What’s the Difference Between an ABN and ACN?

April 2, 2026 admin

If you’re starting a business in Australia, you’ve probably come across ABN and ACN and wondered if they’re basically the same thing.

They’re not.

Understanding the difference between ABN and ACN isn’t just about definitions. It actually affects how you register your business, how you pay tax, and even how seriously customers take you.

A lot of new business owners get this wrong at the beginning. The good news? Once you break it down, it’s pretty straightforward.

What is an ABN (Australian Business Number)

An ABN is an 11-digit number that identifies your business to the government and other businesses.

You’ll need it if you’re earning income outside of regular employment whether that’s freelancing, running a small business, or contracting.

Think of it as your business identity for tax and invoicing.

When you typically need an ABN:

You’re working as a sole trader
You send invoices to clients
You want to register for GST
You want to avoid extra tax being withheld

If you’re operating solo, your income is taxed under sole trader tax rates, which is why having an ABN becomes essential early on.

What is an ACN (Australian Company Number)?

An ACN is different. It’s only for companies.

It’s a 9-digit number given to you when you register a company in Australia. This number proves that your business is officially recognised as a separate legal entity.

That’s the key difference companies are legally separate from their owners, while sole traders are not.

You’ll need an ACN if:

You register a Pvt Ltd company
You want limited liability protection
You’re operating as a formal company structure

This is where many people speak with a company tax accountant before deciding, because the structure changes how you’re taxed and managed.

Key Differences Between ABN and ACN

Here’s a simple way to understand the difference between ABN and ACN:

Feature	ABN (Australian Business Number)	ACN (Australian Company Number)
Number Length	11 digits	9 digits
Issued By	Australian Business Register (ABR)	ASIC
Who Needs It	All business types	Companies only
Purpose	Tax identification	Legal company ID
Usage	Invoices, GST	Legal documents

Do You Need an ABN, ACN, or Both?

This depends entirely on how your business is set up.

Sole trader → ABN only
Partnership → ABN only
Company → ABN + ACN

If you’re unsure which way to go, many people consult a tax accountant perth or business tax accountant perth before registering. It’s much easier to set things up correctly from the start than fix them later.

How ABN and ACN Work Together

If you run a company, your ABN is actually linked to your ACN.

In most cases, the ABN includes your ACN within it. That’s why you’ll often see both used together on invoices and official documents.

It helps connect your legal identity (ACN) with your tax identity (ABN).

Where Are ABN and ACN Used?

You’ll use them in different situations.

ABN is used when:

Sending invoices
Dealing with GST
Working with clients
Reporting income

ACN is used when:

Signing legal agreements
Registering company details
Lodging documents
Meeting compliance requirements

In more complex situations like handling tax returns after death having the correct business identifiers becomes even more important.

How to Apply for an ABN in Australia

Getting an ABN is usually quick.

You apply online, provide your details, and often receive it straight away.

Basic steps:

Fill out your business details
Confirm your identity
Submit your application

There’s no cost, which makes it easy for new business owners to get started.

How to Register for an ACN

Registering a company is a bit more involved.

You’ll need to:

Choose a company name
Decide on directors and structure
Register the company

Once approved, you’ll receive your ACN.

This is where many business owners pause and get advice, because once a company is set up, there are ongoing responsibilities.

Common Mistakes Business Owners Make

A lot of people misunderstand the difference between ABN and ACN, especially early on.

Here are some common issues:

Thinking ABN and ACN are interchangeable
Starting as a sole trader when a company would be better
Not registering for GST on time
Mixing personal and business finances
Not getting professional advice early

These mistakes can cost time and money later.

ABN vs ACN: Which One is Right for Your Business?

There’s no one-size-fits-all answer.

ABN works best if:

You’re just starting out
You want a simple setup
Your income is still growing

ACN (company) works best if:

You want to scale
You need legal protection
You plan to hire or expand

Your decision should depend on your long-term plans, not just what’s easiest right now.

Conclusion

The difference between ABN and ACN is simple: an ABN is used for tax and business activities, while an ACN is used to identify a registered company. All companies need both, but other business structures usually only require an ABN. Understanding this helps ensure compliance and smoother business operations.

FAQs

Q. Can I start a business with just an ABN?

A. Yes, if you’re a sole trader or in a partnership.

Q. Do all companies need an ACN?

A. Yes, it’s mandatory when registering a company.

Q. Is it expensive to get an ABN?

A. No, it’s free.

Q. Can I switch from ABN to ACN later?

A. Yes, but it requires setting up a company structure.

Q. Which option is better for tax?

A. It depends on income and goals. Sole traders follow sole trader tax rates, while companies have different tax rules.

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