If you are a new webcam model and/or content creator, you may be wondering why you should consider getting an EIN (employer identification number) from the IRS. After all, you are a sole proprietor, and your only employee is yourself. An EIN, like a social security number, is used as your identification number when filing a tax return. While it’s true that it is not mandatory to get an EIN when doing business as a sole proprietor, there are several reasons why this is a very prudent idea.
One important reason is to protect yourself from identity theft.
There are many forms in your webcam business that will ask for your name and social security number or EIN. Using an EIN protects your social security number from falling into the wrong hands. Further, there will be many supplies to purchase for your new business, like computer hardware, webcams, props for your room, etc. Many businesses like big box stores, offer business accounts.
Your EIN enables you to sign up for business accounts without sharing your social security number.
Another good reason to use an EIN is if you decide to legally go by a different name than your birth-given name. For example, let’s say you want to go by the name “Cherry Hot Lips.” This name is a dba (doing business as) name. You’ll need to check how to file a dba in your part of the world. The forms normally ask for your name and social security number or EIN. This is another example of when an EIN would be a better option than your social security number because it makes you look more like a legitimate business.
Later, as your business grows, you may want to apply for credit to use for your business expenses.
Instead of applying for credit with your social security number, you can apply using your EIN. This will help keep the business credit separate from your personal credit.
Many webcam performers are running very lucrative businesses. One goal of any business is to legally pay as little tax as possible. An excellent way to accomplish this goal is to talk to your accountant about starting a self-directed 401K plan. These plans are like Roth IRAs and regular IRAs, but they allow a much bigger portion of your income to be diverted pretax savings. However, an EIN is necessary to utilize a self-directed 401K.
As you can see, there are many benefits to getting an EIN that can outweigh the hassle of signing up for one. I hope this article helps you decide whether an EIN is right for you!
Note: The information provided in this article is not, and is not intended to, constitute legal advice; instead, all information and content, are for general informational purposes only. Readers of this article should contact their attorney or accountant to obtain advice with respect to any particular legal matter. No reader, user, or browser of this site should act or refrain from acting on the basis of information on this site without first seeking legal advice from counsel in the relevant jurisdiction.
Gabriella Vita is from Las Vegas, NV and has been writing for over ten years under multiple pen names. She believes variety is the spice of life, which is why she enjoys writing on a plethora of subjects. Email her at firstname.lastname@example.org.
Photo credit: iStock:designer491