AUSTRALIAN BUSINESS NUMBER (ABN)
It’s best to get an ABN for your business if you are in business. If you don’t, other businesses have to withhold 46.5% from their payments to you.
All businesses need a TFN. Sole traders use their individual TFN. Partnerships, companies and trusts need a separate TFN for the business.
Before you go about applying for an ABN it’s important that you understand what business structure you have or will be operating under (i.e. sole trader, partnership, company or trust) and which registrations you require.
If you plan to run your business through a company structure, you need to register your company with the Australian Securities and Investments Commission (ASIC) who will issue your company with an Australian Company Number (ACN) before you can get your ABN and tax registrations.
When applying for your ABN, you need to request registration for Goods and Services Tax (GST) and Pay as you go withholding (PAYGW) if required as this is not automatic.
GOODS AND SERVICES TAX (GST)
To register for GST, you must already have an ABN. You must register for GST if you are carrying on a business or other enterprise and your current or expected GST turnover is $75,000 or more (for non-profit organisations the threshold is $150,000 or more). If your GST turnover is less than $75,000, registering is optional. If you provide taxi travel, you must register for GST regardless of your turnover. This applies to both owner drivers and people who lease a taxi.
It is your responsibility to register for GST within 21 days if your turnover exceeds the threshold, or is likely to exceed it. If you are not registered for GST, then you cannot charge GST on the goods and services you provide or claim a credit for GST paid on business purchases.
PAY AS YOU GO WITHHOLDING (PAYGW)
You must register for PAYGW if you need to withhold an amount from a payment. The most common payments you need to withhold amounts from are payments you make to your employees, your directors and businesses that do not quote their ABN to you.
If you operate your business structure as a sole trader or a partnership and you draw amounts from the business, this is not a wage and you do not have to withhold from these drawings. You make some provision for your income tax liability through PAYG instalments. However, if you have other employees, you must withhold amounts from payments you make to them under PAYGW.
If you operate your business structure as a company or trust with a corporate trustee, it is likely you are either an employee or director of that business. If the company or corporate trustee pays you a wage or directors fees, it has the same responsibility to withhold amounts from these payments and send the withheld amounts to the Australian Taxation Office (ATO).
Please do not hesitate to contact us in relation to any of the above. We are more than happy to help you with all your registration needs and take the hassle away from you.