EIN

[Kate714]

I have a small side business I run as a sole proprietor under my social. I am considering getting an EIN to be considered for wholesale status with some of my vendors I purchase from. Would having the EIN cause me to have to start paying Self employment taxes? Or because it’s still a sole proprietorship, I would not have to?

[Opus 17]

Your side business should be reported on schedule C and is already subject to SE tax, whether or not you get an EIN.  The EIN will save you from having to give your personal SSN to your clients and vendors, but it has no affect on the taxability of your income. 

[Kate714]

Thank you!

So, I wouldn’t have to do any quarterly filing of self employment taxes? Just continue like I have been with my Schedule C every year?

[Carl]

There is no fast hard "requirement" to pay quarterly taxes. But it's a good idea to do so. Otherwise, at tax filing time if your tax liability exceeds certain limits then in addition to paying the tax due at tax filing time, you will also be assessed an underpayment penalty for not having paid enough quarterly taxes during the tax year.

Generally, I send the IRS a flat 20% of my gross business income each quarter. Then, come tax filing time I'll always be well within the limits and no underpayment penalties are assessed.

Generally, I end up getting some of my quarterly payments refunded. But in the two years I owed the IRS, it was less than $1000 and therefore no underpayment penalty was assessed.

[Kate714]

Thank you so much for your help! 
I truly appreciate it! 

[Opus 17]

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@Kate714 wrote:

Thank you!

So, I wouldn’t have to do any quarterly filing of self employment taxes? Just continue like I have been with my Schedule C every year?

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The tax system is pay-as-you go and everyone is supposed to make periodic payments, either from wage withholding or by making estimated payments, and you can be assessed an underpayment penalty if you don't make periodic payments even if you pay in full when you file.  However, the IRS won't actually penalize you for not making payments as long as one of these three statements is true:

1. You owe less than $1000 when you file your return.  

2. Your payments and withholding are at least equal to your tax liability from the previous year.

3. Your payments and withholding are at least equal to 90% of your tax liability for the current year.

@Carl 's advice on how to come "close enough" is pretty good, if you don't want to make a more precise calculation.

Either way, your tax obligations are exactly the same whether you use your SSN or get an EIN for the business.

(Note however, if you have two different lines of business that you report on two different schedule Cs, you can use your SSN for both, but you would need different EINs.)