Note: We are not legal experts or tax preparation professionals, so always consult an accountant, tax prep professional, or attorney if you have concerns. This information is aimed at freelancers in the United States who have questions about a tax ID number for freelancers. Freelancers in other locations may find this information useful for determining what questions they need to ask and answer based on their city, country, or region.
If you’ve ever done more that $600 worth of work for a client, you’ve likely been asked to fill out a W-9 form. While the form is common, and it’s a really good sign when your client asks you to submit one, there is a stumbling block that many freelancers find within. A W-9 asks for your Social Security Number.
Now, the majority of businesses, if they want to stay in business, are going to treat your SSN with the privacy it deserves. But, if you’re still hesitant to give it out, there is another option.
You can apply for tax ID number. This ID number is also referred to as an Employer Identification Number, or EIN.
It’s absolutely free to file the paperwork and obtain your own EIN.
Why is it Important to Have a Tax ID Number for Freelancers?
Forms like the W-9 help your clients—and you—keep track of taxable income. Ultimately, the IRS will kindly request that you pay whatever taxes you owe. And these forms help you keep things straight when it’s time to file.
Here’s the thing: the IRS is skilled at finding out what money you owe. It doesn’t matter to them whether you use your Social Security Number or your Employer Identification Number when you fill out the forms.
The benefit of having an EIN is simply that you don’t have to send your SSN to any of your clients.
How Can You Get Your Own EIN?
Even though the E stands for “Employer,” you do not need to employ anyone to be eligible for an EIN. Regardless of your business structure—yes, even if you are a sole proprietor—you can easily complete the process.
You’ll need to fill out an online application with the IRS. And, according to the IRS website, “After all validations are done you will get your EIN immediately upon completion.”
It’s really that easy!
Who Needs to Have an EIN?
While an EIN is optional for sole proprietors, it is required for other business structures. Take the super-simple yes/no test on the IRS website to find out whether you need one.
Keep in mind that, if you already have an EIN and you change your business structure, you’ll need to apply for a new number. Check out this information from the IRS about when you need a new EIN.
What If I Use an EIN and My Social Security Number?
Don’t sweat it. The IRS is pretty good at tracking what income is going where.
So, if you use your EIN on one form with one client and you use your SSN on another form with another client, don’t worry. You’ll want to report both sources of income come tax time (the IRS will know both belong to you).
Your turn! Did you decide to get an EIN and did you find it easy? Share your experience in the comments below!
Last Updated on July 1, 2023.
