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 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.

Protect Yourself From Identity Theft: Although you're not required to have an employer identification number if you do business with independent contractors, it may be a good idea to have one anyway. The main reason for this is to protect yourself against identity theft.

For example, if you do business with independent contractors and you're required to issue Form 1099-MISC to any of them, you're required to enter your tax identification number in the payer's box of the form. This could be your social security number or employer identification number (EIN), if you have one. For greater protection, you're better off using an EIN on the form rather than revealing your social security number. Apply for one online.

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.