To ensure you are complying with all regulations it is important to know which registrations apply to your business.
The most common registrations required by small business are:
- tax file number (TFN)
- Australian business number (ABN)
- goods and services tax (GST)
- pay as you go (PAYG) withholding
TIP: The ATO video series 'Tax Basics for Small Business' provides practical information to help you understand your tax and super obligations when starting and running your business.
A TFN is a unique nine-digit number issued by the Australian Tax Office (ATO). All entities need a TFN.
If you’re operating your business as sole trader, use your individual TFN for your business and personal dealings with the ATO.
If you’re operating your business through a partnership, company or trust, it will need a separate TFN.
TIP: You can apply for a business TFN when registering for an Australian business number (ABN).
The ATO has more information about registering a TFN.
An ABN is a unique 11-digit number that makes it easier for businesses and all levels of government to interact with you.
TIP: Some organisations advertise to register your ABN for a fee. It is free to apply for an ABN with the Australian Business Register. You can apply online and in most cases your application will be processed immediately. In some circumstances your identity may need to be verified and this may delay the processing of your application.
You will need an ABN to:
- operate in the GST system, including claiming GST credits
- confirm your business identity to others when ordering or invoicing
- avoid pay as you go (PAYG) tax on payments you receive
- get an AUSkey to conduct online transactions with government agencies.
If you don’t register for an ABN, other businesses making payments to you will withhold tax at the top rate of 47 per cent. Similarly, if a supplier does not provide you with their ABN you will need to withhold 47 per cent from their payment unless they provide you with a statement by a supplier form.
TIP: To apply to register a business name you will need to have applied for, or already have, an ABN.
If you plan to run your business through a company, you need to register it with the Australian Investments and Securities Commission (ASIC) and obtain an Australian company number (ACN), before you can get your ABN and tax registrations.
AUSkey is a secure login that lets you access and transact online with many government agencies.
With an AUSkey you can access the ATO Business Portal to:
- lodge your business activity statements
- check your tax account balance and update your registration details
- add or cancel registrations for GST and PAYG withholding.
You can register for an AUSkey during or after the ABN application.
The ATO has more information about registering an ABN and AUSkey.
GST is a tax applied to most goods, services and other items sold or consumed in Australia. The current GST rate is 10 per cent.
You need to register for GST if your business:
- has a current or projected turnover of $75,000 or over
- provides taxi travel
- wants to claim fuel tax credits.
If you are not registered for GST you will need to check each month if you have reached the threshold. If your turnover exceeds the threshold you need to register within 21 days of reaching it.
TIP: You can register for GST when you first register your business or at a later date.
It is a good idea to register for GST even if your turnover has not yet reached the threshold. The advantages of being registered include:
- Claiming GST credits for any GST you have paid on goods and services used in your business.
- Eliminating the risk of upsetting clients with an unexpected price rise; to maintain net profit margins, you will need to increase your prices by the GST percentage when your turnover reaches the threshold.
- You will not need to monitor your turnover each month to determine whether you are likely to reach or exceed the threshold.
The ATO has more information about registering for GST.
When you pay employees or contractors you may need to withhold tax from their pay to send to the ATO. PAYG withholding ensures employees and businesses can meet their end-of-year tax liabilities.
These can include payments you make to:
- employees, company directors and office holders
- businesses that do not quote their ABN
- individuals under labour hire arrangement
- contractors who have a voluntary agreement with you
- employees on termination of their employment.
If you operate your business as a sole trader or partnership and draw cash from the business, this is not a wage and you do not have to withhold tax from these drawings. You need to make provision for your income tax liability through PAYG instalments, or consider a separate savings account.
You must register for PAYG withholding before being required to withhold an amount from a payment.
TIP: You can register for PAYG withholding when you register for an ABN or at a later date.
The ATO has more information about registering for PAYG withholding.