ABN vs ACN: Benefits, Registration Process, and More
Starting a business in Australia involves more than just a great idea; and one of the most challenging parts is to get the registrations right. And in this context, two of the most commonly confused terms are ABN and ACN.
ABN stands for Australian Business Number, and the ACN stands for Australian Company Number. The differences in ABN vs ACN are mainly based on business structure, cost, and usage.
Let us understand their differences and how to apply for both ABN and ACN in more detail.
TL;DR - Summary
- ABN: - ABN is an 11-digit number and is used in commercial transactions
- ACN: - ACN is a 9-digit number used for company registration.
- Applicability: - Sole traders only need an ABN, while registered businesses automatically obtain an ACN when incorporated with ASIC and an ABN to conduct business.
- Relationship: - A company's ABN will always consist of their ACN with a two-digit prefix.
What is an ABN?
An ABN is an 11-digit number that identifies the business and is used in commercial transactions with the Australian Taxation Office (ATO). Since some business names can be quite similar, a company's ABN helps customers ensure they are dealing with the right business.
As a result, a company’s ABN is unique and helps avoid confusion for both consumers and businesses with similar names. An ABN is issued to all businesses via the Australian Business Register (ABR), regardless of their size or structure. Sole traders, trusts, companies, partnerships, or freelancers need an ABN.
The key functions of an ABN are:
- Tax identification: ABN is mandatory for GST registration in Australia, tax returns, and business activity statements (BAS) lodgement.
- Invoice compliance: An ABN should appear on invoices to avoid pay-as-you-go (PAYG) withholding.
- Government dealings: Clients use ABN for grants, contracts, and ABN lookups.
Many people think that only businesses need an ABN. However, sole proprietors and partnerships also need one to operate legally.
What is an ACN?
An ACN is a unique 9-digit number issued by the Australian Securities & Investments Commission (ASIC) for company registration. This acts as a legal identifier for companies, which proves that it is incorporated as a separate legal entity. Proprietary limited and public companies need this unique number instead of sole traders, partnerships, or trusts.
For instance, a digital marketing startup registering as ‘TechZ Pty Ltd.’ gets an ACN number in Australia on ASIC registration. Here is how an ACN helps:
- Legal status: An ACN confirms a company’s registration as Pty Ltd, Ltd, or other structure.
- Public record: It can be found on the ASIC database for verification.
- Document requirement: An ACN appears on all official company documents, contracts, and websites.
Pro Tip
If you are not sure whether your potential client operates legally, you can verify its ACN via the free online register of the ASIC.
What is the Difference Between ABN and ACN?
The key difference between ABN and ACN is that ABN has an 11-digit unique number and is issued by the ATO, while ACN is issued by the ASIC and has a 9-digit unique identifier. Have a look at the key differences between ABN and ACN in the table below:
```htmlHowever, while comparing ABN vs ACN, it is also important to note that both of them have different uses in business identification and compliance.
Key Takeaways
The ABN can be cancelled or reissued, but the ACN remains the same throughout the entire period of the company’s existence.
Do You Need an ABN, ACN or Both?
Are you registering
as a company?
ABN only
Register free via the Australian Business Register (ABR). No ACN required.
ACN + ABN
Register with ASIC to get your ACN first, then get your ABN to conduct business.
Whether you need ABN or ACN, or both, depends on your business structure, which is explained below:
1.Sole Traders
Sole traders only need an ABN and cannot obtain an ACN to operate legally. They must register for GST if their turnover surpasses $75,000. The ABN helps them with all tax and business interactions. In addition, most freelancers and other small service exporters only need an ABN.
2.Registered Businesses
Registered businesses automatically obtain an ACN while incorporating with the ASIC. However, they also need an ABN to conduct business. Registered companies need both identifiers for full compliance. For instance, in this case, the ACN number of company X will be 123 456 789, and the ABN number will be 22 123 456 789.
3. Trust
Since trusts do not operate as companies, they only need an ABN. If a trust starts earning income like business revenue, the trustee applies for an ABN in the name of the trust. This helps to report income and interact with the tax system. Therefore, the trust operates using an ABN for tax purposes, without an ACN.
As a freelancer or exporter from India expanding into Australian markets, understanding whether you need an ABN or an ACN is crucial. Similarly, to receive international payments, it's important to understand how platforms such as Skydo simplify the whole process. This helps you focus on growing your business instead of worrying about transactions.
How to Register for an ABN in Australia?
