What is the Difference Between an ABN and an ACN?

What is the Difference Between an ABN and an ACN?
Below we'll explore the difference between an ABN and an ACN, if an ABN or ACN is needed to start your business and learn how to update or cancel your ABN or ACN.
by Square Jul 05, 2022 — 4 min read
What is the Difference Between an ABN and an ACN?

To successfully start a business in Australia you’ll need to do things by the book. This means registering your operation with the relevant authorities, to ensure you meet tax, legal and regulatory obligations.

In Australia your business can be identified by a couple of numbers: an Australian business number (ABN) and an Australian company number (ACN).

What is an Australian business number? What is an Australian company number? What is the difference between an ABN vs an ACN, and which do you need to have? Find out below.

What is an ABN?

An Australian business number (ABN) is a unique 11-digit number that every business in Australia, no matter its size or structure, must have. This number is issued by the Australian Taxation Office (ATO) and must be accompanied by a registered business name.

The main function of an ABN is to ensure that Australian businesses meet their financial obligations. Because many businesses have very similar names, the ABN is a simple yet sure-fire way to identify a specific business and to ensure that it pays all the relevant Australian taxes, including profit, income, GST and PAYG.

As soon as you start or take over a business, or as soon as a hobby turns into a business, you’ll need to register for an ABN. No matter whether you’re a sole trader, a partnership, a company, a trust, a non-profit or any other form of enterprise. You will need an ABN for tax purposes.

What is an ACN?

An Australian company number (ACN) is a unique nine-digit number that every company in Australia must have. This number is issued by the Australian Securities and Investments Commission (ASIC) and allows this body to monitor company activities that extend beyond the reach of the ATO.

It’s important to note that while the words ‘company’ and ‘business’ are often used interchangeably, there is a real and functional difference between the two in Australian law. A company is a specific type of business – it features a more complex structure that, amongst other things, reduces the owner’s – or more accurately, shareholder’s – personal liability by making the company a separate legal entity.

A company must have both an ACN and an ABN in order to conduct business in Australia. A company is the most common way to structure a business in Australia, and is used by most businesses large enough to employ workers.

What is the difference between an ABN and an ACN?

An ABN is used to identify and monitor a business for tax purposes, while an ACN is used to identify and monitor a business for a variety of company-specific purposes.

Because companies are legally separate entities, it is more difficult to hold individuals liable for the mistakes of the company. This means that ASIC must strictly regulate companies to ensure they do the right thing. This is where the ACN comes in: it’s a single number that can be used to monitor all relevant company activities and check that the organisation is operating within legal and regulatory boundaries.

This means that all Australian companies need both an ABN and an ACN, while other types of businesses, including sole traders, partnerships and trusts, only need an ABN.

How can I get an ABN?

The process to apply for an ABN is super simple.

First you should visit the Australian Business Register website to find out whether you need or are entitled to an ABN.

If the answer is yes, you can visit the Australian Government’s Business Registration portal and follow the prompts to register for an ABN. It’s a quick and easy process that should only take a few minutes to complete, provided you’ve got all the necessary information at hand.

How can I get an ACN?

Creating a company is a more complex affair, which is why the assistance of a professional accountant is highly recommended. That said, you can most certainly do it yourself if you have the necessary knowledge and skills.

The government’s ‘help me decide’ service is a good way to understand whether you need an ACN, and if you do, you can apply for one by following this ASIC guide.

Where can I find my ABN or ACN details?

Have you lost your ABN or ACN? Are you unsure whether you’ve already been registered for either number? Do you need to find the ABN of another business, or the ACN of another company?

Whatever the reason might be for your search, you can use the following portals to look up the ABN and ACN of any Australian business or company:

How can I update or cancel my ABN or ACN?

If you decide to close your business, or if the circumstances of your business change, you may need to update or cancel your ABN and/or ACN. Happily there are relatively simple ways to do so.

Updating or cancelling your ABN

You can use the following links to take the appropriate action on your ABN:

Updating or cancelling your ACN

Given the extra complexity that surrounds company structures and the ACN, it’s again wise to consult a professional about the best ways to update or cancel your ACN, although this ASIC guide could prove helpful.

Do I need an ABN or ACN to start a business?

Do you need an ABN or ACN if you’re going into business in Australia? The short answer is yes, every Australian business needs an ABN, and every Australian company needs an ACN.

You need an ABN if you’re starting or carrying on an enterprise in Australia, or if you work as a contractor. You don’t need an ABN if you work as an employee for a business, even if your employer calls you a contractor (an employer cannot ask you to get an ABN as a condition of employment.)

The world of business can be a complex one, so as we’ve stated throughout, it’s best to seek the advice of a professional accountant to ensure you’re doing everything that you’re supposed to.

And when you’ve successfully registered your business or company, at Square we’re ready to provide all the smart payment and business solutions you need to realise success!

The Bottom Line is brought to you by a global team of collaborators who believe that anyone should be able to participate and thrive in the economy.


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