Does a sole proprietor need an EIN? Let’s dive into what an EIN is, as well as let you know when you need one.

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What Is EIN Number?

An employer identification number (EIN) is a nine-digit number the IRS assigns to business for tax filing and reporting purposes.

Do I Need An EIN If I’m Self-Employed?

The simple answer is that if you’re self-employed and have no employees, you probably don’t need an EIN. You can simply use your Social Security number on your tax returns and other IRS filings like tax deductions.

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When Does Sole Proprietor Need An EIN?

If you’re a sole proprietor, you only need to have an EIN if you:

  • have any employees
  • have a Keogh or Solo 401(k) retirement plan,
  • buy or inherit an existing business that you operate as a sole proprietorship
  • incorporate or form a partnership or limited liability company, or
  • file for bankruptcy.

Additionally, some banks require you to have an EIN before they’ll set up a bank account for your business.

How A Sole Proprietor Obtains An EIN

The fastest and easiest way to obtain an EIN is to apply directly at the IRS website. The IRS has an EIN Assistant you can use and it’s a fairly straightforward tool.

What Else Should I Know About EIN?

Remember, one of the most important decisions you’ll ever make as a business owner is how to legally organize your business. I’ve put together a guide outlining the differences between a sole proprietorship, partnership, limited liability company and corporation.

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Stephen Fishman

Stephen Fishman

Stephen Fishman is a self-employed tax expert and regular contributor to MileIQ. He has dedicated his career as an attorney and author to writing useful, authoritative and recognized guides on taxes and business law for entrepreneurs, independent contractors, freelancers and other self-employed people. He is the author of over 20 books and hundreds of articles, and has been quoted in The New York Times, Wall Street Journal, Chicago Tribune, and many other publications. Visit Fishman Law and Tax Files for more information on his work.
Stephen Fishman

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MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.