Guest Author - Kate Woods
It is often very confusing when you are an individual but you are also operating a business. One of the issues that you need to decide when this is your business scenario is if you really need a Federal Employer Identification Number (EIN). The answer is, of course, also confusing. Sometimes you do and sometimes you don’t.
You will need an EIN as a Sole Proprietor if any of the following apply:
•You will be hiring employees
•You are opening Bank Accounts or transacting bank transactions that require you to have an Employer Identification Number
•You decide to change the entity status from a sole-proprietorship to any other entity, such as an S-Corp, C-Corp, Partnership, or LLC (including a disregarded entity)
•You are subject to a bankruptcy proceeding
•You purchase or inherit an existing business that you choose to operate as a sole-proprietorship
While an EIN may not technically be required for a sole-proprietorship if you are transacting business on the internet and by phone that requires you to provide a Taxpayer ID Number you may want to apply for an EIN for banking purposes and use it to open a business account. This would enable you to use your EIN online and by phone instead of your Social Security Number in many instances. Identity Theft experts recommend you use your Social Security number as little as possible in transacting any business.
Applying for an EIN online is now a very simple process. The IRS has a new interview-style application online to complete. Once it is completed and submitted validations are completed and you are assigned your EIN and are able to print a confirmation notice.
To apply online using the EIN online assistant click on the appropriate link below.
You can also apply by phone, fax or mail. For details click on the appropriate link below.
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