The Importance of checking supplier ABNs

The Importance of checking supplier ABNs

It’s not something all businesses do on the regular but it’s a habit we at Figure 8 Accounts are all for embracing- do you rigorously check your suppliers’ Australian Business Numbers (ABNs)? When making any purchase for the business, you should receive a valid tax invoice from the supplier to prove that your purchase is a business expense. Their ABN holds certain information like contact details, business structure and GST registration, so it’s important to ensure you obtain those details so the correct tax codes are used. Come reporting time, we do find small business owners get caught out by this, sometimes resulting in incorrect GST claims on their BAS – i.e. either claiming too much or not enough.

So how do you check a Supplier ABN?

  1. Head to the ABN Lookup website which can be found here
  2. Simply enter the supplier ABN provided on their bill.
  3. Review the current details, including the GST registration date. This will show whether a business is registered and, if so, from what date.
  4. If an ABN has been been canceled, this will also show on the entry
  5. For future reference, it’s a good idea to print and/or save the PDF extract and attach it to the supplier record in your accounting software i.e. Xero

When should you check your supplier ABNs?
As a general rule of thumb, it’s good practice to check the ABNs of all new and major suppliers, particularly those you know are new to business. For any large or unusual payments, it’s almost always recommended to check the ABN for safe practice. The team at Figure 8 Accounts can assist you in determining whether your accounting software may in fact have built-in add-ons that will automatically check the ABNs for you, saving you the hassle (hello automation!). However if using the manual method, you may choose to audit ABNs once per quarter or even once per year for smaller businesses. If you do an annual check, we recommend you do so in the March quarter so you can make any GST adjustments in the June BAS if needed. If you have the opportunity though, the best thing to do is check the ABN of very new supplier as you go and save the details in your software then and there, that way you always have the correct information and tax codes.

And what if the details are wrong?
It’s not uncommon that some suppliers, particularly those new to business, charge GST on their invoices when they are not yet registered for GST. Some suppliers may also mistakenly provide the ABN of another business- case in point, a supplier may conduct business under both a sole trader and company ABN, but provide you with an invoice from the wrong entity. Another common error is to claim GST on purchases made from small overseas businesses that are not registered for GST in Australia. If, once you’ve reviewed your suppliers’ ABNs you find that some have been charging GST in error, simply notify the supplier and ask for a refund of the GST amount, or for a credit to the value of the GST amount incorrectly charged. You must then ask the supplier to reissue a correct tax invoice.

Help- I need to adjust my BAS!
So you’ve corrected the entries in your software; now you will need to make a GST adjustment on your next BAS. Amending prior BAS’ might result in further GST payable, but in some cases it could just as easily result in a refund! This is where things can get tricky and time consuming though – if you have made significant changes over multiple BAS periods, it could prove a challenge to correct the GST. That’s where our friendly team at Figure 8 Accounts can help. If, like most small businesses in the Camden and Macarthur area, you just don’t have the time (nor patience) to conduct an audit of supplier details and/or to pick up the necessary adjustments to GST, contact us to discuss our range of bookkeeping services to help get you back on track. Whether you’re just looking for a little extra help or training, or want an expert bookkeeper to manage everything for you, we’ll work with you in the way that suits you best.