EIN for Sole Proprietors

What is an EIN for Sole Proprietors?

An EIN, or Employer Identification Number, is the number given by the IRS for administering tax purposes. It is a nine-digit number (i.e., 12-3456789) which is assigned to all types of business entities, including sole proprietorships. It is like a SSN for your business. The sole proprietor—someone working alone in business without incorporation or partnership—is able to identify his or her business with the IRS, banks, or any other entity that requires such identification. As a sole proprietor, it is not always necessary to get an EIN; you can just use your own SSN, especially if there are no employees in the view of your works. However, whenever you hire, open a bank account, or hit any trigger specified by the IRS, it becomes necessary to get an EIN.

The Purpose of an EIN for Sole Proprietors

The only function of the Employer Identification Number is to help the IRS track your business activity apart from your personal matters. If it is not necessary for you to file any of the said forms, such as for employees or an employment status or requirement for taxes such as Form 941 or highway use tax Form 2290, sole owners do not need to have an EIN. The Employer Identification Number allows for one more means of not-the-revelation-of-SSN; instead of giving it out to customers or vendors, you can just mention your EIN to them. The IRS uses this Employer Identification Number as an identifier for processing returns with Schedule C (Profit or Loss from Business) in conjunction with Form 1040 as well as a free way of giving some credibility to your business, whether it be for bank or loan applications.

How Does an EIN Work for Sole Proprietors?

Getting and using an EIN as a sole proprietor is straightforward:

• Do You Need One?: You’re required to get an Employer Identification Number if you hire employees, file excise tax returns (e.g., Form 720), have a Keogh or solo 401(k) plan, buy an existing business, or file for bankruptcy. Otherwise, your SSN works fine—though many sole proprietors grab an EIN anyway for privacy or banking perks.
• How to Apply: Apply online at irs.gov (Monday–Friday, 7 a.m.–10 p.m. ET) for instant approval—free and fast. You’ll need your SSN, ITIN, or existing EIN as the “responsible party” (that’s you). Or go old-school with Form SS-4 via mail (four weeks) or fax (three days). International sole proprietors call 267-941-1099 (not toll-free).
• Using It: Once you’ve got your EIN, slap it on tax forms (e.g., Form 940 for FUTA tax), business bank accounts, or state licenses. Only one EIN per sole proprietorship—don’t get a new one for each trade name (DBA). If you incorporate or add a partner later, though, you’ll need a fresh EIN.

The IRS issues one EIN per responsible party per day, and you can’t save an online application mid-session—it times out after 15 minutes.

Key Details for EIN and Sole Proprietors

• Responsible Party: That’s you—the sole proprietor. The IRS needs your SSN, ITIN, or EIN to tie the business to you. No entities can be the responsible party unless it’s a government outfit.
• When You Don’t Need It: No employees? No excise taxes? No retirement plans? Stick with your SSN for Schedule C and Form 1040.
• Changes: Change your business name or address? Update the IRS with Form 8822-B within 60 days—no new EIN needed. But if you switch to an LLC, corporation, or partnership, apply for a new one.
• Lost It?: Can’t find your Employer Identification Number? Check old tax returns or call the IRS Business & Specialty Tax Line at 800-829-4933 (7 a.m.–7 p.m. local time).