Employee Identfication Number

DEBUTLER

New Member
Is it necessary to get an EIN when you are a sole proprietor and if so, do I need to have a business account? I appreciate any input you can give.

Thanks
Djwanna
 

The Perfect Word

Community Leader
Hi Dwanna. Although a lot of sole proprieters do get an EIN, it is not necessary. I have operated my business for almost for almost 19 years as a sole proprietor and do not have an EIN (use my SSN).

For "business account," if you're referring to a business checking account, that would be a good idea. It's so much easier to keep business and personal finances separate for tax and legal purposes with separate accounts.

Hope this has helped!
 

DEBUTLER

New Member
This information helps me very much. I want to keep things as simple as possible. What I don't need, I won't use. Thank you very much.
 
Djwanna,

As Pam stated earlier, it isn't required as a sole proprietor but I have one just in case. I got an EIN for a few reasons: in case my business grows and I decide to re-structure it to an LLC, I add employees or independent contractors in the future, and to take the place of using my social security number for business related things.

Having a business checking account is always a great idea. It keeps everything separate in regards to finances. You get your own debit card and checks with your business name on it and its easy to keep track of business related transactions. I also used my EIN to open the account. If you decide to open a business checking account, make sure to look for a free one. Saving money anywhere you can is always a great idea because small fees will eventually add up into big expenses.

Good Luck!

Shaval
 

oofva

Member
While totally not required, there one good reason for getting one:

If you plan on staying with a client for more than $600 in a year, then they should be issuing 1099's at the end of the year. Therefore, they will need a W9 from you. You have the option of providing your SSN or EIN on that form.

While you, as a trusted virtual professional, take extra care to ensure that all sensitive information is securely kept .. can you ensure that your client is doing the same? Maybe they just leave it out on their desk, set it in the 'To be filed' pile, etc.

That's your SSN .. not a minor little number like a phone number, number of your house, or shoe size. So protect it by getting an EIN :)
 

Your Virtual Wizard

Community Leader
I agree with using the EIN number instead of a social security number.

I do really try to protect my social security by not sending it through email, fax or another
insecure means, who knows where that information ends up.

I also have a business bank account and keep my expenses separate from personal. It is also much easier, I find to balance my books at the end of the year when everything is separate. Further the IRS expects us to keep separate records as was stated here.

Janine
 

Susankelly

New Member
I have an EIN and it's very easy to get one - you can do it online. I don't trust anyone with my SS number.

I personally think if you are going to run a business you should run it like a real business. EIN, a business bank account, an accounting system of some sort, written policies, contracts, etc.

Doing these things made my life SO much easier at tax time and it made me feel like a business.
 

SuzannaK

New Member
I also agree with using an EIN. I was surprised at how easy it is to get one online. It only takes a minute to get one and it can protect you. So it is definitely worth getting.
 

MaplewoodVA

New Member
Susan Sheehan said it beautifully. If you decide to launch a business then treat every aspect as a business. Embracing this mindset now, from the beginning, will move you away from a hobby business and into growing something that has sustaining potential.

Like the others have mentioned I guard who is privy to my SS number. It only takes one careless person to share this for it to fall into the wrong hands and cause havoc beyond imagination.
 

Your Virtual Wizard

Community Leader
I also use my EIN number to obtain discounts for supplies at local stores and some hotels when I travel. I would not give my social security for these benefits so the EIN is much safer and supports that I am a business owner more easily.

Janine
 
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