What is an EIN and why do payment processors want it?

An EIN is an Employer Identification Number issued by the IRS. Payment processors request it to comply with tax reporting laws and to verify business entities.

Can I use my Social Security Number instead of an EIN?

Yes, sole proprietors can use their SSN. However, using an EIN protects your privacy and is typically preferred for professionalism and security.

Is getting an EIN difficult?

No. You can apply online via the IRS website in about 10 minutes. It’s free and you’ll receive your EIN immediately upon completion.

Do I need an EIN if I don’t have employees?

No, not legally. But many businesses still get one for privacy, to open bank accounts, or to work with certain platforms that require EINs.

What happens if I don’t provide an EIN to a payment processor?

You may be limited in how much you can receive, or have trouble accessing full business features. Your income may also be reported to the IRS, and you’ll need to handle tax reporting yourself.

When Payment Processors Ask for Your EIN - What It Means

You’re setting up your PayPal account, Stripe dashboard, or Etsy store, and everything’s going smoothly – until a field pops up asking for your “EIN.” You pause. Is that really necessary? Do you even need one? What happens if you just skip it?

This moment is more than just a formality. It’s often the point where informal businesses realize the outside world expects them to be a little more official than they thought.

Contents

What Is an EIN, and Why Are They Asking for It?
- Common platforms that may request your EIN:
Do You *Need* an EIN If You’re a Sole Proprietor?
- Reasons to get an EIN even as a solo entrepreneur:
What Happens If You Don’t Provide an EIN?
- Here’s what could happen:
EINs Are a Signal: You’re Taking It Seriously
How to Get an EIN (It’s Easier Than You Think)
The Request Isn’t a Barrier – It’s a Milestone

What Is an EIN, and Why Are They Asking for It?

An EIN – or Employer Identification Number – is a unique nine-digit number issued by the IRS to identify your business for tax purposes. Think of it as a Social Security Number for your business. It’s used for everything from filing taxes to opening bank accounts.

So why are payment platforms asking for it? Because if you’re accepting payments as a business, they need a way to report those payments to the IRS. And they need to know whether to classify you as an individual or a business entity.

Common platforms that may request your EIN:

PayPal
Stripe
Square
Etsy
Amazon Seller Central
Shopify

Even if you’re a solo creator or freelancer, the moment you start accepting payments, you’re signaling a commercial activity. And platforms want to make sure they’re compliant on their end.

Do You Need an EIN If You’re a Sole Proprietor?

Technically, no. If you’re operating as a sole proprietor with no employees, you can use your Social Security Number (SSN) instead. But that doesn’t mean it’s your best option.

Reasons to get an EIN even as a solo entrepreneur:

Privacy: Avoid giving out your SSN to clients or vendors
Professionalism: Looks more legit to banks and platforms
Separation: Keeps your business identity distinct from your personal one
Required for LLCs: If you form an LLC, you’ll need one anyway

Getting an EIN is free and fast – you can apply online through the IRS in under 10 minutes. There’s really no downside, and in many cases, having one can streamline your setup across multiple services.

What Happens If You Don’t Provide an EIN?

Let’s say you skip the EIN field or decide to use your SSN. In most cases, you can still move forward. But the consequences can vary depending on your setup and how much income you’re processing.

Here’s what could happen:

Limited features: Some platforms restrict payouts, payment volume, or business tools without an EIN
IRS headaches: At year-end, you may get a 1099-K reporting your income, and the IRS will expect you to file self-employment taxes
Mixed finances: Without formal separation, your personal and business money can easily get tangled – raising red flags at tax time

Also, some payment processors automatically freeze or flag accounts if they detect unusual activity without a valid business profile in place. That’s a disruption you don’t want.

EINs Are a Signal: You’re Taking It Seriously

Whether you’re freelancing, consulting, selling digital products, or running an ecommerce store, getting an EIN is like drawing a line in the sand. You’re saying, “This isn’t just something I do – this is something I’m building.”

And when you start treating your business like a business, others do too. Payment platforms offer you better tools. Banks take you more seriously. Clients pay you faster. Everything gets a little bit easier.

How to Get an EIN (It’s Easier Than You Think)

You don’t need a lawyer or accountant to get an EIN. You just need to go to the IRS website and fill out the online form. Here’s what you’ll need:

Your legal name and Social Security Number
Your business name, if applicable
The type of entity (sole prop, LLC, etc.)
The reason you’re applying (e.g., starting a new business)

Once you submit the form, you’ll get your EIN immediately. Keep it safe – you’ll use it often.

The Request Isn’t a Barrier – It’s a Milestone

When Stripe or PayPal asks for your EIN, it’s not a hassle – it’s a sign that you’ve reached the point where your business is real enough to matter. Real enough to be taxed, protected, and treated professionally.

If you’ve gotten this far, you’re already running a business. Time to act like it.