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Benefits Of Obtaining An EIN Versus Using An SSN

Benefits of Using An EIN Versus SSN

This question mainly concerns sole-proprietorships and single person startups such as websites, with no employees. When forming an LLC, most individuals will use their SSN for all future contracts made by the business, or at least where it is required. It is possible to obtain an EIN to use instead of an SSN, and I’m wondering what the advantage (or disadvantages) may be of doing this. I can think of several benefits:

  1. If an EIN is stolen, they can impersonate or ruin your business but not your personal life. (Obviously, Business = Life, but I think you know what I mean).
  2. A new SSN is notoriously difficult to replace, while an EIN is not as difficult.
  3. An EIN may be required by some manufacturers/distributors to obtain business-class products and discounts.

Disadvantages:

  1. The business may be taxed differently.

Are these statements true, and do you have any others you can think of?

Answer 3113

This question mainly concerns sole-proprietorships and single person startups such as websites, with no employees.

Then what's the question? As a SMLLC, you are only allowed to use the entity EIN with regards to payroll taxes. See instructions on W9, it clearly states that if you're a sole-proprietor/single-member LLC you're to use your own personal SSN/EIN.

If you are a single-member LLC that is disregarded as an entity separate from its owner (see Limited Liability Company (LLC) on this page), enter the owner’s SSN (or EIN, if the owner has one). Do not enter the disregarded entity’s EIN. If the LLC is classified as a corporation or partnership, enter the entity’s EIN.

Note - "if the owner has one" refers to you personally, not entity. You can get an EIN on your own name, but it will be unique and will not be replaced. Essentially it will be an alias to your SSN.

The business may be taxed differently

Why? Because you're using a different number? Nonsense.

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