Sole-Proprietors, Prevent Identity Theft by Getting an EIN
From time to time, you'll be asked to provide your social security number or employer ID to clients or governmental agencies. Once you do that you have no control over which client employees and other...
From time to time, you'll be asked to provide your social security number or employer ID to clients or governmental agencies. Once you do that you have no control over which client employees and others can view your number.
With identity theft an ever increasing problem, reducing the need to give out your social security numer can only be a good idea.
The best way to do that is to have an employer identification number.
In fact, having an EIN is mandatory for almost any business that is set up as something other than a sole-proprietorship.
This is the IRS checklist for businesses that are required to have an Employer Identification Number.
Sole-proprietors are not required to have an EIN. But if you are a sole-proprietor, I strongly recommend getting one.
The reason? If you are a sole-proprietor, clients who pay you $600 or more in the course of a year must file a 1099 on your behalf. And they need your social security number or employer identification number to do that.
And you, in turn, are required to do the same for your own sole-proprietor subcontractors who receive $600 or more in payments from you.
The process is easy and straightforward.
You can apply for your EIN number online at the IRS website (www.irs.gov) or ask the IRS to have the forms sent to you.
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ABOUT THE AUTHOR
Ellen Zucker's site http://www.selfemployment101.com, provides helpful articles and resources to help the creative sole-proprietor earn a living and create a life.