Home – New Forums Starting your journey Advice on 2 Businesses – 1ABN or 1ACN etc.?

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  • #986251
    TravisT
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    Hi all,

    I am seeking advice as to the best option for starting two small businesses in the fast food industry selling completely different products. For example, is my best option to have 1 ABN and register 2 different business names ? (Am I even allowed to do that?). As far as I’m aware I can operate one business without an ACN and under an ABN just by registering the business name as its a small business? Also, if I can run 2 businesses under the one ABN what are my tax implications etc. or is my only option to register a company and then am I able to run two businesses under the one company? etc.

    If it helps the annual turnover for each business will be approximately $250,000.

    I understand that this is a very broad question so any information on this topic is muchly appreciated.

    Thanks,

    Travis

    #1156984
    JacquiPryor
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    Hi Travis,

    I hope I can offer some ‘food for thought’

    For example, is my best option to have 1 ABN and register 2 different business names ? (Am I even allowed to do that?). As far as I’m aware I can operate one business without an ACN and under an ABN just by registering the business name as its a small business?

    Yes, you are allowed to do that.
    The ABN belongs to the legal entity trading the businesses. This could be (for example) you as a sole trader – where you would personally hold the ABN, and then register the business names in your name, attached to that ABN – or, it could be that you register a company (for example – a Pty Ltd company that then gets the ACN) and then the ABN belongs to that Pty Ltd company and it would register the business names in its name and attach to that single ABN.

    Which is ‘best’ might be a question for your accountant, as they would need to take into consideration all of your personal circumstances to determine the best structure for you. Operating as a sole trader, with your own ABN means YOU are the legal entity; a business name is not an entity – more like an alias for whoever is carrying on the business.

    In either scenario above, attaching the two businesses to the one ABN means its just one ‘entity’ that’s trading, so effectively one entity to file a tax return for the businesses etc. You could run separate accounts in your own bookkeeping to track the businesses but they’ll all come together at tax time.

    Also, if I can run 2 businesses under the one ABN what are my tax implications etc. or is my only option to register a company and then am I able to run two businesses under the one company? etc.

    The tax implications will vary depending on who owns the ABN and therefore who owns the businesses. Company tax rates are different to personal tax rates. (I believe companies are taxed at 30% of net profits at the end of the financial year). It’s important to understand that ACN and ABN are two different things; even if you go the company route it will still need its own ABN. Ultimately any business income/expenses etc will track back to the relevant ABN whether owned by you or a company.

    Again, your accountant will be able to help you figure out, from the tax perspective which structure will be best for you and your businesses.

    If you wanted to keep the businesses separate you’d need two trading entities – for example, two separate Pty Ltd companies that each have their own ABN and then they’d operate quite independently of one another.

    If it helps the annual turnover for each business will be approximately $250,000.

    You will also then need to register for GST, which again links to your ABN. Once your gross turnover is 75k or more you need to register for GST. So, whether you operate both on the one ABN or register as entirely separate entities with different ABNs you will need to register if this is your turnover.

    Hope this helps :)

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