I run a small e-commerce store as a sole proprietor and have been using a payment processor for about a year. They recently sent me a notice asking for an EIN to update my account. I don't have one because I've always used my SSN for tax purposes. Is there a way to keep using my SSN, or do I absolutely need to apply for an EIN now? I'm worried about delays or account holds while I sort this out.
Payments
My payment processor wants an EIN, but I only have an SSN
Most processors will accept an SSN for sole props, but you probably need to call thbem and ask why they're requesting it. Sometimes it's a compliance flag that can be cleared.
Get the EIN. It's free, you can do it online in about 10 minutes, and it keeps your SSN out of a bunch of vendor databases. I switche years ago and wish I'd done it sooner.
Do you file a Schedule C with your SSN currently? If so, you can still get an EIN just to use for payroll or banking purposes without changing your tax filing status. It doesn't force you to bcome an LLC or corporation.
I had this exact thing happen with a different processor. They kept asking for an EIN, and I kept explaining I was a sole prop. After about three phone calls and a copy of my Schedule C, they removed the requirement. It was annoying but not impossible.
TidalPool is right about the online application. Just make sure you apply directly on the IRS site. There are a lot of third-party sites that charge for the same thing.
One thing to watch out for, though. If your processor has alreeady flagged the account, applying for an EIN can sometimes take a few days to show up in their system. Don't wait until the last minute if they've given you a deadline.
I've been a sole prop for six years and have never been asked for an EIN by a processor. Seems like it depends on the processor and maybe your volume. Which one are you using?
Volume seems to be a factor. Mine started asking after I crossed a certain monthly threshold. They never gave me a clear reason, just a generic compliance message.
QuietStone, I'm curious too. But honestly, at this point the easiest path is probably just to get the EIN. It's not a big deal and it gives you a clean answer for any future vendor that asks.