 Now, employer identification number EIN. So now you have your individual identification number that you need to file in order to file as an individual or merit or whatever your status is for the form 1040, you may be able to use that same number to also process your schedule C because it's a sole proprietor schedule C, but you might want to also have an EIN number, which is an employer identification number. You must have an EIN number if you have employees. If you have employees, you're gonna have to deal with payroll tax returns and to file the payroll tax returns, you need an EIN number. However, even if you don't have employees, you still might want an EIN number, which seems kind of unusual since it's an employer identification number. Why would I need it if I don't have any employers, in other words, because you might need to provide your number to someone else that needs to do tax reporting on you, even though you're not an employee because they might need to issue you a 1099 and therefore to do business with them, you don't want to have to give them your social security number generally, but rather an EIN number. Now, it's usually fairly easy to get an EIN number. It's not a difficult process. Oftentimes with businesses, for example, it's fairly easy to set them up. It's more difficult actually to close them. So just be aware of that. So okay, so you must also have an EIN to use as a TIN if you do either of the following, pay wages to one or more employees. So you have to have an employee E identification number to do that, to process the payroll returns, which is the whole thing in and of itself. And so then we have the file pension or excise tax returns. So if you must have an EIN, include it along with your SSN social security number on your schedule C as instructed, you can apply for an EIN online by clicking on the employer ID numbers, the EIN's link at irs.gov forward slash EIN as long as the principal business location is in the United States or US territories. The EIN is issued immediately once the application information is validated. So you could do it pretty easily online if everything is in order. You can also do it by telephone at 267-941-1099, not a toll free number only if the principal business is located outside the United States or US territories or by mailing or faxing form SS4. So you can print it out, you can fax it if you want, the old style way, old school if you want, but application for employer identification number. So new EIN, you may need to get a new EIN if either the form or the ownership of your business changes. So if you have a change, you might, you're kind of a different business entity at that point, you might have to get another EIN. So for more information, you can see publication 1635 regarding that, understanding your EIN. When you need identification numbers for other persons. So in operating your business, you will probably make certain payments. You must report on information returns. These payments are discussed under information returns later in this chapter, so we'll dive into them later. But remember, if you have employees, then you'll have to report them on the payroll forms, which is a whole different thing for payroll. The payroll's basically similar, basically the same in essence for a sole proprietor versus other types of entities, partnership, corporation, S corporation, you've got to do the withholdings and that whole thing. And you need an EIN number for that and you might need it for someone else or to give to someone else that needs to give you a 1099 form because they're paying you not as an employee, but in the course of business, but the IRS is still forcing them to tell the IRS and you in the form of a 1099 that you basically have income from a transaction that took place possibly. So you must give the recipient of these payments, the payee, a statement showing the total amount paid during the year. You must also include the payee's identification number and your identification number on the returns and statements. So we might dive into some more areas where that might be necessary in future presentations. Employee, if you have employees, you must get an SSN social security number from each of them. I'll record the name and social security number of each employee exactly as they are shown on the employee's social security card. If the employee's name is not correct as shown on the card, the employee will or should request a new card from the SSA social security administration. This may occur if the employee's name was changed due to marriage or divorce. So clearly if you get married, if you change your name at that point in time, then you've got to get a new social security card so that the number matches the new name. Form W-4 employee withholding allowance certificate is completed by each employee so the correct federal identification tax can be withheld from their pay. So if your employee does not have an SSN, they should file form SS5 with the SSA social security administration. Other payee, if you make payments to someone who is not your employee and you must report the payments on an information return, get that person's SSN. In other words, if you hire someone as an employee, then the IRS wants to force you to be not only reporting their income but also withholding that information. So reporting with a form W-2 and withholding the information or the taxes and then giving that to the government. But if they're a contractor, then if they're not a business but a contractor, meaning they're not incorporated, you still might have to, or the IRS wants you to then give the IRS information about what you pay to them. Remember the general concept here is that the IRS has the leverage over the payer in a business transaction. If we're the payer as a C corporation or as a Schedule C sole proprietorship business, we wanna take the deduction of the contractors we're paying. And so the IRS might say, well, we want you then, if you want that deduction, we want you to tell us who you paid so that we can then tax them or make sure that they reported their income on their side of the transactions. And to do that, we need not only their name but their social security number and possibly their address. The IRS wants to know who they are, what their number is, where they live and whatnot so they can go after them for their income. So if you must report payments to an organization such as a corporation or partnership, you must get its EIN. So to get that payee's social security number or EIN, so that means, and we'll talk more about this later, but if you're doing business with a contractor, and you're required to give them a 1099, you wanna make sure that you can get their information. Some contractors are reluctant to do that. They might not have an EIN, which is gonna make it difficult on us because we need to report to them a 1099 form. And if they don't have an EIN number, we're gonna have to get their social security number or we're not gonna be in compliance with what the IRS wants us to do to kind of rat out these contractors that we paid them. So the IRS can look over their shoulder to make sure that they are reporting income. So you might wanna think about the contractors you're dealing with and see whether or not they have an EIN number to basically deal with and whether or not you can get their information when doing business with them so you can be in compliance with your reporting requirements and so on. So you can use form W-9, request for taxpayer identification number and certification. You could find the W-9 on the IRS website. A payee who does not provide you with an identification number may be subject to backup withholdings. In other words, if someone is an employee, then the IRS wants you to take their money before you give it to them in the form of withholdings and pay it to the IRS on their behalf. If you're paying a contractor, then the IRS might be content with just simply you telling them who that contractor is, giving them the name, social security number, address and so on so the IRS can go after the money themselves or make sure that that contractor is reporting it. But if that contractor doesn't give you their information like their social security number and whatnot, then the IRS is gonna want to hold you responsible. That's where they have the leverage on you, the payer or the one that wants the deduction and they might try to say at that point then you need to withhold kind of like they were an employee because we can't go after them the way we want to because we don't know who they are because you didn't get their social security number and their address and everything like we wanted you to do. So we're gonna make you collect our money for us. That's how it kind of works. So for information on back withholding, see the instructions for the request for the requester of form W-9 and the general instructions for certain information returns. So we'll dive into some more of those topics in future presentations.