{"id":16072,"date":"2021-05-19T15:40:02","date_gmt":"2021-05-19T15:40:02","guid":{"rendered":"https:\/\/fieldnation.com\/resources\/independent-contractors-ein\/"},"modified":"2025-06-26T14:20:20","modified_gmt":"2025-06-26T19:20:20","slug":"independent-contractors-ein","status":"publish","type":"post","link":"https:\/\/fieldnation.com\/resources\/independent-contractors-ein","title":{"rendered":"Why independent contractors should consider an EIN"},"content":{"rendered":"<\/a>

What is an EIN?<\/strong><\/h2>\n

An Employer Identification Number (EIN) is a nine-digit number assigned by the IRS that\u2019s used to identify a business entity. You may also hear it referred to as a Taxpayer Identification Number or Tax Identification Number (TIN).\u00a0<\/span><\/p>\n<\/a>

Can independent contractors even get an EIN?<\/strong><\/h2>\n

Yes, independent contractors can get an EIN, but it\u2019s not required. According to the IRS, <\/span>independent contractors are considered self-employed<\/span><\/a> and are a type of sole proprietorship. Some sole proprietorships (like those with employees, for example) must get an EIN. For independent contractors, however, it\u2019s optional.<\/span><\/p>\n<\/a>

Why get an EIN?<\/strong><\/h2>\n

There are a few key benefits to getting an EIN.<\/span><\/p>\n

1. It can protect you from identity theft
\n<\/strong><\/h3>\n

As an independent contractor, you are frequently enabling payment by sharing out information that connects you to the work you do for your multiple clients. While many contractors use their social security number for this, doing so makes key personal information vulnerable in the event that a client experiences a data breach.<\/p>\n

Getting an EIN allows you to provide clients with a number that\u2019s linked to your business finances instead of your personal finances. In the event that your data gets stolen, thieves won\u2019t have access to your social security number.<\/p>\n

2. It can help you get more work<\/strong>
\n<\/span><\/h3>\n

Some buyers, especially enterprise companies, require proof that you operate as a business in order to assign you work. Using an EIN is a fast, free, and easy way to help meet that standard. An EIN reinforces that you view yourself as an independent contractor and sole proprietor, demonstrating that you take your work seriously and adds credibility.<\/p>\n

3. It allows you to establish business credit<\/strong><\/h3>\n

According to the Small Business Administration, an <\/span>EIN is required to establish business credit<\/span><\/a>. Business credit is very similar to personal credit. Like personal credit reports, business credit reports take several factors into account to determine how financially responsible your business is. Much like your personal credit score, business credit scores are used when evaluating loan and credit card applications. In general, the better your business credit score is, the lower your interest rates will be.<\/span><\/p>\n

4. It allows you to open a business bank account<\/strong><\/h3>\n

Business bank accounts are useful for several reasons. First off, they\u2019re an easy way to keep your personal finances separate from your business finances. Keeping your personal and business transactions separate makes it much easier to complete your taxes at the end of the year. Additionally, it makes all of your finances much clearer in the case you\u2019re audited by the IRS. To be clear, business bank accounts are not required for sole proprietors. Nonetheless, most sole proprietors would agree that business and personal finances should be kept separate.<\/span><\/p>\n

For sole proprietors, an EIN is not always required to open a business bank account. However, this depends on each bank\u2019s policy. Bank of America, for example, requires an EIN to open a business account. If you\u2019re interested in opening a business checking or savings account, it\u2019s best to contact your prospective bank to find out if an EIN is required.<\/span><\/p>\n

5. It makes business loan applications faster<\/strong><\/h3>\n

As mentioned above, many banks require an EIN to open a business checking account. Without a business bank account, many independent contractors struggled to prove they were business owners because their personal finances were not separate from their business finances.\u00a0<\/span><\/p>\n

This is true for other business loans, too. Additionally, many banks use business credit to assess loan applications, and you <\/span>need an EIN to build business credit<\/span><\/a>.<\/span><\/p>\n

6. You want to set up an individual 401(K) or SEP-IRA for retirement<\/strong><\/h3>\n

In the US, independent contractors have tax-deferred retirement savings options similar to employees participating in company plans. Two of the most common savings plans are individual 401(K)s and SEP-IRAs.\u00a0<\/span><\/p>\n

Individual 401(K)s offer many of the same benefits of a traditional 401(K) and allow self-employed workers to contribute up to $64,500 annually. In order to set up an<\/span> individual 401(K), you must have an EIN<\/span><\/a>. A SEP-IRA allows independent contractors to contribute up to 25% or $57,000\u2013 whichever is less, annually. Although you don\u2019t legally need an EIN to open an SEP-IRA, most institutions will require one.<\/span><\/p>\n

7. Set your business (and yourself) up for future success<\/strong><\/h3>\n

Even if you\u2019re an individual independent contractor now, your business may grow in the future. If you want to hire employees, you\u2019ll need an EIN. If you want to change your business into a partnership or even a corporation, you\u2019ll need an EIN. If you want to open an individual 401(K) or SEP-IRA as mentioned above, you\u2019ll need an EIN.\u00a0<\/span><\/p>\n

All in all, there are tons of reasons to get an EIN, and not many reasons <\/span>not<\/span><\/i> to get one. <\/span>Getting an EIN<\/span><\/a> is completely free through the IRS and only takes a few minutes. There are no penalties for not using an EIN. If you\u2019re a technician using the Field Nation marketplace and you do choose to get an EIN, don\u2019t forget to <\/span>update your tax information<\/span><\/a>.\u00a0<\/span><\/p>\n

Field Nation does not provide legal or tax advice and cannot guarantee you will receive additional work. Please note that you are not required to have an EIN to continue doing work on Field Nation. <\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

While it’s not required, independent contractors can benefit from getting an Employer Identification Number (EIN).<\/p>\n","protected":false},"author":53,"featured_media":18810,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"xn-wppe-expiration":[],"xn-wppe-expiration-action":[],"xn-wppe-expiration-prefix":[],"footnotes":""},"content-group":[],"class_list":["post-16072","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","fldn_content_category-independent-contracting","fldn_content_type-blog"],"acf":[],"yoast_head":"\nWhy independent contractors should consider an EIN | Field Nation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fieldnation.com\/resources\/independent-contractors-ein\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta 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