Can You Get an EIN as a Sole Proprietor?

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Employer Identification Number (EIN) for Sole Proprietors

As a sole proprietor, there is no requirement to obtain an Employer Identification Number (EIN) unless you have employees. Most businesses need to file tax returns separately from the owners’ personal tax forms.

The Benefits of Having an EIN

  • Sole proprietors can help protect their identities by obtaining an EIN for use with clients, rather than providing their Social Security Numbers.
  • Having an EIN may make an independent contractor appear more professional to potential clients and help land relationships.
  • Although an EIN is not required for all business loans, many lenders prefer companies that establish business credit through a business bank account.
  • Reasons to get an EIN even if not required: avoid identity theft and establish independent contractor status.
  • Having an EIN also allows you to separate business and personal finances.

How to Obtain an EIN

To obtain an EIN is straightforward through the IRS website.

  • To get an EIN: Apply online – the easiest method. The IRS EIN Assistant is straightforward. EINs are issued immediately after validating the application.
  • The EIN is a nine-digit ID number issued by the IRS to identify businesses for tax purposes.
  • You don’t have to be an American to get an EIN.

When is an EIN Required?

  • If you have employees, you are required to get an EIN.
  • Sole proprietorships, in general, are not required to have an EIN. However, an EIN is required if you have employees or plan to hire them, or want to offer a Keogh or solo 401(K) retirement plan.

Additional Considerations

  • The IRS specifically states that a sole proprietor transitioning to an LLC needs a new EIN under certain circumstances.
  • Identity theft is a common problem, and keeping your Social Security number as private as possible is important for avoiding identity theft.
  • If a sole proprietor named Joseph Jones uses the DBA “Joe’s Taco Truck," and expands into a multi-person business, he’ll need an EIN.
  • The IRS requires certain businesses to get an use an EIN for tax purposes.
  • What if you are a non-U.S. citizen and do not possess an SSN but require an EIN?

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