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.
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.
When does a 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.
Be aware, unlike Social Security numbers, EINs can change. If a company began as a sole proprietorship with a few employees, then grew into an incorporated entity, a new EIN would have been assigned.
How to lookup an EIN number
Finding your EIN or another company’s number is a simple procedure. Try the following if you lost your EIN:
- Pull your last tax return and lookup your EIN
- Search your files and find the original IRS notice with the EIN assignment
- If you assigned the EIN to your business bank account, the bank will have it on file
- Last resort is to call the IRS and recover it over the phone. Be prepared to verify your identity to the IRS customer service representative.
If the company is privately owned and you have a legitimate business reason to know a company’s EIN, it’s always best to contact them first and request their number. Alternatively, you can use a legal search engine such as Lexis or Westlaw to pull up an EIN.
You can also enter the company name into a specialized search engine such as KnowX. Keep in mind that Lexis, Westlaw, and KnowX charge a fee for use.
For public companies, you can search the U.S. Securities and Exchange Commission’s Electronic Data-Gathering Analysis and Retrieval (EDGAR) database to find the EIN of a public company.
Click on “Search for Filings” and then “Company or fund name.” You can search for companies by state, country, industry or stock ticker symbol.
Enter the identifying information of your choice in the appropriate text box and click “Find Companies.” Access the company’s annual report by selecting “Form 10-K” or “Form 10-Q/A.” The company’s EIN will be listed on the first page of the document.
EINs for non-profit companies can be found by searching the Guidestar database.
- Register for a free account at GuideStar by providing your email address and creating a password.
- Enter the company name to access available information and select “Form 990,” which is a document that provides the names of executives of a nonprofit organization as well as the organization’s financial information.
- The company’s EIN will be listed on the first page of Form 990.
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MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.