ABN vs ACN: what the difference is and which one you need

What an ABN is

The Australian Business Number is an 11-digit identifier issued through the Australian Business Register (run by the ATO). Any entity carrying on an enterprise in Australia can have one: sole traders, partnerships, companies, trusts. It is used on invoices, for GST registration, for dealing with the ATO and other government agencies, and for other businesses to check who they are dealing with.

An ABN is free. You apply online at the ABR, usually in about 15 minutes, and if the details check out it is issued immediately. You need to be carrying on, or starting, a business; a hobby does not qualify. Your ABN as a sole trader is linked to your personal tax file number.

What an ACN is

The Australian Company Number is a 9-digit identifier issued by the Australian Securities and Investments Commission when a company is registered. It identifies the company as a legal entity separate from its owners. Only companies have an ACN; a sole trader, partnership or trust does not.

Registering a company costs a fee to ASIC at the time of registration and an annual review fee each year after, plus the cost of a constitution or replaceable rules and usually an accountant. Check ASIC for current fees. Directors also need a director identification number before they are appointed.

How they relate

A company registers with ASIC, receives its ACN, and then applies for an ABN. The ABN issued to a company is its ACN with two check digits added at the front, so the two numbers share nine digits. That is why a company’s invoice can show both, and why the ABN alone is enough to identify it.

A sole trader never has an ACN. If someone asks a sole trader for their ACN, the answer is that there is not one, and the ABN is the number they need.

What a sole trader needs

An ABN, and only an ABN. With it you can:

• Invoice without the 47% no-ABN withholding applying.
• Register for GST when you reach the threshold.
• Register a business name if you trade under anything other than your own name.
• Claim GST credits and deal with the ATO as a business.
• Get an Australian domain name and open business accounts.

A business name, registered with ASIC, is separate from both numbers. It gives you the right to trade under that name; it is not a legal entity and does not give you an ACN.

Checking a number

ABN Lookup (abr.business.gov.au) shows any ABN’s entity name, type, GST registration status and location. It is the fastest way to confirm a supplier is registered for GST before you claim a credit on their invoice. ASIC Connect shows company details for an ACN, including current status and registered office.

Keeping your ABN active

The ABR cancels ABNs that appear inactive, for example if no business income has been reported for a period. If that happens you can reapply, but it is easier to keep your details current and lodge on time. Update your ABN record within 28 days if your address, contact details or business activity change.

ABN, TFN and GST

Three separate registrations. Your tax file number is personal and stays with you for life. Your ABN is your business identifier and is linked to your TFN as a sole trader. GST registration is a separate election attached to your ABN, only required at the threshold. See do I need to register for GST. If you later change to a company, the company gets its own ABN and TFN; see sole trader vs company.