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#1092601 - 12/05/08 04:51 PM Sole proprietorship
AuditorK Offline
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Joined: Feb 2003
Posts: 962
PA
John Doe, as sole proprietor, opened an account for John's Store. The account was set up under John's EIN, not his SSN. John is set up on the system as an authorized signer. Is the EIN issued to John Doe or to John's Store? Should we be using the EIN or his SSN for information reporting?

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#1092629 - 12/05/08 05:14 PM Re: Sole proprietorship AuditorK
BrendaC Offline
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BrendaC
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
John Doe (IRS prefers we use his SSN)
dba John's Store

Your IRS name field for any IRS reporting should reflect DOE.

I think it is a good idea to house the EIN somewhere if you can just in case you need it in the future. Perhaps you can use a special code field in your system.
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#1092662 - 12/05/08 05:35 PM Re: Sole proprietorship AuditorK
mck401 Offline
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Joined: May 2006
Posts: 1,168
Texas
The EIN is issued to John's Store. It is separate from his personal SSN. We have several Sole Props like this due to the fact they have employees working for them and must have an EIN. We would report it under the EIN.
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#1092670 - 12/05/08 05:41 PM Re: Sole proprietorship mck401
BrendaC Offline
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BrendaC
Joined: Sep 2001
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Sweet Home AL
If you look at the instructions for the SS4 and W-9 forms, you will note that the IRS prefers you use the SSN of the sole proprietor (I guess it is easier for them to keep track of everything that way). A sole proprietor has never legally separated his business affairs from his personal affairs; he and his business are one and the same in the eyes of the IRS. I believe the EIN is basically for submitting payroll taxes.
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#1092762 - 12/05/08 06:46 PM Re: Sole proprietorship BrendaC
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 78,965
Galveston, TX
BrendaC's analysis is correct.

Beside's if the customer obtained the EIN correctly for business purposes, it is registered to the individual and not the DBA name. Look at the instruction for the SS-4 form, line one.

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#1093247 - 12/08/08 02:59 PM Re: Sole proprietorship rlcarey
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,598
Cape Cod
Use the SSN. It will help you if you ever get an attachment or levy or other legal service on John. All of his accounts, including the business accounts, will be reached by such documents and actions.

If you pay interest on John's business NOW account, it will correctly be reported under his SSN (John has to include his business income on his personal 1040).

If you use TINs for aggregating cash transactions for CTRs, you should be aggregating John's personal and business account activity (since they are all owned by one person), so use of the SSN is your better choice.

It's not wrong to use the EIN for the SP account, but it's just more correct to use the SSN.

John's SSN is also the ONLY TIN you can use to correctly complete your CIP requirements, because John is the account owner (not the business).
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