Is Your Social Security Number Exposed?
If you are self-employed (that includes you side hustlers!) and have not formed an entity such as an LLC or Corporation, then chances are your social security number has been shared with those you do business with, and as a result, can be compromised.
I’m going to share how this happens and what you can do about it. The best part is that the solution is free!!
How is your SSN used in busines?
When you do business with someone (customer, client, or even register with a payment processor such as Venmo or PayPal, you may be asked to fill out a form W-9. This form documents and certifies your name, address, and taxpayer identification number (TIN). People that pay you need this information so they can correctly report payments made to you on a form 1099 at the end of the year. I will do another email on the specifics of how to fill out a W-9, but for now, let’s focus on the TIN.
Your TIN can be your social security number (SSN), and/or your Employer Identification Number (EIN). You can get and use an EIN instead of your SSN to protect your privacy, since the EIN is not normally used in identity theft scams.
Why is using an EIN important?
I have seen literally hundreds of vendors give my clients W-9’s with their SSN instead of EIN. These forms end up on desks, emailed to unsecured email addresses, and even sent through the mail. Literally EVERYONE in the company could have access to your name, address, and SSN in that case.
Those three critical pieces of information are enough to open fake credit cards, and to perpetrate other identity theft scams. Do you really want this info out there sitting on the desks of everyone you do business with?
FAQs about using an EIN
HOW TO APPLY:
You can get an EIN directly from the IRS in as little as 10 minutes for FREE. Make sure you only go to the verified IRS website - do not use others. You will have to pay a fee, and worse, the sites may be scammers. If you need more help, I have a FREE course, PROTECT YOUR IDENTITY! Get a TAX ID Number for Free!, that walks you through the process step-by-step.DO I NEED MULTIPLE EIN’s?
No. All businesses you operate as a sole-proprietor can use the same EIN. For example, if you have a consulting business and also a small retail business, you can use the same EIN for both. The only time you need a new EIN is when you form a separate legal entity such as an LLC or Corporation. Also, the EIN never expires. You can use it for life!WHY IS IT CALLED an EIN? DO I NEED EMPLOYEES?:
No. Honestly, I really wish they would change the name as this causes a LOT of confusion. You do not have to be an employer to use an Employer Identification Number. I recommend that all my small non-incorporated clients use an EIN to protect their SSN even though none of them actually have employees.
Final Thoughts
My goal is to make sure you understand how to navigate the business world efficiently and safely. This tip (others to follow in upcoming emails) may be the single most important thing you can do to protect your identity!
Got more questions? Let me know and I will do my best to answer them! Also be sure to pass this along to anyone that may need it.
Please email your questions to Hello@marthatheuscpa.com.