We’re heading into a new calendar year. It’s a great time to do some business ‘spring cleaning’ and make sure that your business registrations are up to date and active. Many grants and government payments depend on an active ABN registration.
The Australian Taxation Office (ATO) has started to review inactive ABN registrations against active businesses in order to cancel inactive registrations. If there is no activity in your tax return or if you have no other signs of business activity, you may have your registration cancelled.
Pro Tax Tip: Emergency and government agencies use your information during natural disasters to identify where financial relief is needed.
What If My ABN Is Cancelled?
Inactive ABN’s that have been cancelled can be reclaimed if the same business structure applies. If your business structure has changed, you’ll get a new ABN. If the ATO cancels your ABN, you can reach out to your tax agent who can help resolve the issue for you.
How Do I Apply For An ABN?
An ABN, or Australian Business Number, is a unique 11 digit code that identifies your business. You need an ABN when you invoice customers or make payment to your suppliers, claim business grants, get an Australian domain name, and claim the good and services tax (GST) when your business earns over $75,000 annually.
To receive an ABN you’ll need to apply through the Business Registration Service. Before you register, make sure you have identified your business structure (Sole trader, partnership, company or trust), have proof of your identity and the details of your business activities and associates at the ready.
Pro Tax Tip: You can register for GST, PAYG Withholding other tax registrations the Australian Registration Service, but your tax agent can do this for you to avoid confusion. They will also help make sure that your information and credentials are in order to ease the process.
The details you’ll need to check under your ABN include your authorised contacts, business location, postal address, email address and phone number. Don’t forget to update your business details within 28 days of becoming aware of any changes. If your business has closed down, cancel your ABN so that you’re not contacted unnecessarily.
How To Update Your ABN Details
The fastest way to update your ABN details is by setting up a myGovID and linking it to the Relationship Authorisation Manager (RAM). All changes will take place immediately. You can also contact the ATO, lodge an online form here: https://www.abr.gov.au/contact-us/lodge-form-mail, or simply ask your tax accountant who can arrange the changes quickly and easily.
Changes that can’t be made include changes made to your business name, legal names for individuals and sole traders and legal names for registered companies.
How Long Does It Take To Get An ABN?
In the majority of cases, as soon as you’ve correctly completed your application with all of the relevant and required information and submitted it, you’ll receive a number. If not, the ATO will review your application within 28 business days. If your identity can’t be confirmed or more information is required, they will contact you.
What Is My Registered Business Name?
You can register a business name at the same time as you register for an ABN number. Your business name is the name your business will operate under, such as Cakes Are Us for a bakery. A business name helps your customers relate and remember your business. If you are a sole trader the business name will automatically revert to your individual name if a specific business name is not registered as part of the process.
Pro Tax Tip: It’s a good idea to check for a free domain business name in order to build a web site for your business. Make sure your business name is free from trademarks and copyright to avoid legal problems down the track.
Confirm Your Business Structure
The most common business structure for Australian businesses is operating as a sole trader. It is cheap to set up for most people. Keep in mind there are different taxation implications for each business structure. Your tax accountant can help you work out which business structure works best for you, and if you’re at the point where you need to change your business structure to minimise the tax you’re obligated to pay.
The cost for registering your business name is $37 for one year, or $88 for 3 years. It doesn’t take long to register a business name. You’ll need your ABN and required documents. Once the fee is paid you should get confirmation in 2 business days if paid by credit card or up to 5 business days if paid by BPay, EFT or bank transfer.
How To Cancel Your ABN
If you shut your business, sell your business, no longer operate in Australia or make supplies connected with Australia, you should cancel your ABN. Before you cancel, you’ll need to make sure you meet any tax and BAS lodgements, reporting and payment obligations. You’ll need to cancel your PAYG withholding registration before you cancel your ABN.
You can cancel your ABN using your myGovID through the Relationship Authorisation Manager (RAM). When you cancel your ABN, it will also cancel your goods and services tax (GST) registration, luxury car tax (LCT), wine equalisation tax (WET) and your fuel tax credits (FTC). It will also cancel any authorised relationships between your myGovID and your RAM.
ITP Accounting Professionals work with businesses who wish to set up a business or cancel a business. They’ll check your state or territory requirements and that all lodgement, reporting an payment obligations are met and dealt with. They’ll work with you if your business is insolvent and to minimise risk for your exit strategy or succession plan.