If you’ve decided to start a business as the sole proprietor, congratulations! Operating as a sole proprietorship is an easy and efficient way to get into the business. While most business entities require an employer identification number (EIN), most sole proprietors don’t need one. This is because sole proprietorship are not separate business entities from their owners. Your Social Security number is usually sufficient for tax ID purposes. However, there are certain instances in which getting an EIN online is required or useful for a sole proprietor.
EIN Requirements for Sole Proprietors
If you operate a sole proprietorship, you’ll need to submit an EIN application if you want to do any of the following activities:
● Hire employees
● Set up a Solo 401(k) or Keogh plan
● Open a business bank account
● Apply for a business credit card
● Purchase or inherit another business and operate it as a sole proprietorship
● File for bankruptcy
You can easily obtain an EIN for your sole proprietorship through IRS-EIN-Tax-ID.com.
Changing Business Entities
You’ll also need to get an EIN if you decide to change your business structure. As your business grows, you may find yourself constrained by the limitations of a sole proprietorship. If you want to form a limited liability company or corporation, you’ll need to get an EIN.
Protecting Your Privacy
You can always obtain a tax ID number even if you don’t technically need to. Identity theft is a serious problem. Thieves may steal your Social Security number and submit fraudulent tax returns to collect refunds. Having an EIN lets you refrain from using your personal Social Security number for business purposes. This gives you an extra layer of security when it comes to your identity.
How to Get a Tax ID Number for a Sole Proprietorship
Applying for and receiving an EIN is simple and fast. The easiest method for getting an EIN is contacting IRS EIN Tax ID Filing Service.