Register for an ABN
via Australian Business Register (ABR)
Check eligibility
Confirm you're entitled to an ABN and decide on your business structure
Collect information
Tax file number, legal entity name, contact details, prior ABN or ACN if held
Complete application
Fill the online form at abr.gov.au — takes about 10–15 minutes
Receive your ABN
Issued instantly for simple applications; up to 28 days if manual review needed
Free · Usually instantRegister for an ACN
via Business Registration Service (BRS)
Choose business structure
Confirm a company structure is right — not a sole trader or trust
Determine company name
Choose a name that differs from any existing registered company
Understand legal responsibilities
Review annual reviews, financial reports, and director duties
Get formal approvals
Confirm directors, secretaries, and members are in agreement
Register via BRS
Submit via the Australian Government's Business Registration Service
Receive your ACN
Issued on successful registration with ASIC
Paid · Part of company registrationIf you’ve been working with Australian companies, you probably have requested their ABN numbers for compliance and invoice generation. To register for an ABN, the company has to use the ABR website and register. Here are the brief steps:
- Check eligibility: Check whether the business is entitled to an ABN and decide on the structure for your business.
- Collect information: Collect data, including tax file numbers, previously held ABN, ACN, entity legal name, company contact information, and more.
- Complete application: It takes about 10 to 15 minutes to fill out the online form.
- Receive ABN: Usually given right away for simple applications, but it could take up to 28 days if a manual review is needed.
How to Register for an ACN in Australia?
The Australian company also needs to provide its ACN while dealing with you to adhere to compliance. Here are the steps to complete the registration process:
- Choose the business structure: First, determine if a company is the best fit for the business or whether an alternative business structure could be more appropriate.
- Determine the name: Select a business name that differs from an already-existing one.
- Legal Responsibilities: Recognise and fulfil your legal responsibilities.
- Get a formal approval: Obtain formal approval from those who will serve as the company's directors, secretaries, and members.
- Register your business: Use the Business Registration Service (BRS) of the Australian government to register the business.
- Get your ACN: After the application is completed, the business will obtain an ACN, and it will be registered.
When a company is registered, it has to keep up with things like annual reviews, financial reports, and director duties.
How to Lookup an ABN or ACN Number?
You need to verify an ABN or ACN to make sure that suppliers, clients, and partners are legitimate. Here are the two methods:
ABN - The Australian Business Register's website allows you to look up an ABN.
ACN - You may use ASIC Connect or the Australian Business Register to look for a company's ACN. You should check up the business on ASIC Connect if you want further details.
Pro Tip
Check that the ABN of a new Australian supplier is active and matches the business name they gave you before starting business with them.
What Happens If You Operate Without an ABN or ACN?
You can face hefty fines if you operate without an ABN or ACN. These include:
1. ATO Penalties
- Payments received without a valid ABN are subject to 47% withholding tax.
- GST credit claims lost
- Interest fees on unpaid taxes
- Penalties for not updating ABN information within 28 days
2. ASIC Penalties
- Penalties for businesses that do not accurately show the ACN
- Directors may be held personally liable in severe circumstances
- Late fines for yearly reviews that are postponed
- Deregistration due to ongoing noncompliance
How ABN and ACN Affect International Business Payments?
As an Indian freelancer or exporter, you might need the ABN of an Australian business to keep records and comply with the Australian taxation laws. In addition, an ABN on invoices shows that they are legitimate and stops payments from being late.
On the other hand, the ACN also confirms a company's corporate status for international partners like you.
Whether you are dealing with a sole trader or a registered business, getting international payments done in an efficient manner requires an appropriate banking solution and not merely registration.
For this, you can use the Skydo platform to receive your payments seamlessly. Integrating your Global Skydo accounts with other platforms, you can reduce your transaction expenses by 50%.
Getting Started With Australian Business Registration
Knowing the difference between ABN vs ACN can help business owners avoid confusion in business registration and operation. To operate legally, sole proprietors only require an ABN and cannot obtain an ACN. However, when a registered business in Australia incorporates with ASIC, it automatically receives an ACN.
Ready to start dealing with Australian businesses with lower fees? Skydo offers a virtual account for you to receive payments in Australian dollars (AUD). Open a free account with Skydo today and save up to ₹74,000 annually!
What is the US equivalent of an ABN?
The US equivalent of an ABN is the Employer Identification Number (EIN). The Internal Revenue Service (IRS) provides businesses operating in the US a unique 9-digit identification number called an EIN.
Can non-residents get an ABN or ACN?
How long does ABN registration take?
Is there a fee for ABN registration?
Should I include my ABN on international invoices?
