Why We Ask for Supplier ABNs – and Why Getting Them Right Matters
If you have ever wondered why your bookkeeper asks for an ABN, a copy of an invoice, or clarification about a supplier, there is a good reason.
Supplier information is not just administrative detail. It plays an important role in making sure your bookkeeping records are accurate, GST is treated correctly, and your BAS is prepared using reliable information.
At Love Bookkeeping, we are continuing to strengthen the checks we complete as part of our bookkeeping and BAS review processes. This means you may occasionally notice us asking for more information about a supplier than we have in the past.
Here is why.
What is an ABN?
An Australian Business Number, or ABN, is an 11-digit number used to identify a business or organisation.
Most Australian businesses that supply goods or services will quote their ABN on their invoice or another document relating to the supply.
For bookkeeping purposes, having the correct ABN helps us confirm that the supplier recorded in your accounting system is the same entity that actually supplied the goods or services.
This becomes particularly important where supplier names, trading names and legal entity names are different.
For example, you may know a business by its trading name, while its ABN is registered to a company or individual with a completely different legal name.
That does not necessarily mean anything is wrong, but it does mean we sometimes need to check.
Why do we check supplier ABNs?
There are several reasons.
1. To confirm we have the correct supplier
An ABN gives us another way to verify who you are actually dealing with.
Sometimes invoices contain:
an incorrect ABN
an ABN belonging to a different business
an old or cancelled ABN
supplier details that do not match the entity attached to the ABN.
The ATO recommends checking an ABN where the details provided do not appear to match the supplier or the supply being made.
Keeping accurate supplier details in Xero also helps reduce duplicate contacts and makes future bookkeeping much cleaner.
2. To check whether the supplier is registered for GST
Having an ABN does not automatically mean a supplier is registered for GST.
This is an important distinction.
If a supplier is not registered for GST, they generally should not be charging GST. If they are registered, GST may apply depending on the type of supply.
ABN Lookup allows us to check both the supplier's ABN and their GST registration status.
This matters because businesses can generally only claim GST credits where the relevant requirements are met. The ATO also recommends checking that suppliers are registered for GST before claiming GST credits.
In other words, we do not want to assume that GST is claimable simply because an invoice has been entered into Xero with GST attached.
3. To help us prepare an accurate BAS
Your BAS relies heavily on the underlying transactions recorded in your bookkeeping software.
If GST has been claimed incorrectly on supplier purchases, those errors can flow through to the BAS.
A small error on one transaction may not look significant, but repeated errors across many suppliers or transactions can add up.
Good supplier information helps us check that:
the supplier is legitimate
the ABN is correct
the supplier's GST registration status is appropriate or has not changed since the previous BAS
GST has been treated correctly
transactions are being recorded consistently.
This is one of the reasons accurate bookkeeping involves more than simply coding transactions.
What happens if a supplier does not have an ABN?
Not every payment without an ABN is automatically a problem.
There are legitimate circumstances where a supplier may not be required to quote an ABN.
For example, this can sometimes apply where a supply is made:
as a private or hobby activity
by certain non-residents
in circumstances where the supplier is not carrying on an enterprise in Australia
in other situations covered by the ATO's exclusions.
Where an ABN is not required, the supplier may be able to provide a Statement by a Supplier explaining why they have not quoted one.
This is why, if we see a supplier without an ABN, we may ask you for some additional information rather than simply assuming there is an error.
What if a supplier should have an ABN but does not provide one?
This is where things become more important.
If a supplier should quote an ABN but does not, there can be withholding obligations.
Generally, where a business pays more than $75 excluding GST for goods or services and the supplier has not quoted an ABN, tax may need to be withheld from the payment unless an exception applies.
There are a number of exceptions and every situation can be different, which is why we may ask questions rather than making assumptions.
The important point is that a missing ABN is not always something that should simply be ignored.
What about overseas suppliers?
Overseas suppliers are another common example.
A genuine overseas supplier may not need an Australian ABN, particularly where they are not carrying on an enterprise in Australia.
So if we see an overseas supplier without an ABN, that does not automatically mean anything is wrong.
We may simply need to identify that supplier correctly in your records so that we do not repeatedly ask you for an ABN that they are not required to have.
This is also why it helps us to know when a supplier is genuinely overseas rather than simply having incomplete information recorded in Xero.
Why might Love Bookkeeping start asking you more questions?
As part of our ongoing quality-control and BAS review processes, we are becoming more systematic about checking supplier information.
You may therefore receive questions from us such as:
Do you have an ABN for this supplier?
Can you please send us the supplier invoice?
Is this an overseas supplier?
Do you know why this supplier does not have an ABN?
Can you confirm which business this payment relates to?
Can you obtain a Statement by a Supplier?
We appreciate that these questions can sometimes feel like extra administration.
However, the purpose is not to create work for you.
It is to make sure we have enough information to correctly treat the transaction and maintain accurate records for your business.
And once we have correctly identified a supplier, we can generally record that information so the same question does not need to be asked every time they appear.
What can you do to make this easier?
The simplest thing you can do is provide complete supplier documentation wherever possible.
Ideally, supplier invoices should clearly show:
the supplier's name
ABN, where applicable
invoice date
description of what was purchased
amount paid
GST information where relevant.
It is also helpful to let us know if a supplier is unusual — for example, an overseas business, a private individual or someone who has told you they do not require an ABN.
A little information upfront can save a lot of investigation later.
Better information means better bookkeeping
Accurate supplier records may seem like a small part of bookkeeping, but they support something much bigger: reliable financial records and accurate BAS reporting.
The more complete the information we have, the more effectively we can check your accounts, identify potential errors and make sure GST is being treated appropriately.
So, if the Love Bookkeeping team asks you for an ABN or some additional information about a supplier, there is usually more behind the question than simply filling in a blank field in Xero.
It is part of making sure your bookkeeping is accurate, your records are reliable, and your BAS is based on information we are comfortable standing behind.
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