If you're a sole proprietor with no employees, you are not legally required to have an EIN. You can use your Social Security Number (SSN) on your tax forms and client paperwork. But the moment you hire someone, open most business bank accounts, or want to stop handing your SSN to strangers, an EIN goes from optional to a genuinely good idea, and it's free to get in about 10 minutes.

So the honest answer is: legally required for a few specific situations, and strongly recommended for almost everyone else. Let's sort out which bucket you're in.

The two-bucket answer: required vs. just smart

Most articles blur these together. Don't. There's a real difference between "the IRS will penalize you if you don't" and "you'll regret not having one." Here's the clean split.

You are legally required to get an EIN if you:

  • Have one or more employees (even one part-timer).
  • Have a Keogh or solo 401(k) retirement plan.
  • File excise tax returns (alcohol, tobacco, firearms, certain fuels, heavy trucks).
  • Are involved with certain trusts, estates, or nonprofit-type entities.
  • File for bankruptcy.

You are not legally required, but it's strongly recommended, if you:

  • Send invoices and W-9 forms to clients (keeps your SSN off their files).
  • Want to open a business bank account (most banks now insist on it, more below).
  • Plan to apply for business credit, a loan, or a payment processor account.
  • Plan to register a DBA, get a seller's permit, or hire contractors later.

For a deeper plain-English breakdown of what the number is and a yes/no table by business type, see what is an EIN and do I need one.

Can I just use my SSN instead of an EIN?

Yes, legally a sole proprietor with no employees can put their SSN on a W-9, on 1099s they receive, and on their Schedule C tax return. The IRS accepts it.

But here's the catch nobody spells out: every client who pays you more than $600 in a year asks for a completed W-9. That form has a Taxpayer Identification Number field. If you use your SSN, your Social Security Number now lives in the files (and sometimes the inboxes and shared drives) of every client and bookkeeper you've ever worked with.

For a freelancer with ten clients a year, that's ten copies of your SSN floating around in places you don't control. An EIN solves this completely. You put the EIN in that field instead, and your SSN never leaves your own hands. Same tax treatment, far less exposure. This single benefit is why most working freelancers eventually get one even though no law forces them to.

Will a bank actually open an account without an EIN?

This is where the law and reality diverge, and it's the gap most guides miss.

Legally, a sole proprietor can open a business checking account with just an SSN. In practice, in 2025 and 2026, many large banks have quietly made an EIN a de facto requirement. Policies shift, so always confirm with the specific branch, but the general pattern looks like this:

Bank Typical sole-proprietor requirement
Chase EIN usually required for business checking
Bank of America EIN typically required; SSN-only rarely accepted
Wells Fargo EIN generally expected for business accounts
Many local banks & credit unions Often accept SSN-only for a true sole prop
Online banks (e.g. fintech business accounts) Mixed; many require an EIN

The workaround if you want to skip the EIN: a local community bank or credit union is your best bet for an SSN-only business account. But honestly, since the EIN is free and takes minutes, getting one is usually less hassle than bank-shopping. You'll want a separate business account either way to keep clean books and look professional. (Mixing personal and business money is one of the fastest ways to create a tax-season nightmare.)

When exactly should you get the EIN? (Timing in your startup sequence)

Whether you need one or not, sequence matters. Here's the order that saves the most rework:

  1. Decide your structure first. If you're staying a sole proprietor, read on. If an LLC might fit better, settle that before applying, because forming an LLC later usually means getting a new EIN. Our do I need an LLC to start a business guide walks through that decision.
  2. Get the EIN early, before your first client invoice. That way your very first W-9 carries the EIN, not your SSN.
  3. Register your DBA / trade name if you're using a business name. Some states or counties ask for an EIN during DBA or seller's-permit registration, so having it first avoids a second trip.
  4. Open your business bank account with the EIN in hand.
  5. Set up payment processors and accounting using the EIN.

The general rule: get the EIN as one of your very first administrative steps. It unlocks everything downstream and costs nothing to have early.

How to get an EIN free in 10 minutes (step by step)

The only legitimate place to get an EIN is directly from the IRS, and it is 100% free. Warning, and this is important: dozens of third-party sites are designed to look official and charge $75 to $300 to "file" the exact same free form. If any site asks for a payment to get your EIN, close the tab. You are on the wrong page.

