What are ABNs and ACNs?

In Australia, businesses are often identified using two key numbers: the Australian Business Number (ABN) and the Australian Company Number (ACN). These identifiers help ensure that businesses can be identified by the government, customers, and other businesses, and they are crucial for legal and tax purposes.

What is an ABN?

An Australian Business Number (ABN) is an 11-digit unique identifier issued by the Australian Business Register (ABR). The ABN is used for taxation and business registration purposes, and all entities engaging in business activities in Australia must have an ABN.

Who needs an ABN?

Any individual or organization carrying out business in Australia must apply for an ABN. This includes sole traders, partnerships, companies, and trusts. An ABN is required for issuing invoices, registering for the Goods and Services Tax (GST), and for interacting with government agencies like the Australian Taxation Office (ATO).

ABN Exceptions

While most businesses require an ABN, there are some exceptions. For example, hobby businesses (which are not considered to be carrying out business activities for profit) are not required to have an ABN. It’s important to determine whether you are carrying out a "business" or a "hobby" to ensure compliance with the law.

Example:

Sarah is a freelance graphic designer who regularly takes on paid projects. She needs an ABN to issue invoices and receive payments. On the other hand, John makes furniture as a hobby and only sells a few pieces per year. Since he doesn't run a full-time business, he may not need an ABN.

What is an ACN?

An Australian Company Number (ACN) is a unique 9-digit identifier issued by the Australian Securities and Investments Commission (ASIC). The ACN is used for companies registered under the Corporations Act 2001. Every company registered in Australia must have an ACN, and it must be displayed on all official company documents, such as invoices, letterheads, and contracts.

Difference Between an ABN and an ACN

An ACN is specific to companies, while an ABN is required for all business entities, including companies. If you have a company, you will need both an ACN and an ABN. The ACN identifies the company as a legal entity, while the ABN is used for taxation and business registration purposes.

Example:

ABC Pty Ltd, a registered company in Australia, has both an ACN and an ABN. The ACN identifies the company as a legal entity, while the ABN is used when ABC Pty Ltd conducts business, issues invoices, and interacts with government bodies like the ATO.

For more details, you can visit our pages on types of business structures or what ASIC does.