Can a Sole Proprieter Have an EIN Number?

by Susan H. Green ; Updated September 26, 2017
Can a Sole Proprieter Have an EIN Number?

The IRS issues Employer Identification Numbers (EIN) for businesses to use primarily for tax filing and hiring purposes. Although sole proprietors are not required to obtain an EIN, it is a free and easy process which provides an alternative to using your personal social security number as identification.

Significance

Sole proprietors are permitted but not required to obtain an Employer Identification Numbers (EIN) from the IRS.

Function

Sole proprietors might use an EIN to open a business bank account, credit card or self-employed retirement account.

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Benefits

Having an EIN for business purposes is an opportunity to protect your personal information. Depending upon your needs, having an EIN also may convey a more official approach to your business.

Time Frame

The IRS has an online application (as well as phone and paper applications) to obtain an EIN. The process is free and takes only a few minutes. At the end of the simple application, you receive a generated form letter which includes your nine digit EIN. (Note: you will need to enter your social security number on the application.)

Considerations

According to the IRS, a sole proprietor must obtain a new EIN if he is subject to a bankruptcy proceeding, is incorporate, operates as a partnership, or purchases or inherits an existing business that is operated as a sole proprietorship.

About the Author

Susan Green has ten years of business writing and proofreading experience and three years of web content writing experience. Areas of expertise include personal finance, small businesses, travel, and pet care. Susan has a bachelor's degree from Tufts University.

Photo Credits

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