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Jumping Off Point

As we described in Chapter 7, all business owners must have a taxpayer identification number. The reason for this number is so that the IRS can identify you and process your tax returns. To review, there are two types of identification numbers: first, a Social Security Number (SSN) and second, an Employer Identification Number (EIN). SSNs are issued by the Social Security Administration and appear in a nine-digit form that looks like 000-00-0000. An EIN is issued by the IRS and also appears in a nine-digit format but looks like 00-0000000. All estimated tax payments for income tax of a sole proprietor must be recorded under the SSN.

When do you need an EIN:


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