Do Sole Proprietors Need an EIN?

Navigating the paperwork and requirements of running your own business can feel overwhelming at times. One question many freelancers and solo business owners ask is: “If I am a sole proprietor, do I need an EIN?”

It’s a valid question with some nuance to the answer. While many sole proprietors can technically operate without an Employer Identification Number (EIN), there are compelling reasons why you might want to get one anyway.

This comprehensive guide breaks down everything you need to know about EINs for sole proprietors in 2025, including when they’re required, the significant benefits of having one even when it’s optional, and exactly how to obtain yours (for free!).

What is an EIN and Why Do Businesses Need One?

An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to business entities for tax filing and reporting purposes. Think of it as a Social Security Number, but for your business.

The IRS uses EINs to identify taxpayers who need to file various business tax returns. While corporations, partnerships, and LLCs are generally required to have EINs, the rules for sole proprietors are a bit different.

When Sole Proprietors Are Required to Get an EIN

As a sole proprietor, you’re legally required to obtain an EIN if you meet any of the following conditions:

You have employees

If you hire even one employee (not including yourself), you’ll need an EIN to handle payroll taxes, including federal income tax withholding, Social Security, and Medicare taxes. This applies even if you only have seasonal or part-time employees.

You have a Keogh, SEP, or Solo 401(k) retirement plan

These tax-advantaged retirement plans require an EIN for proper administration and reporting purposes. If you’re planning to set up any of these retirement options for your business, you’ll need to get an EIN first.

You acquire an existing business

If you buy or inherit a business that you’ll operate as a sole proprietorship, you’ll need a new EIN to separate your tax obligations from the previous owner’s.

You file for bankruptcy

When filing for bankruptcy related to your sole proprietorship, you’ll need an EIN to properly handle the associated tax matters.

You change your business structure

If you decide to incorporate or form a partnership or LLC, you’ll need to obtain an EIN for the new business entity. Your sole proprietorship’s tax ID (whether your SSN or an EIN) won’t transfer to the new business structure.

You’re subject to excise taxes

Certain industries require filing excise tax returns, which necessitate an EIN. These include businesses dealing with alcohol, tobacco, firearms, or fuel.

When Sole Proprietors Don’t Need an EIN

If none of the above scenarios apply to you, you’re technically not required to get an EIN. As a sole proprietor, you can simply use your Social Security Number (SSN) for tax purposes if:

• You have no employees
• You started your own business rather than buying an existing one
• You haven’t changed your business structure to an LLC, corporation, or partnership
• You don’t have a qualifying retirement plan
• You’re not filing for bankruptcy

Many solo business owners operate for years using just their SSN for tax identification. However, as I’ll explain next, obtaining an EIN offers significant advantages even when it’s not legally required.

Why You Should Get an EIN Even If It’s Not Required

After working with thousands of freelancers and solo business owners through SolidGigs and our other channels, I’ve noticed that the most professional and successful sole proprietors almost always choose to get an EIN, even when they’re not legally required to have one. Here’s why:

1. Protecting Your Identity

Identity theft is a growing concern for business owners and individuals alike. When you operate your business using your Social Security Number, you’re forced to share this sensitive personal identifier with clients, vendors, and other business contacts.

Every time you fill out a W-9 form for a new client or provide your tax information for payment processing, you’re putting your personal identity at risk. With identity thieves increasingly targeting tax information to file fraudulent returns and claim refunds, keeping your SSN private has never been more important.

Using an EIN creates a critical layer of separation between your personal and business identities. It allows you to provide tax identification without exposing your personal SSN to potential theft.

2. Establishing Professional Credibility

Having an EIN signals to clients and partners that you’re running a legitimate, established business. It demonstrates a level of professionalism that can give you an edge when competing for work.

Many clients, especially larger corporations, prefer working with vendors who have EINs rather than those using personal SSNs. It looks more professional on paperwork and creates the impression of a more established operation.

