An EIN—employer identification number—is like a Social Security number (SSN) except that it’s for a business. (It’s sometimes referred to as an FEIN—the “F” simply refers to “federal.”) This number is unique to the business and is used when paying taxes or doing other financial transactions. It’s absolutely a requirement if you have employees, but you can also get an EIN can as an individual—a sole proprietor—and this has some advantages.
We strongly encourage all medical/healthcare interpreters who are freelancers / self-employed / independent contractors (i.e., sole proprietors of their interpreting business) to get an EIN.
Advantages of Having an EIN
First, it shows a clear intent, to both the government and potential clients, that you intend to conduct business as a business. This is important as there are efforts to classify independent contractors as employees. An EIN marks a clear separation between you as an individual and your business activities. It’s also seen as a sign of professionalism that makes clients more comfortable.
Second, it’s a defense against identity theft. When you submit your invoices and receive payments from your clients, you will need to provide some type of identification, so that the payments can be tracked and reported for tax purposes. If you provide your SSN, there’s always the danger that it will not be properly protected. By applying for and using an EIN, you can maintain the privacy of your SSN and use the EIN when submitting your invoices.
Third, if you want to open a bank account for your business that is separate from your personal bank account, you’ll need an EIN.
How to Apply for an EIN
The easiest way to get an EIN is to apply online. Getting an EIN is free, and you get your EIN immediately after applying. It also only takes a few minutes to apply.
There are a few questions to answer, but the website provides information to help you make decisions during the process. You will likely apply as a sole proprietor as most individual linguists who usually use their SSN are considered sole proprietors, but you should talk with your tax or legal advisor to be sure. Begin your application here.
How to Use Your EIN
The proper way to share your EIN with potential clients is by submitting a W-9 form. In the form, do not complete the section labeled “Social security number.” Instead, complete the section labeled “Employer identification number.” If you have existing clients, simply send them a new W-9 form with a request that they update their records.
Download a fillable PDF of Form W-9 from the IRS website here.