As a sole proprietor, I'd heard that using an employer ID number (EIN) can get you audited faster than if you use a Social Security number. Any truth to this one?
2007-07-27 04:03:03 · 4 answers · asked by Lori W 2 in Business & Finance ➔ Taxes ➔ United States
No. Filing a Schedule C, which is likely for a sole proprietor, is more likely to get you audited, but the fact that you use an EIN doesn't have any real effect. Obviously, using an EIN is another potential source of error on a tax return and it involves slightly more paper work, but there is no reason why it should increase your chances of an audit if used correctly.
2007-07-27 04:16:29 · answer #1 · answered by ? 6 · 0⤊ 0⤋
if you are filing as a sole proprietor you will use your SS number for the income tax return. The EIN is for employee taxes. If you use you use you EIN for purposes related to income that may cause confusion when the IRS compares your income to your return but I have never found that to be the case. Sounds like a myth to me.
2007-07-27 04:25:17 · answer #2 · answered by ? 6 · 0⤊ 0⤋
Not even remotely true. One reason you'd want an EIN as a sole proprietor is that you don't want your personal social security number used as an employer ID that shows up on all kinds of documents such as your employees W-2s.
2007-07-27 04:16:47 · answer #3 · answered by Gerald 2 · 0⤊ 1⤋
Nope, not true. Wouldn't make any difference as to whether you got audited or not.
2007-07-27 12:06:02 · answer #4 · answered by Judy 7 · 0⤊ 0⤋