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It is a legal requirement for every Australian business to have an Australian Business Number (ABN).
This article will explain the process and requirements of obtaining an ABN, your obligation as a business owner to maintain your ABN registrations and good practices when it comes to checking your contractors’ and suppliers’ ABN registration.
ABN is a unique 11 digits identifier issued to all Australian entities.
You are entitled to an ABN if you are carrying or starting a business in Australia, this mean that you are providing products and services to your clients and not just working as an employee in someone else’s business.
The information from the registration allows customers to check that your registration is current.
Application for ABN is done through the Australian Business Register (ABR).
Firstly, before applying for an ABN, you need to decide on the business structure (sole trader, company, partnership, trust, superannuation entity or deceased estate). If you are unsure what the best business structure is for your business, you should consult with your accountant or tax agent.
The following information is required to complete your ABN application:
An ABN can be used to:
There are few legal obligations you must comply with if you have an ABN:
To check supplier’s ABN registration, use the ABN Lookup tool from the Australian Business Records (ABR) website.
There are a couple of things to check:
Checking ABN registration prior to making a payment to a supplier will help you to meet your obligations to the ATO as a business owner by not paying the full amount to an unregistered business and claiming GST credits incorrectly.
Even though it is not a legal requirement as a business owner to regularly check all contractor and suppliers’ ABN, it is a good practice and highly recommended to do so for any new supplier and once a year for all suppliers.
You can download ABN lookup report for your records and attach it to your supplier’s card for a future reference or take a note of date, ABN and GST status.
Here are some of the common issues that can arise when checking supplier’s ABN: