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Sole Prop change from SSN to FEIN

by jpbeck, Performer

  • Created: September 23, 2011, 11:48 am
  • Updated: October 12, 2011, 4:22 pm
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4 comments

So my wife started a sole prop initially under her SSN and was issued a sales and use certificate in MA under that SSN.  The first year we filed her personal taxes under that SSN and filed the necessary business schedules but kept seeing little flags everywhere about applying for an FEIN instead.So ahead of the next tax season I need to determine the best course of action, I would like to make tax season a little easier so should she apply for an FEIN for her business which she still plans to keep as a sole prop and how would that affect taxes if it were done in the 3rd quarter?  In addition what would have to happen to the sales and use tax certificate supplied by MA, would that need to be reissued by MA under the new FEIN and if so how would that work for paying the next sales tax bill, would there have to be two partial payments one for the old and one for the new in the current quarter?Bit of a novice at all of this and Small Business Advisors at our bank are absolutely useless and seem to know less than us.  Grateful for any advice...

Tags: Discuss Popular Topics, Filing and Paying Taxes
‹ Best way to find a competent tax accountant Filing a schedule F and state personal property taxes ›

Doug Millington | Window Shopper | 11/20/2011 - 12:13 pm

As long as you can answer NO to the following questions a sole proprietor does need a Federal EIN: Do you have employees? Do you operate your business as a corporation or a partnership? Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms? Do you withhold taxes on income, other than wages, paid to a non-resident alien? Do you have a Keogh plan? Are you involved with any of the following types of organizations? Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax ReturnsEstatesReal estate mortgage investment conduitsNon-profit organizationsFarmers' cooperativesPlan administrators    If all of your answers are NO then you do not need a Federal EIN. Now with that said, if you are a 100% owner of an LLC (filing schedule C with your 1040) then you do need a Federal EIN. That is the only caveat asl long as your answers to the above questions are no.
Professional Web Site: http://www.millingtonandcompanycpas.com

BizResearcher | Window Shopper | 11/30/2011 - 2:59 pm

Show Replied Text…
As long as you can answer NO to the following questions a sole proprietor does need a Federal EIN:Do you have employees? Do you operate your business as a corporation or a partnership? Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms? Do you withhold taxes on income, other than wages, paid to a non-resident alien? Do you have a Keogh plan? Are you involved with any of the following types of organizations?Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax ReturnsEstatesReal estate mortgage investment conduitsNon-profit organizationsFarmers' cooperativesPlan administrators  If all of your answers are NO then you do not need a Federal EIN. Now with that said, if you are a 100% owner of an LLC (filing schedule C with your 1040) then you do need a Federal EIN. That is the only caveat asl long as your answers to the above questions are no.
Corporations with whom your wife may do business will require an EIN, not her SS#. If they ask her to submit a W-9, they will expect an EIN. Also, your bank may require an EIN number to establish a business account, particularly if you have a personal account there and you are using a SS# on the personal account. It costs nothing to get an EIN and the process is very fast, so there is really no reason not to have one. 

kmurray | Community Moderator | 10/27/2011 - 12:06 pm

Hi, You might consider getting in touch with the Massachusetts Society of Certified Public Accounts for specific advice tailored to your situation. Contacting your local Small Business Development Center (SBDC) may also be helpful.

chrismarklee | Window Shopper | 12/14/2011 - 3:39 am

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Hi, You might consider getting in touch with the Massachusetts Society of Certified Public Accounts for specific advice tailored to your situation. Contacting your local Small Business Development Center (SBDC) may also be helpful.
Unless you have employess, I see no need to an EFIN   ChrisOwner Cel Financial ServicesRegistered bonded California CTEC Tax Preparer                                                                                                      
Chris Owner Cel Financial Services IRS Registered Tax Return Preparer Registered bonded California CTEC Tax Preparer Please visit my website for all your Income Tax Fillmore needs. http://www.taxprepfillmore.com/
Professional Web Site: http://www.taxprepfillmore.com/