A sole proprietor can have multiple businesses. A sole proprietor shows business income on a federal tax return. A single business can have only one EIN. As a sole proprietor, you can deduct regular business expenses. This deduction has income limits. A sole proprietor pays federal income tax and may pay state income tax.
EIN Requirements and Benefits
There are situations where an EIN is legally required for a sole proprietor and situations where an EIN is recommended but not legally necessary. Per the IRS, “A sole proprietor without employees who doesn’t file any excise or pension plan tax returns doesn’t need an EIN.” Once you hire employees or file certain tax returns, you require an EIN.
A sole proprietor can use their Social Security Number instead of an EIN. But an EIN establishes credibility and helps open a business bank account. Getting an EIN now also avoids delay later when hiring an employee or applying for a loan.
One EIN Per Sole Proprietor
A sole proprietorship only needs one EIN. But an owner can have multiple EINs, one for each business. You can only apply for one EIN per day. Processing time varies; online is fastest.
It is not possible to use the same EIN for different entity types or unrelated businesses. Other entities can have unlimited EINs.
Can a sole proprietor use the same EIN for multiple businesses?
You cannot use the same EIN for multiple businesses, even if they are owned by the same person. EINs are not limited, so you may apply for as many as you need. Each one will require a separate, unique EIN. A sole proprietor can have multiple DBAs for unrelated businesses under the umbrella of a single taxpayer identification number (TIN) or EIN. A DBA (also referred to as a Doing Business As, Assumed Name, or Fictitious Name) will need to be applied for each different name being used by a business.
While it sounds like it would be better to have an EIN for each business venture, there are some restrictions. Your DBAs are just your business nicknames, and therefore, you won’t have a separate EIN for a DBA.
Generally, businesses need a new EIN when their ownership or structure has changed. For Sole Proprietors, only one EIN can be issued to the individual. The Sole Proprietor may change business type/name by filing the appropriate documentation with his or her local municipality.
When I went to register the EIN, it asks for my DBA (doing business as) and industry the business is in. And, sole proprietors cannot have more than one EIN.
If you have multiple businesses and they are not established as legally separate entities, you can use the same EIN for all of them. The IRS, which issues EINs, is a federal body, and trade and DBA names are a state matter.
What happens if I have 2 EIN numbers?
If you inadvertently have multiple EINs, be aware that with one EIN, if any of the businesses under that number is sued, the assets of all of the businesses are at risk. You can have multiple DBA under one sole proprietorship, or multiple business names under one corporation.