How To Register For An ABN
Although not mandatory and usually boils down to the nature of your business, knowing how to register for an ABN is essential if you want to keep the ATO happy.
An Australian Business Number - otherwise known as an ABN - is a unique 11-digit identifier issued by the Australian Business Register, which is operated by the Australian Taxation Office. The concept of an ABN was introduced on 1 July 2000 by John Howard and the Liberal government, as part of a major tax reform which also included the introduction of a GST.
In 2022, holding a valid ABN allows you to lodge business activity statements, confirm your business identity to others when ordering and invoicing, claim GST credits, claim energy grant credits, and register an Australian domain name.
While holding a valid ABN isn’t a legal requirement, any business that you trade with may withhold 46.5% (the top marginal tax rate) of their payments to you, and instead pay this amount directly to the ATO. Needless to say, knowing how to register for an ABN can be a gamechanger when it comes to the overall profitability of your new or existing brand, so it’s important to “play ball” in this arena.
When You Need An ABN
If you’re starting or carrying on an enterprise in Australia, making supplies connected with Australia’s indirect tax zone, or a company registered under the Corporations Act 2001, you’re entitled to register for an ABN.
While there is no singular test to determine whether someone is carrying on or conducting a business, common features that require an ABN to operate include -
The activity is a significant commercial activity, involving commercial sales of products or services, and is of a reasonable size and scale
There is an intention to make a profit from the activity as demonstrated by a business plan, which is how it differs from being just a hobby
The activity is repeated
The activity is systematic, organised and carried on in a business-like way and records are kept
The activity is carried on in a similar way to that of other businesses in the same or similar industry
The entity has relevant knowledge or skill
While carrying on an enterprise also resembles key activities like the above, other indicators that require ABN registration include renting or leasing property, operating a charity or acting as the trustee of a super fund.
A Guide On How To Register For An ABN
Before you lodge the relevant information required to register for an ABN, it’s important that applicants have the right business structure in place, as this will be directly linked to what tax obligations apply to you.
To complete the online ABN registration, users should have the following information already on hand, or at their disposal.
Tax File Number - Tax file number (TFN) and the TFNs of any associates, such as company or trust partners, directors and trustees.
Registered Agent Number - If you’re currently using or plan to use professional Tax or BAS agents, get a copy of their licence number.
Professional Adviser Number - If you’re using a professional adviser in any capacity, get their licence number i.e Australian Financial Services licence (AFS licence).
Previous ABN - If you have previously traded under another ABN or an old and no longer used one, be sure to supply this for tax records.
ACN or ARBN - An Australian company number or Australian registered body number for companies can be registered via the Australian Securities and Investments Commission (ASIC).
Required Date - The date your ABN is required, and should be the date that you expect to start any business, such as buying stock. It can't be more than six months in the future.
Entity Legal Name - If you're a sole trader, your legal name will most likely be your own name, and is what appears on all official documents or legal papers.
Authorised Contacts - Often a registered tax or BAS agent, these are contacts authorised to make changes or update information on behalf of the entity.
Business Contact Details - This includes an address, postal address, email address and phone number linked directly to your brand or business.
Business Activity - Usually classed as the primary or main source of income for your enterprise, such as agriculture, construction, or marketing.
Business Locations - Provide all physical locations for all premises operated by your enterprise, unless there's a risk to safety of individuals (i.e. womens refuge).
Sourcing Help With ABN Registration
If understanding your finances, or the in’s and outs of doing business isn’t your strong point, then it may be reassuring to know that you’re not alone. In fact, many businesses big and small enlist the services of an accountant and business advisor, in order to free up their time while knowing that their financial obligations are already taken care of by the professionals.
What you choose to invest in or shy away from as a business owner can have a domino effect that ripples through your entire team - so are you confident in your financial choices? At Muro, we are more than just accountants. We offer our clients strategic business advice and ongoing support to help them reach their business and financial goals. Get in touch with us at Muro today to ensure that you’re on the right path for success in starting a business in 2022.