As a business owner in Australia, you may ask yourself, “what is an ACN?”
ACN stands for Australian Company Number. It’s an important number that identifies your company. Sole traders, companies, trusts, and partnerships use it for various purposes, including taxation and legal compliance.
Moreover, it is a unique nine-digit number issued by the Australian Securities and Investments Commission (ASIC) to every company registered in Australia. Also, it serves as an identifier for your company, similar to an individual’s Tax File Number (TFN).
It’s important to understand what an ACN is, why it matters, and how to get one if you’re planning to set up a business in Australia. This article will explain everything about the ACN, how to get one, and the advantages and disadvantages of having one.
How to Get an Australian Company Number?
Below is the registration process for obtaining a company number:
- Choose a corporate and business structure: Before you can register your company, you need to choose a business structure that suits your needs, as there are several types of business structures in Australia.
- Select a name for your company: Once you’ve chosen a business structure, you need to select a name for your company. The name must be unique, not already registered by another company, and not misleading or offensive. Also, you can check the availability of your preferred name using the online business name search tool of the Australian Securities and Investments Commission.
- Provide details about the company’s directors and shareholders: To register your company, you need to provide details about the company’s directors and shareholders. This includes their names, addresses, and dates of birth. You also need to provide details about the company’s registered office, which is the company’s official address.
- Register your company: Once you’ve provided all the necessary details, you can register your company with ASIC. As of July 2022, the registration fee for an ACN is $443-$538 AUD. Click here to see more of ASIC’s fees.
What Is an ACN: ACN vs ABN
While the purpose of an Australian Company Number is to identify a company, the use of an Australian Business Number (ABN) is to identify a company that conducts business activities. Specifically, an ABN is an 11-digit number for taxation and other business purposes.
Here are some key differences between ACNs and ABNs:
- Only companies are issued with an ACN, while an ABN is issued to a business.
- All companies in Australia are required to have an ACN, while not all Australian businesses are entitled to an ABN. Click here to find out if you’re entitled to get an ABN.
- An ACN is a nine-digit number, while an ABN is an eleven-digit number.
- An ACN is used for legal compliance and public records, while an ABN is used for taxation.
- You can search for an ABN on the website of the Australian Business Register. An ACN, on the other hand, may be on the same website or in ASIC Connect
- The ASIC issues the ACN, whereas the Australian Tax Office (ATO) issues the ABN. The role of the Australian Taxation Office is to manage and shape the tax and superannuation systems to support and fund Australians
Some businesses may need both an Australian Company Number and an Australian Business Number. Other businesses may only need one or the other. It’s important to talk to a lawyer if you’re not sure if you need an ACN, an ABN, or both.
Ultimately, once your business has an ABN, you can apply to the ATO for further tax registrations (such as GST), Goods and Services Tax. Click here to read an article we published about choosing between an ABN or ACN
Note: Click here to see how ASIC differentiates a business name from a company name.
What Is an ACN and Its Advantages?
Legal Protection
When you register your company and obtain an ACN, you create a separate legal entity that’s distinct from the company’s directors and shareholders. This means that the company can enter into contracts, sue and be sued, and own assets in its own right.
Having an ACN provides legal protection for the directors’ and shareholders’ personal assets and helps them avoid personal liability for any debts or legal issues that the company may face.
Credibility and Professionalism
Having an ACN can make your business appear more credible and professional to potential customers, suppliers, and partners. It shows that you’ve taken the necessary steps to register your company and comply with Australian laws and regulations.
Taxation Benefits
Having an ACN also makes it easier to manage your company’s taxation obligations. You can use your ACN for the following purposes:
- to apply for an Australian Business Account (ABA), which allows you to pay and manage your company’s taxes online; or
- to claim business expenses and deductions on your tax return.
Disadvantages of Having an ACN
The disadvantages of having the company number may include the following:
Cost
Registering for an ACN involves a fee of $443-$538 AUD. This can be a significant expense for small startup companies. There may also be ongoing costs associated with maintaining your ACN, such as annual fees and reporting requirements.
Administrative Burden
Maintaining a company number involves various administrative tasks, such as updating ASIC with any changes to the company’s details, filing annual financial statements, and paying annual fees. These tasks can be time-consuming and may require the help of a professional accountant or business advisor.
FAQs
Q: Do I need an ACN to start a company in Australia?
A; Yes, all registered companies in Australia are required to have an ACN.
Q: Can I use my ACN as my company name?
A: Yes. According to Section 148 of the Corporations Act, a company can choose a vacant company name or the registered ACN number as the company name.
Q: How long does it take to get an ACN?
A: It usually takes around 2-3 business days for ASIC to process your application for an ACN.
Q: Can I change my company’s ACN?
A: It is possible. However, you must change the name of your registered company. The new name should not be identical to a registered company/business name.
Importance of Seeking Legal Advice
A corporate and commercial lawyer can aid in the process of registering an Australian Company Number. They can help reduce the burden of disadvantages involved in registering an ACN. We at JB Solicitors can:
- Guide you through the registration process;
- Help you choose the right structure for your company;
- Ensure that all necessary documents are filed correctly and on time; and
- Provide ongoing support and advice to help you manage your legal and regulatory obligations.
Contact us today if you have more questions.
