ABN vs ACN: What's the Difference and When Do You Need Each?

Published 28 March 2026 · 7 min read

Starting a business in Australia means navigating a maze of numbers, registrations, and government acronyms. Two of the most commonly confused are the ABN (Australian Business Number) and the ACN (Australian Company Number). While they might look similar and both relate to business identification, they serve completely different purposes. Understanding which one you need — and when — can save you from compliance headaches, missed tax deductions, and even penalties from the ATO or ASIC. Here's everything you need to know about ABN vs ACN in FY 2025-26.

What Is an ABN?

An Australian Business Number (ABN) is an 11-digit unique identifier issued by the Australian Business Register (ABR). It's used to identify your business to the government, other businesses, and the community. Think of it as your business's tax file number — it's how the ATO tracks your business activities, GST obligations, and tax returns.

Nearly every business operating in Australia needs an ABN. This includes sole traders, partnerships, trusts, and companies. Without an ABN, other businesses must withhold 47% of any payments they make to you (the highest marginal tax rate). You'll also struggle to claim GST credits, register a business name, or get an Australian domain name (.com.au). For individuals calculating their take-home pay as freelancers or contractors, having an ABN is essential for proper tax treatment.

Your ABN stays with you for the life of your business, even if your structure changes or you operate multiple businesses under the same entity. It's free to apply for and relatively straightforward to obtain through the Australian Business Register website — provided you have a legitimate business purpose.

What Is an ACN?

An Australian Company Number (ACN) is a 9-digit unique identifier issued by the Australian Securities and Investments Commission (ASIC) when you register a company. Unlike an ABN, which applies to all business structures, an ACN is only for companies — specifically, those registered under the Corporations Act 2001.

When you form a proprietary limited company (Pty Ltd), a public company, or any other corporate structure, ASIC automatically assigns you an ACN. This number must appear on all company documents, including letterheads, invoices, receipts, and public notices. It identifies your company as a separate legal entity, distinct from its directors and shareholders.

Importantly, if you operate as a company, you need both an ACN and an ABN. The ACN identifies your company structure, while the ABN handles your tax and GST obligations with the ATO. You cannot conduct business as a registered company without both numbers.

Key Differences: ABN vs ACN at a Glance

The distinctions between these two numbers are crucial for compliance and understanding your business obligations. Here's a side-by-side comparison:

As you can see, while both numbers identify your business, they serve fundamentally different regulatory purposes. The ABN is tax-focused and applies universally, while the ACN is corporate-focused and company-specific.

When Do You Need an ABN?

You need an ABN if you're conducting any business activity in Australia. This includes selling goods or services, operating as a contractor or freelancer, running a side hustle, or even running a not-for-profit organisation. The ATO considers you to be "carrying on a business" if your activity is regular, has a profit motive, and follows business-like practices such as keeping records and having an ABN.

Here are the most common scenarios where you absolutely need an ABN:

• Freelancing or contracting: If you provide services to clients as an independent contractor rather than an employee, you need an ABN to avoid having 47% withheld from your payments.
• Starting a side business: Whether you're selling handmade goods, consulting, or driving for rideshare apps, an ABN is your first step.
• Registering for GST: If your turnover exceeds $75,000 per year, you must register for GST — and you need an ABN first.
• Claiming business expenses: To deduct business expenses from your taxable income, you need to operate under an ABN.

Having an ABN also allows you to register for other tax obligations like HECS-HELP repayments if you're a sole trader with a student loan, or set up salary sacrifice arrangements if you employ staff. For employees, understanding how ABN arrangements differ from standard PAYG employment helps you verify your correct take-home pay calculations.

When Do You Need an ACN?

You only need an ACN if you're registering a company. In Australia, a "company" is a specific legal structure where the business is a separate legal entity from its owners. This contrasts with sole traders (where you and the business are the same legal entity) and partnerships (where two or more people share ownership personally).

Choosing to register a company — and therefore obtain an ACN — makes sense in several scenarios:

• Limited liability protection: A company structure limits your personal liability. If the business fails or faces legal action, your personal assets (home, savings) are generally protected — only the company's assets are at risk.
• Tax efficiency at higher incomes: For FY 2025-26, the company tax rate is 25% for base rate entities, which can be more efficient than individual marginal rates of 30%, 37%, or 45% once your personal income exceeds $135,000.
• Raising capital: Companies can issue shares to investors, making it easier to raise funds for growth.
• Business succession: A company continues to exist even if directors or shareholders change, making it easier to sell or transfer ownership.
• Professional credibility: Some clients and industries prefer or require dealing with incorporated entities.

Remember: if you register a company, you need both an ACN and an ABN. The ACN comes first when you incorporate with ASIC, then you use that ACN to apply for an ABN through the ABR. Your ABN will actually include your ACN as its last 9 digits, making the connection between the two numbers clear.

Tax Implications: How Your Choice Affects Your Obligations

Your decision to operate under just an ABN (as a sole trader or partnership) or to also obtain an ACN (as a company) has significant tax implications for FY 2025-26.

As a sole trader with just an ABN, your business income is taxed at your personal marginal rates. The Stage 3 Tax Cuts mean that for FY 2025-26, you'll pay 16% on income between $18,201–$45,000, 30% on $45,001–$135,000, 37% on $135,001–$190,000, and 45% above $190,000. You can use our income tax calculator to see exactly how much tax you'll owe at different income levels. You'll also pay the 2% Medicare levy and potentially the Medicare Levy Surcharge if your income exceeds thresholds and you don't have private health insurance.

As a company with an ACN, your business pays a flat 25% tax rate (for base rate entities with turnover under $50 million). However, getting money out of the company — whether as salary, dividends, or loans — creates additional tax complexities. If you pay yourself a salary, the company claims a deduction and you pay personal income tax. If you take dividends, the company has already paid 25% tax, and you may receive franking credits to offset your personal tax liability.

Companies also have ongoing compliance obligations with ASIC, including annual reviews and fee payments (currently $290 per year), plus more complex accounting requirements. For many small businesses, the costs and complexity of a company structure outweigh the benefits until annual profits consistently exceed $100,000–$150,000.

Superannuation Considerations

Your business structure also affects how superannuation works for you. As a sole trader with just an ABN, you're not required to make super contributions for yourself — though it's strongly recommended for your retirement savings. You can make voluntary personal contributions and claim a tax deduction for them.

As a company director, if you pay yourself a salary, the company must make Superannuation Guarantee contributions just as any employer would. For FY 2025-26, this means contributing 12% of your ordinary time earnings into your super fund. These contributions are tax-deductible to the company but taxed at 15% within your super fund — still more favourable than most personal marginal rates.

Summary: Which Do You Need?

Here's the simple breakdown for FY 2025-26:

• Operating as a sole trader, partnership, or trust: You need an ABN only. No ACN required.
• Operating as a registered company (Pty Ltd): You need BOTH an ACN and an ABN.
• Working as an employee: You don't need either — your employer handles tax through PAYG withholding.
• Freelancing or contracting: You need an ABN to avoid payment withholding and claim business expenses.

Choosing the right structure — and understanding which numbers you need — is foundational to your business success. An ABN is the minimum requirement for anyone doing business in Australia, while an ACN represents a step up to a more formal, regulated company structure with greater protection but also greater compliance obligations.

Still unsure which structure is right for you? Consider speaking with a registered tax agent or business advisor who can assess your specific circumstances. And whether you're an employee, sole trader, or company director, use our suite of calculators — including take-home pay, income tax, superannuation, and salary sacrifice — to plan your financial future with confidence.