Use EIN to legitimately hide SSN from clients?

A relative (a published author) is going to be doing some consulting. She does plan to talk to a lawyer and a tax pro about what form of business to ultimately use (consulting workshops she's gone to recommend creating either a S-Corp or a LLC because many companies, especially bigger ones, can be very reluctant to contract with an individual). However, for the near-term, she'll be a sole proprietor in her consulting work. Because of the book, she actually already is a sole proprietor. She has previously opened a solo 401(k). As part of opening that, she had to apply for an EIN because an EIN is explicitly needed for the "plan administrator" part of the solo 401(k) paperwork. Now, she's not thrilled about having to give out her SSN when she does her consulting gigs. Can she legitimately instead give out the EIN she already has? (And then would she put that EIN on her consulting Sched C?) If not, can she apply for another EIN (reason being "starting new business") and legitimately give that out to clients (and use it on the consulting Sched C)? Or is the only way to get out of giving out her SSN is to form a corp or LLC and have the entity contract with the client, giving the entity's EIN to the client?

-- Rich Carreiro snipped-for-privacy@animato.arlington.ma.us

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Reply to
Rich Carreiro
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I've been doing that for a decade, giving people a W-9 with my EIN, then reporting the income on Sched C with that EIN. Works fine for me.

The IRS says that if you're a sole proprietor you use the same EIN for all your businesses. R's, John

Reply to
John L

A sole proprietor is allowed to have an EIN and use it for the business. So I don't see why that would be a problem in her case. Stu

Reply to
Stuart Bronstein

If it is a legitimate sch C, which could be an LLC, it can have its own EIN. ___________________________________

-----> real address on hobokeni or hobokenx

Reply to
Benjamin Yazersky CPA

"Rich Carreiro" wrote

I might not fully understand what happened, but the EIN is for her "business" or for the Solo 401K plan? If for her business, then she can utilize that EIN as you are suggesting. If the EIN identifies the plan, then it can't be used by her business for business earnings.

-- Paul A. Thomas, CPA Athens, Georgia

Reply to
Paul Thomas, CPA

To open a solo 401(k), (at least with Fidelity), the custodian requires that the "employer" have an EIN, even for sole proprietors. So she got an EIN. The "type of entity" given on line 8a was "sole proprietor" and the reason given on line 9 "created a pension plan".

On the paperwork to open the solo 401(k), the EIN was used in the "Employer information" block.

-- Rich Carreiro snipped-for-privacy@animato.arlington.ma.us

Reply to
Rich Carreiro

So if you get an EIN for one purpose, you can't use it for another proper purpose, and have to get a second EIN for the same business entity? Stu

Reply to
Stuart Bronstein

No, the IRS is quite clear that one entity has one EIN. For some reason they ask you why you want the EIN in the first place, but once you have it, you use it for anything the entity does.

Reply to
John L

I have no idea. That's what I'm trying to find out.

-- Rich Carreiro snipped-for-privacy@animato.arlington.ma.us

Reply to
Rich Carreiro

Nope. That EIN is for the business. They can use it to identify the business, for payroll reporting, etc and so on.

-- Paul A. Thomas, CPA Athens, Georgia

Reply to
Paul Thomas, CPA

That's what I thought. I hope that settles the issue for Rich. Stu

Reply to
Stuart Bronstein

But of course the solo 401k plan also gets its own and separate EIN. ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

Check; and double check.

The business has its EIN, and the plan it's own/separate EIN. ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

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