Do I need an abn?
On ABNs: Hi Cindy. I have been asked to do some consultancy work but I have no previous consultancy experience. I presume I would need an ABN but do I also need to register a company name?
ABNs, company names and a business names are different things
Let’s start at the beginning.
There are 3 different things in this question: ABNs, company names and business name
1. Do I need an ABN
ABN stands for Australian Business Number. It identifies you (or your business) as someone who collects GST (and in some cases can claim the GST paid for the business against the GST collected).
2. Do I need a Company name
Company names exist only for companies, not for people. A company will cost you around $1k in Australia and it’s a tax and legal entity. If you get a Pty Ltd company then you’ll need to do a separate tax return for the company than for you. If you work with a business name that you own personally then that’s not the case.
Find out more about setting up a Pty Ltd at the ASIC site here.
3. Do I need a Business name
People (or companies) can own business names. You can buy one for around $100 here. It takes about ten minutes.
You may not need a Company, but you will need an ABN
You may not need a company or a business name, but you will need an ABN to charge your client. If you need a Pty Ltd company the client will let you know.
You can get an ABN for you personally, or for your business/company. Go here to read more and get one. If you get an ABN for you personally, you don’t need a business name. But if you’re going to do both a business name and an ABN then get the business name first.
If you need a company quickly
If you do need a Pty Ltd structure straight away and don’t have time to make one (or can’t justify the expense of creating and maintaining one) then you have the option of working through an agency like CXC*, who will handle the tax, workers compensation and a few other things for you, so that you can concentrate on doing what you’re best at.
Rob Armstrong at contractright.com.au* tells me that there is more to it than this. It’s complex and depends on what you do for whom and for how much. If you want to be absolutely certain his first consultation is free.
Other tax-like things you need to understand are Withholding Tax, GST, Professional Indemnity, Public Liability and Workers Compensation. The liability is different based on whether you have a Pty Ltd or an ABN/Business name.
Talk to your accountant and your lawyer. Or get one! I’m not an accountant or a lawyer, this is based purely on my own experience.
I talk about this more in book 3: It’s Official! Set up your Australian Consultancy Profitably and Painlessly.
*That’s not an affiliate link: if you are a company that does this, then please let me know and I’ll plug you too!