- 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 or needs to file an excise or pension plan tax return, you need to get a separate EIN for the LLC to file employment taxes.
- An EIN, also known as a federal taxpayer identification number, is a type of TIN used to identify a business entity including a trust or estate.
- If you're required to report employment taxes or excise taxes or to give tax statements to employees or annuitants, you need an EIN.
If you already have an EIN, and the organization (entity) or ownership of your business changes, you may need to apply for a new number.
Some of the circumstances under which a new number may be required are as follows:
- An existing business is purchased or inherited by an individual who'll operate it as a sole proprietorship.
- A sole proprietorship changes to a corporation or a partnership.
- A sole proprietorship files for bankruptcy under Chapter 7 (liquidation) or Chapter 11 (reorganization).
- A sole proprietorship establishes a pension, profit sharing, or retirement plan.
- A partnership changes to a corporation.
- A corporation changes to a partnership.
- An individual owner of a sole proprietorship dies and the estate takes over the business.
This list isn't all inclusive. Please refer to Employer ID Numbers.
In general, businesses are required to obtain the TIN from vendors if they're required to file any information return, document or other statement that calls for the TIN. It’s a good business practice to obtain TIN information from a vendor even if you’re unsure whether any information return, document or other statement will be required. Form W-9, Request for Taxpayer Identification Number and Certification can be used to make the request. The business should also maintain the verification of these numbers in their records.
If the recipient is a foreign person, the IRS suggests that you request that the recipient complete the appropriate Form W-8. For more information on completing these forms and when a U.S. TIN is required to be included, see the Instructions for the Requester of Forms W–8BEN, W–8BEN–E, W–8ECI, W–8EXP, and W–8IMY.