One of the most important things a business must have is a taxation number. This number will be your identification as a legal entity for tax purposes. It is also known as an Australian Business Number or ABN for short.
There are different types of taxation numbers depending on what country you live in and where your company is based. In Australia, if you own a business that has been registered as being under an Australian Company then you need to have an Australian Business Number. The number works just like your Tax file number which the government uses to identify individuals working within the country.
If you do not apply for this registration promptly it can result in serious interest fees and penalties from the Government agencies who rely on these numbers to keep track of your business dealings.
A wise business owner or entrepreneur will make sure he/she gets their ABN number as soon as they open their business to avoid inconveniences in the future.
You need to get an Australian Business Number if you run a company that has any of the following activities: selling goods or services, importing goods into Australia, borrowing money from banks, using agents or carrying on any other kind of business. If one does not have this number then it may be difficult to lodge income tax returns with the Australian Taxation Office effectively making them lose all benefits of being a registered entity under an Australian Company.
This will not only affect the company but also its owners too so one must be aware of this when they start their own business.
There are several reasons why having an Australian Business Number (ABN) is important. This article will highlight some of these reasons, and provide links to more information on the ABN.
The first reason is that once you have an ABN, you can start claiming goods and services tax (GST) refunds for your business expenses. Claiming GST refunds is essentially getting back money from the government which you had paid in taxes throughout the course of doing business domestically or internationally. So if you are exporting overseas, you get back some of the taxes imposed on your products.
If you import goods into Australia, you get back some of the taxes charges by customs when importing them into Australia. And even if it’s just regular business expenses, even if they are personal expenses for your own business, you can still claim these as deductions against the GST. The second reason why having an ABN is important is because it’s needed to open a bank account in Australia.
Many institutions will ask you which ABN you plan to use before opening an account with them specifically for your Australian business.
The next reason why you need an ABN is that certain transactions require it. If you’re purchasing shares listed on the Australian Stock Exchange (ASX), then not only must the company be listed on this exchange, but also they must have their Australian Business Number registered with ASIC (Australian Securities and Investment Commission).
This means that not only must the company have their ABN but so must each shareholder of the company. And also, if you want to borrow money from a financial institution in Australia for your business, they’ll ask you which ABN you plan to use for this loan before proceeding with the application process.
The last reason why having an Australian Business Number is important is because it can be used as an identifier for things like Centrelink (social security) and Medicare (health insurance). To sign up for either of these two benefits programs or even Open Learning Australia (financial assistance program), you will need to provide them with your tax file number (TFN). However, some people prefer not to use theirs because they don’t want everyone they interact with to know everything about their financial situation.
If you don’t want this for whatever reason, but still need access to these kinds of government programs, you can use your ABN instead, as it serves the same purpose as a TFN. And if you’ve already signed up using your own or someone else’s TFN then you can switch to using an ABN at any time.
So now that you’re familiar with five reasons why having an Australian Business Number is important, there are links below which will lead you to more information on how it can be obtained and what other benefits come along with it. This way you’ll have the ability to make truly informed decisions before getting started in business here in Australia.
For further information on how to register for an Australian Business Number, you can check company 123.