One of the most common questions I get is whether you need another ABN to start a second business. Since people who start side businesses often like to get involved in multiple projects, this is a very common scenario.
The simple answer is: It depends on the underlying structure of how you are running your various businesses.
If you run everything as a sole trader do you need another ABN?
As an individual you can only have one ABN. When you start a business you register for an ABN that is associated with you as an individual. You then use this ABN to run your business.
If you decide to run a second business as a sole trader you do not need to get another ABN. You use your existing ABN. This is because an ABN is attached the legal entity (you) and not the business itself.
However, if you are running multiple businesses as a sole trader you should still treat these businesses separately. This means you should still:
- Register the trading name (if required) for each business separately.
- Run your bookkeeping data for each business separately (or at least in a way where you can easily distinguish the two in your reports).
- Have a separate bank account for each business
- Track logs and records for each business so you can ensure expenses are appropriately apportioned
Can you run mulitple businesses under the same ABN?
Yes. The simple answer is that an ABN is attached to the legal entity running the business. A legal entity can only have one ABN as the ABN is an identifier for the legal entity. However a legal entity can run multiple businesses. There is no specific limit on the number of businesses an entity (such as yourself) can run.
Let’s reiterare: When do you need another ABN to run multiple businesses?
The Answer: If you are setting up a new entity to run the new business.
If you set up a company or trust do you need another ABN?
If you are running a business as a sole trader and decide to set up a new business under a trust, partnership or company structure then you are creating a new legal entity.
Each legal entity requires its own ABN.
Your personal ABN can be used to run multiple businesses.
However if you set up a trust, a partnership or a company, then you are setting up a new entity. This new entity will need its own ABN in order to run a business.
Whether the entity running the business is you as a sole trader, a partnership, a trust, or a company, it only has one ABN. However, it can run multiple businesses under that ABN.
Keeping It Clear
Running multiple businesses can be tricky. Even if they are micro businesses. Make sure you do your homework before you set up. Ideally you should get a professional tax accountant to help run over your options, set you up, and point you in the direction. This is ideal even if you want to do your own bookkeeping.
For more information see your local accountant or contact an online agent such as R & R Tax Services.
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