🧠 What’s the Difference?
| Term | Full Name | Used For |
|---|---|---|
| SSN | Social Security Number | Personal tax filing, identity, and solo business use |
| EIN | Employer Identification Number | Business tax ID, hiring, banking, and vendor forms |
👤 Sole Proprietor: SSN by Default
- You can use your SSN to report income and file taxes.
- But you may still need an EIN for:
- Opening a business bank account
- Hiring employees
- Working with vendors or platforms that require a business tax ID
- Filing certain business licenses or permits - 📝 Tip: Getting an EIN is free and easy via IRS.gov.
👥 General Partnership: EIN Required
- You must get an EIN to file partnership taxes.
- Each partner still uses their SSN for personal tax reporting.
- EIN is used for:
- Filing IRS Form 1065
- Opening a joint business bank account
- Issuing K-1 forms to partners
📌 When Should You Get an EIN?
| Scenario | EIN Needed? |
|---|---|
| Operating under your legal name only | ❌ Not required |
| Using a DBA or trade name | ✅ Recommended |
| Hiring employees | ✅ Required |
| Forming a partnership | ✅ Required |
| Opening a business bank account | ✅ Often required |
| Selling products online | ✅ Recommended |
| Applying for business licenses | ✅ Often required |
| Working with vendors or platforms | ✅ Recommended |
🧭 Final Tip
- Keep your SSN private: Use your EIN instead of your Social Security Number for business forms and filings.
- Build business credibility: An EIN signals professionalism when working with banks, vendors, and clients.
- Separate personal and business finances: Helps streamline bookkeeping and tax reporting.