Employer Identification Number (EIN) for a Sole Proprietorship
A sole proprietorship must have a federal Employer Identification Number if any of the following apply:
- You have one or more employees.
- Note: 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 a corporation.
Where to Get Your Employer Identification Number
You can apply for an employer identification number (EIN) online; it takes about 15 minutes.
- Here's the link: Federal Employer Identification Number
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.
Because of the increase in identity fraud, as a sole proprietor, it's a good idea to apply for a Federal Employer Identification Number even if you don't need one for federal income tax purposes. The reason? Fraud protection.
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 filed with the IRS and a copy 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. This number will be in the name of the LLC and not your own name. You use this number when paying employment taxes and filing employment tax returns.
Do not enter the EIN issued to the LLC on Schedule C, line D. Again, only enter an EIN issued to you in your own name as a sole proprietor on Schedule C, Line D. If you don't have such a number, simply leave line D blank and just enter your social security number on Schedule C.