Question
Does a small company that operates as a sole proprietorship need an employer identification number (EIN)?
Answer
  • A sole proprietor without employees and who doesn't file any excise or pension plan tax returns doesn't need an EIN (but can get one). In this instance, the sole proprietor uses his or her social security number (instead of an EIN) as the taxpayer identification number. However, at any time the sole proprietor hires an employee or needs to file an excise or pension plan tax return, the sole proprietor will need an EIN for the business and can't use his or her social security number.
  • If you have an existing EIN as a sole proprietor and become a sole owner of a Limited Liability Company (LLC) that has employees, you need to get a separate EIN for the LLC to file employment taxes.