Home – New Forums Starting your journey Confusion regarding ABN / Business Name – basic query

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  • #995533
    marty085
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    Hi there,

    I’d love some help as I’m confused on a basic principle of sole trading.

    I have a decade’s experience in my particular professional field including some time working as a consultant for a private firm. I work in government currently. I’m considering starting out doing some private work on the side with a view to ramping up work gradually (if successful) and running my own self sufficient consultancy at some stage in the future.

    The private work can be done at home on my computer outside my regular work hours. There are very little overheads (electricity, a little petrol perhaps and some brain power, basically). It is mostly report based, i.e. analysing a situation and providing a detailed report to the client with a turnaround time generally of 5 – 14 days.

    My confusion arises around ABNs and Business Names and the old “Which one first: chicken or the egg” riddle. My problem is as follows:

    1. To register a business name, I need to have an ABN. I don’t yet.

    2. To obtain an ABN, I need to have commenced my business, or undertaken “commencement activities”.

    3. I haven’t commenced my business as there is very little to commence apart from advertising and trying to land my first client.

    4. I haven’t advertised yet as I don’t know how to advertise until I have a business name.

    See my dilemma?

    Should I look at the business names that are currently available, advertise my services using an available name, land my first client (however small) and only then apply for an ABN and hope the business name I adopted is still available? I am far more likely to get my first client (however small it is) if I have a business name. Or am I limited to advertising my services as simply “Services” (e.g. “Plumbing”) or using my own personal name (e.g. “John Smith Plumbing”). (Obviously I’m not a plumber with those overheads I mentioned.)

    Your help is appreciated.

    #1202416
    Paul – FS Concierge
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    Hi And Welcome to the Forums. It is great to have you!

    Sounds like a good plan marty085,- testing the waters before diving in.

    Short of speaking to an accountant, you can call the ATO for an answer.

    Cheers

    #1202417
    Mischelle
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    marty085, post: 240059, member: 87229 wrote:
    Should I look at the business names that are currently available, advertise my services using an available name, land my first client (however small) and only then apply for an ABN and hope the business name I adopted is still available? I am far more likely to get my first client (however small it is) if I have a business name. Or am I limited to advertising my services as simply “Services” (e.g. “Plumbing”) or using my own personal name (e.g. “John Smith Plumbing”). (Obviously I’m not a plumber with those overheads I mentioned.)
    Your help is appreciated.

    Hi Marty,

    For your first option you run the risk of having to change names later and redo any marketing material, new social media accounts etc if you haven’t secured the name and someone else takes it.

    Or am I limited to advertising my services as simply “Services” (e.g. “Plumbing”) or using my own personal name (e.g. “John Smith Plumbing”).

    You can operate under your own name without registration, but not if you use addon’s to your name EG “John Smith Plumbing” that must be registered, only your name can be used, not names with “Services, Plumbing etc.” BUT I am not an accountant and talking to one is always recommended.

    Either way if you want a business name you have to get an ABN first, and all your marketing can be deemed as activity.

    I think you need to weigh up your options and I think research into your market is needed to give you the confidence to make the leap of registration.

    WHEN I FIRST STARTED:

    When I first moved to the big bad world of consulting, I did it via my name only, not a business name, I got a client through talking to people in and around my industry and securing the fact there was a need in the market for my services, after all of that I went a created a Company (I didn’t go down the Sole Trader route) then I started the advertising etc etc.

    So either take the risk or take the leap :)

    #1202418
    JacquiPryor
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    ABN first, and then business name if you are going to trade by something other than your own name. As you noted, the business name registration asks you for your ABN.

    I would suggest you probably have undertaken commencement activities :) They can include:

    • consulting with financial or business advisors
    • completing a business plan and/or financial projections
    • applying for finance
    • conducting feasibility studies
    • leasing or purchasing premises or equipment for the business
    • obtaining licences to operate
    • advertising your business.

    There is no single test for the ABN, but I would suggest most people branching out as sole traders have completed some commencement activities – perhaps without realising. Further, when you look at what they define as being an enteprise (such that you require an ABN and are eligible for one) it includes the following

    • is a significant commercial activity
    • there is an intention to make a profit from the activity
    • the activity isn’t a hobby
    • repetition of the activity
    • commercial sales of products
    • a business plan exists
    • the activities are organised and carried on in a businesslike manner and records are kept
    • the activities are of a reasonable size and scale
    • the entity has relevant knowledge or skill.

    From your post it sounds like there’s an intention to make a profit, it won’t be a hoby there will be repetition of the activity etc.

    Noting the above is for information purposes and is not legal advice, I would suggest you are eligible for an ABN, and as such can then register your business name assuming available and free to use.

    All the best :)

    #1202419
    Divert To Mobile
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    Hi Marty,

    ABN first, business name second.
    Provided your intent is to start trading, any preparation or activity including your question on the forum is commencement of activities.

    Best of luck and welcome to the forum,

    Steve

    #1202420
    Mischelle
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    Opps, I missed a big part, my bad :)

    Get the ABN first and as Steve said you are intending to start activities. Activities include your website, social media, marketing etc etc

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