If you’re using SolidGigs to find high-quality freelance leads, you’ll want every advantage when approaching these potential clients. Having an EIN can be that small detail that sets you apart from competitors.

3. Strengthening Independent Contractor Status

Using an EIN can help establish and reinforce your status as an independent contractor rather than an employee. This distinction is crucial for both tax purposes and maintaining business autonomy.

The IRS and other agencies look at multiple factors when determining worker classification. Having and using an EIN is one indicator that you’re operating as an independent business entity rather than serving as an employee.

This can be particularly important if you work with a limited number of clients or have any long-term client relationships where misclassification might become a concern.

4. Simplifying Business Banking

Most banks require an EIN to open a business bank account, even for sole proprietors. Having a separate business account is highly recommended for several reasons:

Clean accounting separation

Keeping business and personal finances separate makes tax preparation much simpler and helps establish proper business record-keeping.

Professional image

Writing checks or accepting payments through an account with your business name appears more professional to clients and vendors.

Liability protection

While a sole proprietorship doesn’t provide legal separation between business and personal assets, maintaining separate accounts can help demonstrate the distinction between your business and personal activities if legal issues arise.

5. Preparing for Future Growth

Getting an EIN now positions you for smoother business expansion later. If you eventually hire employees, form a partnership, or transition to an LLC or corporation, you’ll already have this essential business identifier in place.

Many successful freelancers start as solo operations but eventually grow their businesses. Having your EIN established early makes these transitions seamless from a tax perspective.

6. Building Business Credit

An EIN is essential for establishing a business credit profile separate from your personal credit. With an EIN, you can begin building business credit through vendor accounts, business credit cards, and other financing options.

This separation becomes invaluable as your business grows, allowing you to access better financing terms while protecting your personal credit score from business-related activities.

How to Get an EIN for Your Sole Proprietorship

Obtaining an EIN is completely free and surprisingly simple. The IRS offers several methods, but the online approach is by far the most efficient:

Option 1: Apply Online (Recommended)

The fastest and easiest way to get your EIN is through the IRS website:

Step 1: Visit the IRS EIN Assistant

Go to the IRS website and search for “Apply for an EIN Online” or go directly to the EIN Assistant tool.

Step 2: Verify Eligibility

Confirm that you’re eligible to apply online. The primary applicant must have a valid Social Security Number or Individual Taxpayer Identification Number (ITIN).

Step 3: Complete the Online Form

Fill out the application, which is essentially an online version of Form SS-4. You’ll need to provide basic information about your business, including:

• Your name and SSN as the responsible party
• Your business name (or your name if you operate under your personal name)
• Business address and phone number
• Type of entity (sole proprietorship)
• Reason for applying
• Information about your business activities

Step 4: Submit and Receive Your EIN Instantly

After submitting the form, you’ll receive your EIN immediately on a digital confirmation page. Print or save this confirmation for your records.

The online application is only available Monday through Friday, 7 a.m. to 10 p.m. Eastern Time. The entire process typically takes less than 15 minutes.

Option 2: Apply by Mail

If you prefer not to apply online, you can download and complete Form SS-4 from the IRS website and mail it in:

Step 1: Download Form SS-4

Get the form from the IRS website.

Step 2: Complete the Form

Fill out all required information.

Step 3: Mail to the Appropriate Address

The mailing address is listed on the IRS website and depends on your location.

Step 4: Wait for Processing

Allow 4-5 weeks for processing and delivery of your EIN by mail.

Option 3: Apply by Fax

You can also fax your completed Form SS-4 to the IRS:

Step 1: Complete Form SS-4

Fill out the form as described above.

Step 2: Fax to the Appropriate Number

Fax numbers are available on the IRS website.

Step 3: Receive Your EIN

If you provide a fax number, the IRS will fax your EIN within four business days.

Option 4: Apply by Phone

International applicants or those who need their EIN immediately for a pending business deal can apply by phone:

Step 1: Call the IRS

Call the Business & Specialty Tax Line at 800-829-4933 (7 a.m. to 7 p.m. local time, Monday through Friday).

