If you have ever read any business documentation before it is likely you have come across the terms ‘Australian Business Numbers’ (‘ABN’) and Australian Company Number (‘ACN’).
Although these terms appear similar, they are distinct identification numbers and reveal different legal obligations.
What is an ABN?
An ABN is a 11-digit number issued to all entities registered in the Australian Business Register. Issued by the ATO, all businesses, irrespective of size or corporate structure, are required to have a registered ABN. This includes sole traders, companies, trusts, and partnerships.
The benefit of having an ABN is that an ABN is unique to each business and therefore serves as a useful identification tool. This is particularly so since ABNs must be displayed on all business correspondence. An ABN also reveals a business’s status, with ABNs listed as either ‘active’ or ‘cancelled’. A cancelled status indicates that the business has ceased trading.
What is an ACN?
An ACN is a 9-digit number issued to all companies. ASIC issues an ACN when a body becomes registered as a company under Corporations Law. As with an ABN, a company’s ACN must be displayed on all business correspondence.
A company is different to a business. A company is a legally separate entity, distinct from its owners (shareholders) and managed by directors. Importantly, a company which conducts business activities will have both an ACN and ABN.
Like an ABN, an ACN is a useful identification tool which allows shareholders, suppliers and consumers identify a particular company.
Although they appear similar, ABNs and ACNs are two distinct identification numbers carrying vastly different obligations.
An awareness of the difference between theses two acronyms will serve useful in understanding business documentations but also, in ensuring that businesses and companies fulfil their respective legal obligations.