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Benefits of Working Under an ABN: What You Need to Know About ABNs

Every business operating in Australia has to have an ABN (Australian Business Number) – a unique code that identifies your business to the government and the public at large. The ABN application process is pretty straightforward and is a necessary part of setting up a business in the country.

Transacting without one would mean that you’re operating illegally, and that has very real legal consequences. So, you need one to be compliant.

There are several benefits of working under an ABN. This article explores the top 5. Here’s everything you need to know.

Benefits of Working Under an ABN

There are several perks of having an ABN when conducting any sort of business transaction. Here are the top 5 benefits you get.

1. To Help Identify Your Business

Anytime a business or any other legal entity like a non-profit organization or government body registers for an ABN, all its identity information is saved in the Australian Business Register (ABR). This information is important for several reasons.

  • Service delivery – ABN information comes in handy for government agencies when licensing business activities, identifying new businesses, offering support, and promoting new government grants and services
  • Procurement – You can use a company’s ABN information to validate potential suppliers and check if any potential conflicts of interest may arise
  • Planning and development – Government agencies can use this information to identify any changes in business’ growth and work accordingly to establish future strategic plans that meet the ever-changing needs of the community
  • Compliance – Businesses and individuals can use ABNs to validate company details and develop a risk profile on the entity in question
  • Disaster management – It helps to identify the businesses in particular states or territories that have been affected by catastrophic events, as well as those entities that are in a position to offer support and assistance

Direct Benefits to Business Owners

If you’re a business owner, some of the direct benefits of working under an ABN include:

  • It gives you a higher level of confidence in the information you receive from companies you interact with in your day-to-day operations – like suppliers
  • It also offers more in-depth knowledge of and insight into your client base
  • It allows you to use your existing resources more efficiently, therefore, putting you and your business in a better position to serve your community
  • It makes it easier for businesses to identify themselves, which enhances the level of transparency in all your interactions and transactions
  • Online resources like the ABR allow you to validate both your suppliers’ and clients’ ABN details in real-time. That way, you know exactly who you’re dealing with. You can look up the status of a business entity before engaging in any transactions with them
  • It allows you to match and share data using a common identifier, therefore removing the need for your business to collect and maintain data and information on the entities you’re doing business with.

So, you spend more time running your business and less time managing a business database

2. To Avoid Withholding Certain Taxes

Every business operating in Australia needs to have an ABN. You also need to get one if you’re self-employed and display it on invoices for any services delivered. So, if you work in occupations like personal training, fundraising, or carpentry, for instance, you’re going to need one.

Now, unlike a Tax File Number (TFN) where the amount owed in tax is withheld at source, this isn’t the case for an ABN. You would receive full payment of the amount you raised in your invoice. You would then be responsible for meeting your tax liability at the end of the financial year.

The great thing about having an ABN is that you are entitled to a tax-free threshold of up to $18,200 annually. As a result, any income below this amount that you earn from the services you deliver or from the business you run will generally be tax-free.

An ABN also saves you the hassle and nuances involved when withholding tax on your invoices – since you don’t have to.

3. To Claim Tax Credits

If you want to claim a business tax deduction, you need to have an ABN. What most business owners and sole traders may not be aware of is that you can get a tax credit for any expense you incur that’s directly related to the running of your business.

Here are the 3 golden rules for what would constitute a valid business deductible:

  • The expense incurred should have been for your business and not for private purposes
  • If the expense in question were incurred for both business and personal use, you’d need to identify the portion used for your business
  • You’ll need to have to records to back up your claims

In short, you can claim tax credits for capital and/or operating expenses. But, to do this, you’ll need to quote your business’ ABN when filing your returns.

4. To Claim Energy Grant (Credits)

The Energy Grants (Credit) Scheme exists to provide an incentive for businesses and any other entities to embrace the use of cleaner fuels. If your business activities involve the use of diesel fuel, you would have to move to ultra-low sulphur diesel to qualify for the credits.

Keep in mind that your business would need to have an ABN to claim these credits. It is an indicator that your business is registered.

5. To Get an Australian Domain Name

Before you can buy a country code Top Level Domain (ccTLD) like “” or “”, you’re required to register it through a domain registrar accredited by the Australian Domain Name Authority (auDA).

One of the requirements is that your sole trade, registered business, or company needs to have an ABN before you can register for an Australian ccTLD. It tells visitors to your business website that your business is Australian.

Apply for ABN to Reap the Perks

Aside from confirming your business identity to others, and the identity of other entities you transact with, the benefits of working under an ABN certainly trump the risks of not having one.

It gives you access to tax benefits, credits, energy grants, and even lets you register an Australian domain name, making it easier for customers to identify the scope of your business operations. The application process is quick and easy. So, apply for an ABN today to reap all the perks it has to offer.

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