Apply directly here: the IRS EIN online application.

The walkthrough:

  1. Go to IRS.gov and open the EIN application. It's open Monday through Friday, roughly 7 a.m. to 10 p.m. Eastern.
  2. Make sure you have a valid SSN or ITIN, since you're the "responsible party."
  3. Select Sole Proprietor as your entity type.
  4. Enter your name, SSN, and business address.
  5. Answer the simple questions about your business activity and whether you expect employees.
  6. Submit. Your EIN appears on screen immediately.
  7. Download and save the confirmation letter (CP 575) as a PDF right then. Print a copy too. You'll need this exact document to open your bank account, and re-requesting it later is a pain.

That's it. No fee, no waiting, no middleman. (International applicants without an SSN/ITIN apply by phone and usually get the number during the call.)

One quick housekeeping tip before you move on: bookmark your saved EIN letter somewhere you'll find it in a year. Want more no-nonsense setup guides like this in your inbox? Subscribe to the howtostart.biz newsletter and we'll send the practical stuff, no fluff.

A simple decision checklist

Run through this in 60 seconds:

  • [ ] Do you have, or plan to soon have, any employees? → Get an EIN (required).
  • [ ] Do you file excise taxes or have a solo 401(k)/Keogh? → Get an EIN (required).
  • [ ] Do you send W-9s to clients? → Get an EIN to keep your SSN private (smart).
  • [ ] Do you want a business bank account? → Get an EIN; most banks expect it (smart).
  • [ ] Are you a true side-hustler with one client and no plans to grow? → You can use your SSN, but the free EIN still beats exposing your SSN.

If you checked any box, the move is the same: get the free EIN. There's almost no scenario where having one hurts you.

What about DBAs, LLCs, and changing structure later?

A few sequence questions come up constantly:

  • DBA (doing business as): A DBA is just a registered business name. It doesn't, by itself, require an EIN federally. But some states or counties ask for one during registration, and your bank often will, so most people with a DBA end up wanting one anyway.
  • Forming an LLC later: When you convert a sole proprietorship into an LLC or corporation, the IRS generally requires a new EIN. You don't carry the old one over. So if an LLC is likely in your near future, factor that in.
  • Hiring your first employee: If you've been using your SSN and you hire someone, you must get an EIN at that point. There's no way around it.

If you're still mapping out the full setup, our how to register a business step by step guide puts the EIN in context with licenses, permits, and registration. You can also cross-check requirements with the U.S. Small Business Administration.

Frequently Asked Questions

Can a sole proprietor use their SSN instead of an EIN on a W-9 sent to clients?

Yes. A sole proprietor with no employees can legally enter their SSN on a W-9. But using an EIN instead keeps your Social Security Number off every client's files, which is a real privacy and identity-theft benefit at zero cost. That's why most freelancers get one even though it isn't required.

Does a sole proprietor need a new EIN if they later form an LLC or hire an employee?

If you form an LLC or corporation, the IRS generally requires a brand-new EIN, since your business structure changed. If you simply hire your first employee while staying a sole proprietor, you must get an EIN at that point if you don't already have one. Check the IRS "Do You Need a New EIN?" page when in doubt.

Will banks let a sole proprietor open a business account without an EIN?

Legally, yes, an SSN can be enough. In practice, many large banks (Chase, Bank of America, Wells Fargo) now expect an EIN for business checking. Local credit unions and community banks are more likely to accept SSN-only. Since the EIN is free, getting one is usually easier than bank-shopping.

How long does it take to get an EIN, and does it cost anything?

Online, it's instant, you receive the number the moment you submit. It is completely free directly from the IRS. Any website charging a fee is a third-party middleman, not the IRS. Apply only at IRS.gov.

What happens if I file taxes with an EIN one year and my SSN another year?

For a sole proprietor, your business income still ties to you personally through your SSN on your tax return, so switching the number on a W-9 between years generally won't cause a filing problem. To avoid client confusion and mismatched 1099s, though, pick one (ideally the EIN) and use it consistently going forward.