Step 2: Provide Information

Be prepared to answer all the questions from Form SS-4 during the call.

Step 3: Receive Your EIN

The representative will provide your EIN over the phone if you’re authorized to receive it.

How to Use Your EIN Once You Have It

Once you’ve obtained your EIN, you should start using it immediately for all business matters:

Tax forms

Use your EIN on all federal tax returns, including your Schedule C with your personal 1040 return.

W-9 forms

Provide your EIN instead of your SSN when clients request a W-9.

Bank accounts

Use your EIN to open a dedicated business bank account.

Business credit applications

Apply for business credit cards and loans using your EIN.

State tax registrations

Use your EIN when registering for state business taxes, where applicable.

Vendor accounts

Establish accounts with suppliers using your EIN.

Keep your EIN confirmation in a safe place with your important business documents. You’ll reference this number frequently throughout your business operations.

Common Questions About EINs for Sole Proprietors

Will getting an EIN change my tax obligations?

No, obtaining an EIN doesn’t change your tax obligations or how you’re taxed. As a sole proprietor, you’ll still report business income and expenses on Schedule C of your personal tax return, regardless of whether you use an SSN or EIN.

Can I use my EIN instead of my SSN on tax documents?

Yes, once you have an EIN, you should use it instead of your SSN on all business-related tax documents, including W-9 forms provided to clients.

What if my business structure changes?

If you change your business structure (for example, from sole proprietor to LLC or corporation), you’ll need to apply for a new EIN for the new entity. The EIN belongs to the specific business structure it was issued for.

Does my EIN expire if I don’t use it?

No, your EIN never expires. Once issued, it remains with that business entity permanently, even if you never file returns with it or stop using it for a period.

Can I have multiple EINs as a sole proprietor?

Generally, a sole proprietor should have only one EIN. However, if you operate distinct, separate businesses, you might be eligible for multiple EINs. Consult with a tax professional if you think this applies to your situation.

What happens if I lose my EIN?

If you lose or forget your EIN, you can recover it by:

• Checking your original EIN confirmation letter from the IRS
• Looking at prior tax returns where you used the EIN
• Checking with your bank if you used the EIN to open a business account
• Calling the IRS Business & Specialty Tax Line at 800-829-4933

Final Thoughts: Making the Right Choice for Your Business

While many sole proprietors can legally operate using just their Social Security Number, obtaining an EIN offers significant advantages that make it worth the minimal effort required. From protecting your personal identity to establishing professional credibility and preparing for future growth, an EIN is an asset to any serious business owner.

As someone who has built and supported countless freelance businesses through platforms like SolidGigs, I’ve seen firsthand how these small professional steps can contribute to long-term success. An EIN is one of those foundational elements that signals both to yourself and to the world that you’re serious about your business.

The application process is free, quick, and straightforward – there’s really no downside to getting an EIN, even if you’re not technically required to have one. It’s a small step that can yield significant benefits as you build and grow your sole proprietorship.

Taking this step now positions you to focus on what really matters: finding great clients, delivering exceptional work, and growing your business. And remember, SolidGigs can help streamline your client search by delivering carefully curated freelance opportunities directly to your inbox every week, letting you focus on your craft rather than constant job hunting.

Have you applied for an EIN for your sole proprietorship? I’d love to hear about your experience in the comments below!

One more thing...

You didn't start freelancing to spend hours every week searching through job boards. You started freelancing to do more work you enjoy! Here at SolidGigs, we want to help you spend less time hunting and more time doing work you love.

Our team of "Gig Hunters"—together with the power of A.I.—sends you high-quality leads every weekday on autopilot. You can learn more or sign up here. Happy Freelancing!

Preston Lee

Preston has worked for over 15 years as a freelancer. He works as a writer, a designer, and a developer and has been featured by Adobe, Forbes, Inc, Entrepreneur, and many more.