Congratulations, you got your first book deal! Now you’re probably wondering, “What royalties will I…
If you’re a freelance illustrator working professionally in America, you should get an EIN#. Here’s why:
In order to receive payment, companies need a tax ID number to process your invoices and report everything back to the government. This presents a huge problem if you only have a social security number.
- You have no control over how many people will have access to your invoice—and your social security number—during internal processing. If the wrong person sees it, that could have serious repercussions like identity theft.
- Companies do not want to be liable should your social security number become public or fall into the wrong hands. More and more frequently, corporations are now requiring you to have an EIN# instead of a social security number in order to get paid.
Additionally, an EIN# will help establish your identity as an independent contractor, which is a very good thing.
What is an EIN#?
Simply put, an EIN# is a tax ID number that is exclusive to your business. (It stands for Employer Identification Number.) It can be used in place of a social security number for all your freelance transactions.
How do I get an EIN#?
The process is actually very simple to obtain an EIN#. It’s free and you can apply online through the IRS’s online EIN Assistant page. Typically, you’ll set yourself up as a “sole proprietor” and then fill in all the necessary details, including your social security number (which is tied to your EIN#). After your application is submitted, you’ll get your EIN# immediately. It’s that easy!
An EIN# is important to your freelance health because it protects you from identity theft and, as more and more companies refuse to process invoices with social security numbers attached, it will be a requirement. So, why wait? Get yours today!