Do You Want to Give Out your Social Security Number to Everyone?
My husband is a freelance User Interface Developer. When we set up his business, which is currently a sole proprietorship, I applied to the IRS to get him an EIN (aka Employer Identification Number). Why did I do this?
It’s pretty simple, actually. If you have a freelance contract and you earn over $600, you should receive a 1099-MISC form stating that you received X amount in non-employee compensation. The same is true if you sub-contract out some work and pay more than $600. In order to win in an audit and claim that expense, you need to issue a 1099-MISC to the person whom you paid. For the IRS to track all these payments, the 1099-MISC has 2 identifying tax numbers on it–the social security number or EIN of the issuer and that of the recipient. If you don’t have an EIN, you MUST give out your Social Security number. And who wants to do that with all the identity fraud going around?
Luckily, it’s really simple to get an EIN and it can be obtained online. You get the number instantly when you’re done with the form and can begin using it for any requests that you get for a business-related Social Security number. Another option, if you don’t want to use the online form, is to fill out form SS-4 and fax or mail it into the IRS. If you really crave human contact, you can even call the IRS Business and Tax Specialty Line at (800) 829-4933.