Taxable Talk

Most business entities have an Employer Identification Number (EIN) that they use. An EIN is for a business what a social security number is for an individual: It’s their taxpayer identification number. Some sole proprietors must have EINs (if they have employees, have withholding, or certain other situations). The IRS’s official position is that most sole proprietors do not need an EIN.

I beg to differ.

The problem today is identity theft. It’s rampant, and sometimes involves actual theft of your personal information from files. There’s a story out of Miami of a police officer stealing identities; there have been cases where hospital employees and others steal social security numbers. What’s to stop an employee of a business from stealing social security numbers? Nothing but most individuals’ inherent honesty. Unfortunately, I don’t think that’s enough today.

If you are a sole proprietor and you will have to complete a Form W-9 (giving your social security number to someone) or you issue Form 1099s, you should be using an EIN instead of your social security number. There is no cost to obtain an EIN (except about ten minutes of time). You can do so online at the IRS’s website.

Tags: Identity.Theft

This entry was posted on Sunday, March 10th, 2013 at 2:42 pm and is filed under IRS. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.