What is the Difference Between an ABN vs ACN

What is the Difference Between an ABN vs ACN?

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No matter if you run your business alone or with others, either as a trust or company in Australia, to operate your business well you need what’s called an Australian Business Number (ABN). Businesses also get an Australian Company Number (ACN). This article wants to help you understand the difference between an ABN and ACN. It will guide you on which one to sign up for and explain how to register for both of them.

What is an ABN?

An ABN, which has eleven digits in it, is needed for all businesses to identify them. It works like a special sign for businesses and is very important in buying and selling things, dealing with the Australian tax office (ATO), and talking with customers or other businesses.

Since there can be many similar names in businesses, the ABN is important for precise handling with a specific business. It’s different from others, which stops people and other companies getting mixed up. Specially, an ABN is given to all types of businesses no matter how big they are or what form they take like single people working for themselves, trusts or big corporations.

It is important to keep your ABN details current using the Australian Business Register website. Additionally, it is important to stay in line with the rules. This involves filing tax returns and business activities on time to the government.

Is it possible to have multiple ABNs?

When starting a company, it will each get its own ABN. Though you can have more than one ABN for one entity, it’s usually not recommended. For instance, if you have a business under a company, you will need to get an ABN. If you want to get another ABN, it’s better if you register for a new company. Depending on your specific situation, it may not be necessary to register a new company to obtain a new ABN.

When you launch a new product or brand linked to your current company’s business, you don’t need to register a new company just to get a new ABN. Just one business can take care of more than one product or brand, all under the same ABN.

But if you’re getting ready to introduce a different segment of products that is totally different from the existing company’s business nature, it is better to register a new company and get a new ABN for that product.

Case Study

As the owner of your own software development company you have run that business successfully for four years in the business of selling POS system software (Company A). Over the past year, you’ve been working on writing HR Payroll software, which is still in its infancy. Today the HR Payroll software is ready to launch and it would be in a different industry compared to POS system software, and at this point, you may want to set up an entirely separate company which will then have its own ABN number for running the business centered around HR Payroll software (Company B)

Reasons for Company B and obtaining a new ABN are discussed concerning asset protection and administrative unclarity. By incorporating Company B to operate a new HR Payroll software business would provide asset protection due to the separation between Company A and Company B since they are operated as separate legal entities. The customers of each company will most likely differ and if a customer sues Company B, this claim or liability will not then take up the assets of Company A or its intellectual property.

For example, if two both POS system software and HR payroll software are operated under a single company structure then any claims would give the other party access to all of the assets and intellectual capital of each business asset as they are operating under one legal entity.

What is an ACN?

An ACN is a nine-digit number that is issued only to companies. The ATO issues ABNs. On the other hand, ACNs are issued by the Australian Securities and Investments Commission (ASIC).

What is an ACN

It is important to note that not all businesses are companies. Sometimes, an individual may say they run a ‘company’ when they mean that they run a sole trader business. A company is a particular legal entity and business structure. Unlike other business entities like sole traders and trusts, ASIC strictly regulates companies. Accordingly, if directors mismanage the company, they may be subject to criminal and civil penalties.

Keep in mind, not all businesses are companies. Sometimes, a person might say they own a ‘business’ but what they really mean that they have their own solo trade. A company is a special type of legal body and business setup. Companies are more strictly controlled by ASIC than other types of businesses like individual traders or trust groups. So, if those in charge of a company don’t handle it correctly, they could face legal and civil punishments.

A company that does business will have both an ABN and an ACN. Once a company is created, it must sign up for an ABN before it begins doing business. If the company is just for the purpose for holding assets and is not doing business, it might not need an ABN. Usually, the ACN is used as the bottom number for the ABN. This means they will be the same, but the ABN will start with two extra numbers.

How Do I Find an ABN or ACN?

You can find your company’s ABN on the Australian Business Register’s website.

You can search for a company’s ACN on the Australian Business Register or ASIC Connect. To get more recent details about the company, you can buy a copy of the company’s current information report. The extract will contain the following details:

  • Company registration date 
  • Company current status 
  • Basic company information 
  • Share capital information including Directors and officers details
  • Annual reports

ABN Registration

Getting an ABN for your business

Apply online: You can easily apply for an ABN through the Australian Business Register (ABR).

Register business name together: If you need to register both your ABN and business name, do it in one step using the Business Registration Service.

Attach multiple names to one ABN: You can use the same ABN for different trading names, saving you the hassle of getting multiple ABNs.

Reactivating an old ABN

Apply for a new number: To reactivate a previous ABN, apply for a new one and list your old ABN during the process.

No fee for ABN: It’s free to apply for or reactivate an ABN.

Business name registration fees

$42 for one year: It costs $42 to register your business name for one year.

$98 for three years: You can save by registering for three years for $98.

Read: Business name fees and payment options.

Registration periodCost
One year$42
Three years$98

Updating or Cancelling Your ABN

Businesses in Australia have to keep company information updated. They must make sure these changes and details are updated such as:

  • Directors and shareholders changes and details
  • The company’s official legal address
  • Contact information
  • GST registration status.

Consequences of not updating details: Failure to update your ABN details within 28 days of a change can result in penalties from the ABR. These penalties can increase depending on the length of the delay.

How to update details: Various ways to update your details, including:

  • Online through ABR online services using your myGovID and Relationship Authorisation Manager (RAM).
  • By phone on 13 9 226 (13 ABN).
  • By mail using a paper form.

Read: Update ABN record

Cancelling your ABN: Before canceling your ABN, make sure you’ve paid all taxes and cleared off all debts to creditors. The ABR provides guidance and advice on how to cancel your ABN on their website.

Checking cancellation status: You can check if your ABN was canceled by using the online services of the Australian Business Register or calling them directly.

By knowing these duties and making sure to keep your ABN information correct, you can prevent penalties and make sure your business runs smoothly.

ACN Registration?

Once you start a company, the ACN will be given to you automatically. You can pick to start a business by yourself using ASIC or get help from a company secretary.

Check your chosen company name is available to use by looking it up in the register. Make sure your chosen business name doesn’t match any current ones or trademarks. If there are, you may not be able to operate your business freely using that name. You can look for trade marks on IP Australia’s website.

You also need to read and completely understand your responsibilities as a person in charge of a business. An officeholder in a company is someone like directors and secretaries. Also, make sure other company officeholders know the responsibilities and get their consent and agreement to be an officeholder before starting the business.

How FastLane Group Can Help

Starting a business in Australia? You might find getting to know about ABNs and ACNs a bit confusing at the start. Don’t worry, though! If you work alone or run a big company, FastLane Group‘s professional corporate service can help you easily and quickly. 

We’ll help you handle all the paperwork, and ensure your registration sails through, so you can focus on what matters most: launching your business success story. 

Avoid getting lost in the paperwork and let FastLane Group be your advisor. Get in touch with us now for a free consultation and find out how we can quickly help you on your business journey!