Employer Identification Number for a Sole Proprietor

A sole proprietor must have a federal Employer Identification Number if any of the following apply:

  • You have one or more employees. A sole proprietor is not an employee of his/her own business.
  • You file pension tax returns
  • You file excise tax returns (e.g., alcohol, tobacco, or firearms)
  • You change your form of business. For example, from a sole proprietorship to an LLC or corporation.

Where to Get Your Employer Identification Number

You can apply for an employer identification number (EIN) online; it takes about 15 minutes.

If you're a sole proprietor (Schedule C or F filer) and none of the situations in the above list applies, you can use your social security number on your federal tax forms. However, it may be a good idea to get an employer identification number (EIN) in your own name as a sole proprietor.

Tip: Because of the increase in identity fraud, as a sole proprietor it's a good idea to get a Federal Employer Identification Number even if you don't need one for federal income tax purposes. The main reason for this is protection against identity theft.

For example, if you must issue Form 1099-MISC to independent contractors that you hired during the year, you would enter your Federal Employer Identification Number on Form 1099-MISC in the payer's box instead of your Social Security Number.

Form 1099-MISC must be provided to any independent contractor you pay $600 or more during the tax year.

A Word About Schedule C and Employer Identification Numbers

If you have an EIN in your own name as a sole proprietor, enter this number on Schedule C, line D. If you don't have such an EIN, leave line D blank and just enter your social security number of Schedule C.

If you're the sole owner of a single-member LLC (SMLLC) and have employees, you must have an EIN number issued to the LLC in the LLC's name. Use this number when paying employment taxes and filing employment tax returns.

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