Sole Trader to Company: Do I Need a New ABN? (2024 Update)

Making the move from being a sole trader to a company carries a number of obligations. This includes ensuring you comply with the terms of the Corporations Act, and ensure your duties as a director are fulfilled. When you register a company, you will also receive an Australian Company Number (ACN). In addition to this, many budding company owners aren’t sure what happens to their ABN. In this article, we’ll explain whether you need a new ABN to start your company.

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Key points

  • Every registered business in Australia must have an ABN
  • Along with an Australian Company Number (ACN), a company also needs to apply for a new Australian Business Number
  • Your ABN from your old business will not carry over

Australian Business Numbers (ABNs)

In Australia, regardless of what business structure you choose, you need an Australian Business Number to operate a business. This unique 11-digit number is the way that other businesses, customers and the Government can identify your business. An ABN offers peace of mind by allowing people to look up your business using the ABN Lookup to get confirmation of your details for sales or service orders.

Switching to a company structure

Registering a company for your business is a big step for any business owner. However, many business owners find the benefits of running a company far outweigh being a sole trader. Some of these benefits include:

  • Limited liability (not liable for debts or legal issues the business may face)
  • Ability to choose your own company name
  • Opportunities to raise capital
  • Lower corporate tax rate (as opposed to individual tax rates)

Here are some key things to keep in mind when you’re changing your business to a corporate structure:

1. A new ABN is required

When setting up a new business structure such as an incorporated entity from sole trader, the sole trader ABN will need to be cancelled. You will then need to apply for a fresh Australian Business Number to use in conjunction with your ACN for your company.

2. Before you cancel your old ABN, ensure all business obligations have been fulfilled

Before you cancel your former ABN, ensure you have no debt owing and have met all your obligations. Multiple business activities can be carried out under a single ABN if they correspond to the same business structure.

3. You cannot transfer an existing ABN to another entity

ABNs cannot carry over between business structures. A new entity will need a new name, meaning there will be no use for the ABN you have been under as a sole trader.

How to cancel an ABN

There’s a number of ways you can cancel your Australian Business Number including:

  • Online, if you posses an administrator AUSkey
  • Contacting the Australian Taxation Office (ATO) on 13 92 26 between 8:00am and 6:00pm Monday to Friday
  • Lodging a NAT 2955 form
  • With the help of a registered tax agent

Before you start

Note that an Australian Company Number (‘ACN’) is required before an ABN can be acquired.  After registration for an ACN is complete, you can apply to the ATO for a new ABN, which is your ACN with an additional 2 digits. You also need to register your company with a legal company name in mind. You can register different business (trading) names under your legal company name.

Where to from here?

Once you have your new ABN, ACN and company certificate, you’re all set to go. You can now experience the benefits or running a business as a corporate entity. However, you should also educate yourself on your obligations when running a company. You can register a company and ABN easily online. If you have any questions about changing business structures, we recommend that you contact a business lawyer for further advice.

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