Starting a business involves many things, some more thrilling than others. Analyzing business names and selecting the next social media posts are all fun, but considering whether you need an Australian business number (ABN) may be less fun. You need to understand what an ABN is in order to get your business up and running. While it might be a legal requirement, there are many perks to working under an ABN. Here are some benefits of having an ABN when running any business.
1. Avoid getting a temporary pay cut
Having an ABN means that the government is confident you are paying the appropriate amount of tax. If you don’t have an ABN, any business that is paying for your products or services rated above $75, excluding goods and services tax (GST), may withhold up to 47% of the total payment. The withheld amount is sent to the Australian Taxation Office.
While this amount might just be withheld temporarily, it can still be crucial capital to keep your business running. Supplying an ABN to your suppliers or other businesses you interact with can help you receive the payments in full. Another tax advantage of an ABN is that it makes you eligible for a tax-free threshold of personal income for up to $18,200. Like ACN, the ABN should be displayed on all business paperwork, including invoices, tax returns, and other relevant documents. Learn more about ACN vs ABN here.
2. Become easily identifiable
There are a lot of circumstances where you don’t want a case of mistaken identity when running a business. While your business name is helpful, there are many businesses out there, and some have quite similar names.
If you have an ABN, your business is added to the Australian Business Register (ABR), a register that keeps the information about companies currently running within the country. This allows the government and the community to verify the business details they are provided. When you are listed on the ABR, other businesses and potential customers can confirm the validity of your business details.
3. Get an Australian domain name
Digital presence is essential for running any modern business. A website is a great place to display key information about your business, such as opening hours, your contact details, and your information about your products or services. You will also require a place to sell your products or services if you plan to run an online business.
In Australia, you must register an available domain name that ends in “.com.au” or. “org.au” when setting up a website. These endings are referred to as country code top-level domains (TLDs), and you must have an ABN to buy one.
4. Claim energy grant credits
The energy grants scheme offers businesses an incentive to embrace the use of cleaner fuels. You would have to use ultra-low Sulphur diesel to qualify for the credits if your business operations involve use of diesel fuel. While this encourages businesses to be more eco-friendly, one eligibility requirement is that your business must have an ABN.
There is no doubt that getting an ABN helps you kick your business goals in time, whether you want to begin a sole proprietorship or partnership. The perks of working under ABN are clear and great ways to get a head start for your business, where money-saving and identification practices are essential.