EIN

Forum|Forum|4 years ago
April 6, 2022
1 reply
6 views

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

Level 15

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.

Kate714Author

Level 2

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

Level 11

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.