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How Are ABNs and ACNs Different? (2020 Update)

How Are ABNs and ACNs Different? (2020 Update)

ABNs and ACNs may seem similar, but they serve very different functions depending on what type of business you have. Read about them here.

21st April 2020
Reading Time: 2 minutes

ABNs and ACNs are specific numbers that identify your business. However, the number you use will vary depending on what business structure you have. Every registered business in Australia is required to have an ABN (Australian Business Number). However, not all businesses will have an ACN. To run a business as a sole trader, all you need to do is register and ABN. However, ACNs are unique to companies that are registered through ASIC.

If you are thinking about starting a business or Registering a Company, then it is important to know the difference. In this article, we’ll explain what each number means and how they will apply to your business.

Generally, ABNs and ACNs (if applicable) must be present on most documents including:

  • Invoices
  • Business Letterheads
  • Orders
  • Receipts
  • Account Statements
  • Legal documents

If you fail to provide your ABN or ACN on the above documents, you will likely face a serious penalty from the ATO or ASIC.

What is the difference Between an ACN and ABN?

Essentially, the difference between the two lies in the types of businesses they are used for. One applies to all businesses, whilst the other applies to incorporated businesses. 

Australian Business Number (ABN)

Your ABN is a unique 11-digit number that identifies your business. Every business which operates in Australia will have an ABN. The Australian Taxation Office (ATO) provides this number which allows it to keep track of your business activity and taxes. It also acts as an identifier for other businesses that work you may work with. Whether you are a sole trader, a partnership, or a company, you will need to register an ABN. If you don’t, you will be trading illegally. You will also need an ABN to register for GST and payroll tax. Sole traders and partnerships will cite their ABN and TFN when corresponding with the ATO. 

Australian Company Number (ACN)

An Australian Company Number (ACN) is issued specifically if and when you register your business as a company. Your ACN is a 9-digit number that is issued by the Australian Securities and Investments Commission (ASIC) . Your ACN will serve as an identifier to ASIC for the monitoring of your company activities. It also lets the public know your business’s structure. Company structures are separate legal entities, meaning  that directors will not ordinarily be responsible if the company gets into financial or legal trouble.  Your ACN should be cited on all important business correspondence. 

Finally

Both ABNs and ACNs are integral to your business. If you trade and do not have the sufficient identifiers, you will be in breach of company and tax laws. It’s important in this sense to know which number you will need to have and where to use them in order to be compliant.

Don’t know where to start?
Contact a Lawpath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.

Author
Adam Lewis

Adam is a Consultant at Lawpath working with the Marketplace Team. With an interest in consumer and commercial law, he is currently completing a Bachelor of Commerce and Bachelor of Laws at Macquarie University.