Do I Need an EIN for Sole Proprietorship

The federal employer identification number i.e. EIN is a nine-digit unique number assigned to business by IRS for tax filing and reporting purposes. IRS uses this nine-digit unique EIN so as to identify the taxpayer. EIN is used by business entities or organization such as corporation or limited liability companies so as to file tax return. However, most of sole proprietors do not need to get an EIN and can use their Social Security Number instead.

Why this EIN is required by the Sole Proprietors?

If you are a sole proprietor, then you must have an EIN to –

  • EIN is used to hire the employees for the company.
  • To have a Keogh or Solo 401(k) retirement plan.
  • To buy or inherit an existing business or organization that you operate as a sole proprietorship.
  • Have an incorporate or form a partnership or limited liability company.
  • Have a file for the bankruptcy.
  • For opening a bank account for your business or organization.

What are the different steps to get an EIN for Sole Proprietorship?

In order to get an EIN for Sole Proprietorship, one need to follow these steps such as –

  • Preparation of the mandatory information

In order to have an EIN for your sole proprietorship, you need to provide IRS with several details about your business.  These details may help you to eliminate all the hurdles along the way. You need to gather all the mandatory information regarding your business before you start applying for an EIN such as –

  • Name of your sole proprietorship.
  • Doing business as (DBA) name of the business if applicable.
  • Contact info regarding your business or organization.
  • Your name and Social Security Number or Individual Tax Identification Number.
  • You need an EIN for your sole proprietorship if you acquired an LLC and want to obtain another EIN.
  • Type of the business and principal business activity.
  • Reason of why you are applying for an EIN.
  • Number and type of the employees you have in your business or organization.
  • Whether or not you have a plan to pay for more than $1,000 in employment tax for the year.
  • Ending date of your sole proprietorship’s tax return.

These are the required details that one need to gather before applying for an EIN for Sole Proprietorship.

  • Apply for the Sole Proprietorship EIN Online

One can apply for Sole Proprietorship EIN Online, if you want to receive your EIN instantly. In order to apply online, one need to fill application Form SS-4. In this application form you need to fill all the necessary details regarding your business or organization. These details may include name of your sole proprietorship, type of business and principal business activity etc. You also need to provide an electronic signature for yourself on the application form. You can even designate someone to complete your application form on your behalf. One will get an EIN instantly once all the details in the application form are validated.

  • Apply for the Sole Proprietorship EIN via Mail or Fax

In this, one need to take out the print out of application Form SS-4 first. The details you provide in the application form about your company are same as what you use for online application form. After you fill out all the details in the application form, you need to fax or mail the completed application to IRS. Make sure to include your fax number or return address as without this information IRS will not be able to fax or mail your EIN. In order to mail the completed application form one need to send the application form to the IRS at the following address –

  • Internal Revenue Service
  • Attn: EIN Operation
  • Cincinnati, OH 45999

In order to fax the completed application form, one needs to fax the application form to the IRS specialty number. One can get an EIN for the business by mail in the time duration of 4-6 weeks while one can get an EIN for business by fax within 4 business days.

  • Apply for the Sole Proprietorship EIN via Phone

In this, one need to call IRS Specialty Number from Monday to Friday between 07:00 AM to 10:00 PM Eastern Time. Someone will ask you about your business information over phone call and will assign you an EIN for the business at the end of phone call. The person making phone call must be authorized to receive an EIN and answer the questions concerning to your business or organization.

But if you were incorporated outside of US, then you need to call IRS Specialty number from Monday to Friday between 06:00 AM to 11:00 PM (Eastern Time). The IRS Specialty customer agent will assign you an EIN for your business or organization at the end of the phone call.