I am changing my business from operating as a sole trader to an incorporated entity. Do I need a new Australian Business Number (‘ABN’)?

Simply put, yes you will need a fresh ABN if you cease being a sole trader. You can’t transfer an ABN to a different business structure. We’ll explain this more in-depth below.

ABNs generally

In Australia an ABN is required to operate a business, no matter what structure it is. This unique 11-digit number is the way that your business is identified.

An ABN offers peace of mind by allowing people to look up your business using ABN Lookup to get confirmation of your details for sales or service orders. Further, you are required to include your ABN on many formal documents, including tax invoices.

Registering your company

To operate as a sole trader, you only need to have your ABN work as your key identifier. Contrastingly, when you register a company you will receive both an ABN and ACN. Your ACN works as your company identifier, and should be used on all formal documents.

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The golden rules for sole traders

1.You’ll need a new ABN if you are a sole trader setting up a different business structure such as an incorporated entity.

Multiple business activities can be carried out under a single ABN if they correspond to the same business structure. However, you must register for a new ABN if your business structure is changing.

2. When you set up a new business structure, your previous ABN will need to be cancelled.

It is not possible to transfer an existing ABN to another entity. If you already have an ABN as a sole trader, you will need to cancel this ABN after the incorporated entity has been set up. You will be allocated a new ABN upon registration of your company.

3. Before you cancel your ABN, ensure you have fulfilled all of your business obligations

Make sure you have repaid any debts and complied with outstanding obligations to the ATO. The ATO can issue hefty fines if these obligations are not met.

Cancelling your ABN

There are multiple ways you can cancel your ABN. The most convenient way is to cancel it online on the ATO website, but you can also cancel it over the phone on 13 92 26.

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.

Updating your details on time is important when changing business structures. If you’re unsure of your obligations, it’s worthwhile consulting a business lawyer. 

Jackie Olling

Jackie is the Content Manager at LawPath and manages the content team. She has a Law/Arts degree from Macquarie University and has worked in the legal industry since 2014. She's interested in legal tech and the opportunities it offers to not only the legal industry, but all people.