Should you get an ABN or ACN? For you to answer this question, you must first know the difference between the two. ABN stands for Australian Business Number, whereas ACN stands for Australian Company Number. This is an important topic of discussion under commercial matters.
Primarily, to figure out ABN or ACN, you need to understand whether you are running a business. If you are running only businesses, you will need an ABN number. ACN, on the other hand, is meant for only companies.
While a sole trader (business owner) business or partnership business may be responsible for running a business, a company is a different entity that carries on a business. Moreover, different Australian businesses may also have different business structures.
A company is generally larger than a business. Being larger in size, companies also generally offer more services than businesses. They also have different legal obligations. Setting up a company takes personal liability away from a single individual.
ABN or ACN: What Is an ABN?
The Australian Business Number is an eleven-digit number that every single business in Australia must have. This is a unique number, and regardless of the size or structure of the business, each business must have its own unique ABN.
This means that both small-sized and large-sized business with more employees should have their own ABN. This number is important for all communications between the company and the Australian Tax Office or Australian Taxation Office (ATO). It can track all business activities.
How to apply for an ABN? You will need the following to complete your ABN application:
- TFN or tax file number and TFN of any associates including partners, directors, and trustees.
- Previously held ABN
- The legal name of the registered business that appears on all official documents and legal papers
- Business activity including the main source of income for your enterprise, this could include construction, building, or manufacturing.
- Business locations – all addresses for your premises
ABN or ACN: What Is an ACN?
On the other hand, an Australian Company Number is a unique nine-digit number that the Australian Securities and Investments Commission (ASIC) issues to all Australian companies registered in Australia. The ASIC can then monitor all activities of the new company by using the ACN.
It monitors all companies within the guidelines under the Australian Corporations Law. The leading legislation in this regard is the Corporations Act 2001.
Moreover, the ACN also helps all shareholders, customers, partners, and other businesses to identify the company. The ACN must appear on all official and legal documents of the company, including:
- statements of accounts and invoices
- business letterheads
- official company notices
- receipts
- orders for goods and services
- written advertisements making a specific offer
How to apply for ACN?
When a person registers a company, they automatically get an ACN. In Australia, you can use this link to register your company and subsequently obtain an ACN. It is important to note that when registering a company, the company acts as a separate legal entity. This is not the case when registering a business.
To understand if you need an ACN, you must seek legal advice from lawyers. This is because each structure of a company or business can differ. You must choose a structure that is best suited to your individual circumstances.
As we have mentioned above, business models that include sole traders, freelancers, or self-employed individuals or trusts will require an ABN instead. Even for tax returns, these are lodged as a company with the company name on them.
An important step when registering your company is to think of a suitable company name. For obvious reasons, your company name should not include any inappropriate words that may indicate illegal activity.
How to Search for An ABN or ACN?
Generally, the ABN or ACN is listed on the website or other legal documents of a business or company respectively. If an ABN or ACN is not available there, you can look for it on the Lookup page of the Australian Business Register website here.
Do I Have to Cancel ABN or ACN?
Generally, a party must cancel their ABN if their business has:
- Closed down
- Changed business structures
- Ceased operations in Australia or making supplies connected with Australia
- Been sold
To cancel ACN, you must first deregister your company as it effectively ceases the company from operating as a legal entity.
Importance of Seeking Advice from Commercial Lawyers
While the difference between ABN and ACN may seem simple and obvious, there are multiple factors to consider before you decide whether to set up a business or a company. Because it can have long-lasting implications, you have to make such a decision by first exercising careful judgment.
At JB Solicitors, our commercial law team can help you with making these decisions. Following that, our lawyers can also assist you with making the relevant application to obtain either ABN or ACN.
If you wish to learn more about any topic under family law, migration law, commercial law, criminal law, or property law, check out the blog page of our website.
For more information or in case of any enquiries, please contact our friendly and experienced team today.
