An ABN or Australian Business Number is what identifies you as the name that you intend to trade your business under. It is available to anyone who is self employed in the following structures: sole trader or individual (its all about you!) or partnership (you and other business owners).
Not everyone needs an ABN however there are a number of benefits to having one and conversely impediments to not having one. Here are some great reasons why you should get one:
- It’s free! If you go through the Australian Business Register website (ABR) it won’t cost you a cent. You don’t need to go through your accountant or tax agent, it’s a fairly straightforward process.
- It is better for your business cash flow. If you don’t have an ABN businesses that deal with you are obliged to withhold tax at a whopping PAYG rate of 46.5%. Whilst you can claim this back with your tax return, most agree that it is far better for your liquidity to have that cash in the bank when you are paid.
- An ABN allows you to take advantage of tax incentives such as GST and fuel tax credits, offer fringe benefits to any employees, claim energy grant credits and register with the PAYG system
- To register an Australian website domain i.e. ends in ‘au’, you must have an ABN. Most agree it’s hard to do business without an online presence.
- If you are planning to earn over $75,000 per annum, you are legally required to pay GST. You need an ABN to pay and claim GST
- Having a registered business name is what helps your customers differentiate your business from your competitors. However don’t confuse this with a trademark – it is very different!
- Finally, businesses prefer dealing with businesses that have an ABN. An ABN brings with it certain ‘legitimacy’ and ‘trust’ that businesses value with supplier/customer relationships. Not having an ABN indicates that you earn less than $75,000 per year and suppliers may view this as risky from a credit perspective.
The easiest way to obtain an ABN is to visit the ABR website www.abr.gov.au. And if you are like me and like to be able to do things online (as opposed to being on hold, and going through a myriad of security questions, etc etc) you can register for AUSkey, which you can use to update your ABN details as needed.
– Words by Tina, our fabulous VA