Registering for an Australian Business Number (ABN) as a sole trader isn't always required – but it can help streamline your interactions with the government and other businesses.
In this guide, you'll learn how an ABN can simplify and legitimise your business as a sole trader, what you need to apply and how to get one.
What is an Australian Business Number (ABN)?
An Australian Business Number (ABN) is a unique, 11-digit number that identifies your business to the government, your customers and any other organisations you work with.
That number is stored on the publicly searchable ABN database, along with specific trading information, like the suburb you work from.
Your ABN should be included on all your invoices, receipts and other documents when dealing with suppliers.
Why do you need an ABN as a sole trader?
If your annual turnover is more than $75,000, you're required to get an ABN. You'll also need one if you work with businesses or organisations that require a tax invoice.
Even if you're not legally required to have an ABN, it can make your life easier as a sole trader. Here's how an ABN could benefit your business:
Identify your business to others
Identifying your business to other business owners or government entities is a key benefit of ABN registration. The number gives you legitimacy as a business — even if you're a sole trader.
Once you're registered, your business name and number can be searched on the ABN Lookup Database, which lets prospective customers or suppliers check whether your ABN is current or cancelled, if it matches your business name and where your business is located.
Claim GST credits
Claiming GST credits on business-related purchases and operating expenses can help reduce your tax liability for the financial year, but you need to have an ABN and GST registration to do so. You can't apply for GST registration without a current ABN.
Much like an ABN, GST registration is required once your turnover exceeds $75,000 a year (excluding some forms of income).
Set up an Australian domain name
Setting up an Australian domain name also requires an ABN. Whether you trade under a business name or use your own, an Australian domain like com.au or org.au can make your website look more professional and let local clients know where you're based.
Avoid pay as you go tax (PAYG)
Pay-as-you-go (PAYG) tax applies to businesses without an ABN — and it can make a significant difference to your cash flow. This tax, also called PAYG Withholding, puts the onus on customers to withhold part of their payment for tax purposes.
If you're not registered with an ABN, other businesses must generally withhold 47% from payments they make to you for tax purposes (there are some limited exceptions).
What information is required on an ABN application?
The information required on a sole trader's ABN application includes contact details, your tax file number (TFN) and other basic business information.
Have these details on hand before you start your application. Note that some of the optional details may not be relevant for sole traders.
Your TFN (tax file number) – apply here if you don't have one.
Any previous ABN, if you have owned a business before
The date you need your ABN. This will be the day you plan to start your business (if you are just getting set up) and must be within six months of the application date.
Your legal business name. As a sole trader, this might be your given name, but you can register a trading name.
The contact details of your business, including email, postal address and phone numbers
The address where you conduct your business – you must list a physical address, not a post office box.
Your business activity and industry
Your tax agent's registration number and/or professional adviser's license numbers (if you have them)
Any authorised contacts (like tax or BAS agents) and their details
How to apply for an ABN as a sole trader
Applying for an ABN as a sole trader is a simple process — and it's free. Here's how it works:
Collect all information required
Collect all required information from the list above before you start. You can save your application and come back to it later if needed, but missing information or delays could hold up the process.
Head over to the ABR website
Go to the Australia Business Register (ABR) website and start the application process. You'll need your MyGovID to log in.
Complete the application process
Complete the application process with all required details, and your ABN will likely be issued immediately. You'll also receive a letter within 14 days confirming your ABN.
If details are missing, or your application needs to be reviewed, you should hear back within 28 days.
Once your ABN is issued, your details will be added to the ABR database (you can request to suppress some details if you have privacy concerns). You can also apply for any other business registrations, like GST or setting up an Australian domain.
Sole trader ABN FAQs
Do I need an ABN if I earn less than $75,000 a year?
You don't need an ABN if you're a sole trader earning less than $75,000 a year. However, you may want to apply for an ABN to simplify your tax requirements, get an Australian domain name and legitimise your business.
Once you hit the $75,000 annual turnover threshold (or expect to) you must apply for an ABN and register for GST.
How much does registering for an ABN cost?
Registering for an ABN is free — unless you apply through a third party like a tax consultant.
What is the difference between an ABN and TFN?
The difference between an ABN and a TFN is that one is a personal tax number and the other identifies a specific business.
A TFN (tax file number) is a 9-digit unique tax identification number that every person working in Australia must have. It's used for personal tax purposes and will stay yours regardless of whether you change jobs.
Your ABN, however, is a unique number that identifies your business. If you're starting another business, you'll need to apply for a new ABN.
Do I need to register for GST if I register for an ABN?
You don't have to register for GST just because you register for an ABN, but the two are often linked. If your business has an annual turnover of at least $75,000, you're required to register for an ABN and GST. The ABN application has to come first, because it's needed to complete your GST registration.
Get off to a great start
Keen to start your own business? Sign up to MYOB today and have the accounting and business management software you need to achieve your goals.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.
MYOB is not a registered entity pursuant to the Tax Agent Services Act 2009 (TASA) and therefore cannot provide taxation advice to clients. If you have a query concerning taxation, including filing your BAS return or annual tax statements, then you should consult with your accountant or other registered tax adviser.