Do I need an EIN as a solo freelancer?
Not always, but many get one anyway. It lets you avoid putting your Social Security number on W-9 forms and adds privacy to business dealings.
Tax guide
What Is an EIN?
An EIN is a federal tax identification number for a business, working much like a Social Security number does for an individual.
EIN stands for Employer Identification Number. The IRS issues it to identify a business for tax purposes. Businesses use it to file tax returns, open business bank accounts, and report payroll if they have employees.
You generally need an EIN if you have employees, operate as a partnership or corporation, or meet certain other conditions. Even sole proprietors without employees often choose to get one so they can avoid giving out their personal Social Security number on forms like the W-9 they provide to clients.
Getting an EIN from the IRS is free, and many businesses apply online and receive the number quickly. Using an EIN instead of your Social Security number can add a layer of privacy to your business dealings.
In short
Key points
- EIN stands for Employer Identification Number
- It is a federal tax ID number for a business
- Used to file business taxes, open bank accounts, and run payroll
- Generally required for employers, partnerships, and corporations
- Sole proprietors can get one to protect their Social Security number
- The IRS issues EINs for free, often quickly online
FAQ
Frequently asked questions
Does it cost money to get an EIN?
No. The IRS issues EINs for free. Be cautious of third-party sites that charge a fee for something you can get directly at no cost.
What is an EIN used for?
It identifies your business on tax returns, payroll filings, and business bank accounts, much like a Social Security number identifies an individual.
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