABN:

One of the common misconceptions in Australia is that ACN and ABN are interchangeable. However, they serve different purposes, and it's essential to understand their differences to avoid confusion.

As mentioned earlier, ACN is only used to identify registered companies. On the other hand, ABN is used to identify businesses and entities for taxation purposes. In other words, if you're running a business as a sole trader or partnership, you'll need an ABN, but not an ACN.

Another difference is that an ACN is a unique identifier that's only issued once and remains the same throughout the life of the company. In contrast, an ABN can be cancelled or revoked if a business is no longer operating, changes its legal structure, or fails to meet its taxation obligations.

Conclusion:

In conclusion, the Australian Company Number (ACN) is a unique identifier assigned to every company registered in Australia by the Australian Securities and Investments Commission (ASIC). It is an important identifier that is required by law for companies operating in Australia. The ACN provides benefits to companies, such as limited liability protection for company directors, increased credibility with customers and suppliers, and the ability to access certain government services. While the ACN and ABN are both identifiers used for businesses in Australia, they serve different purposes and are not interchangeable. As such, it's important for businesses to understand the difference between the two and ensure that they obtain and display the appropriate identifier for their business.

Legal Advice:

Managing a business can be tricky and exhausting, but we are here to make it easier. Check out our Business Kitz Subscription Service today to access our full range of legal, commercial and employment documents to begin your business with a solid foundation that ensures compliance. If you are unsure about how to best protect yourself and your future business, our sister company, Legal Kitz can assist you. Additionally, you can request a FREE consultation with one of their highly experienced solicitors here today, or contact them at info@legalkitz.com.au or 1300 988 954.