Dec 16, 2022
What’s the Difference Between a TFN and an ABN?
If you live in Australia, you will likely have heard of an ABN and a TFN, and you probably even have personal experience with one or both. But you may not know the finer details of when each is needed (and what they are needed for).
So let’s dive in to discover the difference between a TFN and an ABN. And when you might need each.
What’s the Difference Between a TFN and an ABN
Most adults in Australia will be earning an income. For some of us that might be as employees of a company. For others, it might be as the owner of our own businesses. And this is one of the essential differences between a TFN and an ABN.
What is a TFN?
A tax file number, or TFN, is the number that’s assigned by the Australian Taxation Office (ATO) to individuals. You then use this number to pay tax. In fact, this number is required for any person working in Australia.
You will normally apply for a TFN, which will stay with you for life, when you get your first job. When you begin working you’ll give this number to your employer who can then deduct tax from your income. Of course, if you’re starting your own business as your first income-earning job, you can certainly apply for a TFN on your own (and we can help!).
What is an ABN?
ABN stands for Australian Business Number and to operate a business in Australia, you must have an ABN. It’s a unique 11-digit number that is assigned to a business (as opposed to an individual). While the ATO says that you don’t have to apply for an ABN unless your annual turnover is expected to reach $75K, the reality is that if you want to issue tax invoices (and most businesses will), it’s a requirement that you include an ABN. So the practical result is that most businesses will need to register for an ABN.
You should apply for an ABN before you begin running a business or other enterprise. And if you run your business as a company, you will also need an ACN.
Read more: How to Set Up An ABN
When can you use your existing TFN for your business?
If you run your business as a sole trader, you can use your current TFN for tax purposes. But if you enter into a partnership, or have a company, then that separate entity will have its own TFN.
Can you use an existing ABN for a new business?
If you’ve already got an ABN as a sole trader or a partnership, you’ll need to apply for a new ABN if you want to start a new company. Because it’s a separate entity, it needs a separate ABN.
Let’s Get Started
Now that you know the difference between a TFN and an ABN, it’s time to get started. At Easy Companies we can help you register for an ABN, an ACN or even a TFN. Our online form is easy and quick to fill out, and our expert team is ready to help you get started! Get in touch today.
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