Do You Need An EIN?

[val2525]

If you're a sole proprietor, you aren't required to obtain an EIN from the IRS unless you have employees. However, even without employees, it's still a good idea to get one (and totally legal, the IRS will not scold you or slap your hand for applying).

Why? It means you don't have to provide your SSN. You give your EIN instead. Less chance of identity theft. And to entities like mortgage lenders, it sometimes makes the dense ones realize that yes, eBay stores are real businesses.


To apply online:

www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online


More info about EINs:

www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Employer-ID-Numbers-EINs

[Deleted]

Woot! I just got one for Mark's Construction biz. I always thought I would have to pay, but I got it for free. Thank you!

[sunsetpainter]

If DH and I work together at say a craft show, would we both need one?

[val2525]

No, just one EIN is fine. And even then it's optional. The nice thing is it means you don't have to give out your SSN. That's why my tax office recommends it to sole proprietors, especially ones who may be buying wholesale.

If you form an LLC, you'll need one as the LLC is an entity separate from you the person, even if you file it on your Schedule C.

[sunsetpainter]

Thanks val. We've been kicking around the idea of incorporating and that's good info to start off with.

[Gabi]

I got my EIN about 8 years ago and they used my ssn as EIN. Is that what usually happens?

[val2525]

No. The EIN is a completely different number. SSN is xxx-xx-xxxx, EIN is xx-xxxxxxx.

[Deleted]

Are you tax exempt with an EIN

[val2525]

Yes and no. If you're buying wholesale, sometimes an internet wholesaler will use your EIN (but they usually want your state #). If you're buying from in-state wholesalers or retailers (B&M or online), they usually require something issued from the state. Here, in NM, you register for a CRS # and then issue the wholesaler or retailer a Non-Tax Transaction Certificate (NTTC) which tells them you are buying for resale. The terms will vary by state, but if your state charges sales tax (under any name - use tax, gross receipts tax, transaction priviledge tax, etc) then you'll need to register with the state to be exempt from sales tax on items purchased for resale.

[zoesam]

I have an EIN. It is not my SS#, like Val said, it's not even the same format.   I would not be tax exempt for purchasing, at least in CO with my EIN. I've never been asked for that, they want my state sales tax license/ID.