Whether you are a small business owner who has just started out on their business venture, or a large multinational company that dominates the industry, all businesses that deal in Australia must have one item: the ABN. This Business Kitz article will look at how to register and create an ABN.
What is an ABN?
An ABN is an ‘Australian Business Number’ which is a unique 11 digit number that represents your business to the government and the community. An ABN is used to:
- Identify your business to other businesses when ordering and invoicing;
- Avoid pay as you go (PAYG) tax on payments you receive;
- Claim goods and services tax (GST) credits;
- Claim energy grant credits; and
- Get an Australian domain name.
How do I create an ABN?
First, you should check if you’re entitled to create an ABN, since not everyone is.
You’re entitled to create an ABN if you’re:
- Carrying on or starting an enterprise in Australia;
- Making supplies connected with Australia’s indirect tax zone; or
- A Corporations Act company.
Now, let’s build on each of these characteristics.
What is carrying on an enterprise?
An enterprise includes activities that are conducted for business, as well other activities including:
- Acting as a trustee of a super fund;
- Operating a charity; and
- Renting or leasing property.
Although there is no specific test or definition of ‘carrying a business’, the main features of a business includes:
- Activity that involves significant commercial activity like product sales or services;
- An intention to make profit;
- Activities that are repeated; and
- An entity that has relevant knowledge or skill.
If your business satisfies these conditions or features, then you are classified to be carrying on an enterprise and are thus entitled to an ABN.
What does making supplies connected with Australia’s indirect tax zone mean?
This condition is relevant for businesses and organisations that are located outside of Australia who also carry on an enterprise.
Australia’s indirect tax zone includes Australia but not its external territories or certain offshore areas. This means that businesses that are not necessarily located in Australia but deal with Australian businesses are entitled to an ABN.
If this sounds like your business, you may be entitled to an ABN.
What does a Corporations Act company mean?
This condition applies to businesses that are registered with the Australian Securities and Investments Commission (ASIC). ASIC is a government body that is responsible for regulating the Australian financial services system. Any company that is registered with ASIC is a part of the Corporations Act 2001 and as such, can conduct business in Australia without having to register with individual state and territorial jurisdictions. To check whether your business is registered with ASIC, head to their ‘Organisation and Business Names register’.
What do I need to create an ABN?
If your business satisfies these above conditions or features, then it is entitled to an ABN. Now that you have checked the eligibility for an ABN, you’ll need to ensure that you have the right documents and information for your ABN application. To complete you ABN application you’ll need the following details:
- Tax file number (TFN) and the TFNs of any associates;
- Tax or BAS agents registered agent number, if you use a registered agent;
- Professional adviser number – if you’re using the services of a professional adviser, you can provide their licence number;
- Previously held ABN;
- Australian company number (ACN) or Australian registered body number (companies can register for an ACN or ARBN through the ASIC);
- Date your ABN is required. This should be the date you expect to start any business activities (cannot be more than six months in the future when you apply);
- Entity’s legal name as it appears on all official documents or legal papers;
- Authorised contacts – this can be a registered tax or BAS agent if they are authorise to make changes or update information on behalf of entity;
- Associates’ details – associate requirements are different for each entity type;
- Business contact details including an address, postal address, email address and phone number. Your email address must meet requirements such as; being between 5-200 characters, contain no spaces and not start with ‘support@’, ‘Sales@’ or ‘info@’;
- Business activity – usually the main source of income for your enterprise e.g agriculture, construction, investment and manufacturing; and
- Business locations – provide businesses physical locations for all premises operated by your enterprise, unless there’s a risk to safety of individuals as a result of the disclosure.
Once you’ve checked for the correct and relevant documents and information, you’re now ready to register your ABN. Head to the ABR’s website about ABN entitlement to lodge your application.
Applying to register an ABN is simple. Simply head over to the ABR’s website regarding ABN entitlement and click on the button that says ‘Apply for an ABN’. Make sure to check beforehand that you are entitled to an ABN and that you have all the correct and relevant information for the application. If you are still unsure about the entitlements, our sister company Legal Kitz can assist you with any business related matters. Book here now for a FREE 30-minute consultation with one of our experienced and professional team members.