Top 4 Benefits Of Being a ABN Holder

4 July 2024

The Top 4 Benefits of Being an ABN Holder

By Jaden Husin

04 July, 2024 | 4 min read

Ever wondered why having an ABN (Australian Business Number) is a game-changer for your business? Beyond being a legal necessity for eligible businesses in Australia, an ABN is your golden ticket to long-term success. From saving big during tax season to unlocking government grants, the benefits are immense. Let’s dive into the top four reasons why having an ABN is crucial for small business owners:

1. Avoid Extra Tax Being Withheld from Your Payments

Imagine losing nearly half of your payments to the tax office just because you didn’t provide an ABN. Sounds harsh, right? If you’re trading with other businesses, having an ABN is essential to prevent your customers from withholding 47% of any payments under the “no ABN withholding rule.” This withheld amount goes straight to the tax office, and you’ll only see it back at tax time, depending on your tax situation. Don’t let this happen to you. Trade with an ABN and keep your hard-earned money where it belongs – in your business.

2. Claim Tax Deductions on Business Expenses

Operating with an ABN means more than just ticking a legal box – it’s about financial freedom. With an ABN, you can claim tax deductions on genuine business expenses and purchases. Think everyday operational costs, inventory, leases, and even interest payments on business finance. When tax season rolls around, these deductible expenses reduce your taxable income, meaning more money saved and more cash in your pocket. It’s not just about compliance; it’s about smart financial management.

3. Benefit from Government Incentives and Grants

Financial support when you need it most – that’s what an ABN can unlock. Whether it’s grants, payment schemes, or rebates, government assistance often requires an ABN. Remember the COVID-19 pandemic? Initiatives like JobKeeper and the SME Loan Guarantee Scheme were lifelines for many, but only available to ABN holders. Future-proof your business and ensure you’re eligible for critical support when disaster strikes by maintaining an ABN.

4. Become Eligible for Finance

Looking to expand, consolidate debt, or purchase new equipment? Lenders want to see your ABN. It helps them assess your financial history and creditworthiness. Without an ABN, you’re forced to apply for loans in your personal name, which means the credit is seen as personal, not for an unregistered business. Secure your business’s financial future with an ABN, and open doors to the funding you need for growth.

Ready to Apply for an ABN?

Before you rush off to get your ABN, it’s crucial to understand how it will impact your personal reporting and tax situation. If you’re running an unregistered business or side hustle, talk to your accountant to see if ABN registration is necessary and how these benefits apply to you.

Ready to take the plunge? The application process is quick and easy, often taking less than 10 minutes. Make sure you have:

Identification of your business structure
Proof of identity
Details of your business activities and associates