What Are The Requirements For An ABN?

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To run a business in Australia, you are required to have an Australian Business Number (ABN). An ABN is 11 digits, strung together to make a unique identifier just for your business.

ABN’s are important, as your business will need to undertake matters such as filing paperwork or dealing with government agencies on at least more than one occasion. In those instances, your business’s ABN is usually asked for.

So, if you plan on running a business or already have one but haven’t gotten your ABN yet, then this is a good place to start.

When Do You Require An ABN?

Ideally, you need to get your ABN before you start any kind of business operations. There’s actually no official determination of what constitutes business operations. Basically, you will need to tick off the boxes that are generally associated with running a business. This includes:

Setting up a venture that is aimed at earning a profit
Consistently working on your business just as you would a regular job
Registering a business name
Attaining licences and permits for your business
Organising your business in a way that is considered to be typical of a business i.e. keeping records, a separate business premise and a business bank account

If you don’t do any of these then there’s a chance you are engaging in a hobby, as opposed to running a business.

Example
Sarah likes to make handmade jewellery in her spare time. Impressed with her talent, friends and family sometimes ask Sarah to create something for them. Sarah agrees to do so if they provide her with the cost of materials and works on it whenever she has free time.
Making jewellery is likely to be considered a hobby of Sarah’s, rather than a business. As such, Sarah wouldn’t require an ABN to keep making jewellery.

How Do I Get An ABN?

Getting an ABN is free and the application process can be completed online.

All you need to do is go to the Australian Business Register website and start the application process. The application itself can be completed in one sitting if you’re prepared with the right information.

Once you have submitted your application and it’s been processed successfully, then you should receive an email with your ABN. Remember to save this somewhere secure, as it’s important to be able to access your ABN whenever you need it.

You can read more about the process of acquiring an ABN in our article, Is An ABN A Legal Requirement?

Is A TFN Required For An ABN?

When you go to apply for your ABN, then there will be a section that asks for your Tax File Number (TFN). If you don’t have a TFN, then there’s no need to stress. You can simply state on the application that you don’t have a TFN and complete the rest of the questions.

If you don’t have a TFN but want to get one, then you can apply for it online through the Australian Taxation Office website.

Does A Sole Trader Require An ABN?

Yes, in order to become a sole trader you will need to attain an ABN.

A sole trader is someone who runs a business and is the primary person responsible for the business. A sole trader is one of the more common business structures in Australia and in order to be able to consider yourself a sole trader, you’ll need to get an ABN.

It’s important to keep in mind, once you become a sole trader, the business will be attached to you personally. That means, whatever happens with your business will impact you as there isn’t much liability protection for sole traders. If you’re thinking of becoming a sole trader, then it’s wise to weigh your options by properly considering the risks.

If you don’t like the idea of having your business attached to you personally, then you might want to register your business as a company. The application process for a company is a little more complex and you will likely need the help of a legal expert. However, once your company is properly set up, it will function as a legal entity separate from you. That means, even if something does go wrong, your liabilities will be better protected.

You can read more about the process of registering a company here.

Next Steps

If you’re running a business, then you’ll need to have an ABN. To summarise what we’ve discussed:

An Australian Business Number (ABN) is required to operate a business in Australia
You should ideally get an ABN before starting business operations
Activities like earning profits, registering a business name, and keeping records signify the need for an that you’re running a business instead of engaging an a hobby
Getting an ABN is free and done online through the Australian Business Register website
Your ABN application will ask you for your TFN
Sole traders must have an ABN, attaching the business to them personally with limited liability protection
Consider other business structures like a company for better liability protection, with a more complex application process

If you would like a consultation on getting an ABN, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

Sapna Goundan

Sapna has completed a Bachelor of Arts/Laws. Since graduating, she's worked primarily in the field of legal research and writing, and she now writes for Sprintlaw.

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