Shopify EIN Number: Do You Need One to Sell on Shopify?

What is an EIN number?

An EIN (Employer Identification Number) is a unique nine-digit tax identification number issued by the Internal Revenue Service (IRS) to businesses, organizations, and entities operating in the United States.

If you have a business or enterprise, using a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) for tax purposes won’t be considered legitimate. 

That’s why there’s a special tax ID called an Employer Identification Number (EIN). Unlike SSNs, which are for individuals, only businesses can get an EIN. 

Applying for an EIN is essential if your business has hired employees. This tax ID is needed to pay payroll taxes, which is a must for running a business.

What are the eligibility requirements for getting an EIN (Employer Identification Number)?

The key requirements to get an EIN:

1. If you are self-employed and do not have any employees, you do not need an EIN. You can use your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) instead.

2. However, if you have hired employees for your Shopify business, you are required to obtain an EIN. The EIN is necessary to pay payroll taxes for your employees.
3. Owning a Limited Liability Company (LLC) also requires an EIN, even if you are the sole owner and have no employees. The EIN establishes the LLC as a legal business entity.
4. Certain types of businesses that sell regulated products on Shopify, such as drugs, firearms, or products that could cause injury, also require an EIN, regardless of having employees or not.
5. Using the Shopify payment gateway also mandates having an EIN, even if you are a sole proprietor without employees.

How do you apply for an EIN Number?

To apply for an EIN number, follow these steps:

1. Go to the Internal Revenue Service (IRS) website and navigate to the “Apply for an Employer Identification Number (EIN) online” section. 
2. Click on the “Apply Online Now” button to begin the application process.
3. Select the appropriate reason for applying for an EIN, which in this case would be “Started a new business.”
4. Provide the required information, such as the legal name of your business, the business structure, and the principal business activity.
5. Review and confirm the information you provided, then submit the application.
6. Once the application is processed, the IRS will assign an EIN to your Shopify business and provide you with the number.

The EIN is a unique nine-digit number that identifies your business for tax purposes and is required for various business activities, such as opening a business bank account or filing taxes.

Benefits of EIN Number

There are 6 significant benefits of having an EIN number for a Shopify store. Here are the key benefits:

• Enhanced Business Identity: Having an EIN separates your business identity from your personal identity, providing more credibility and professionalism for your Shopify store.
• Easy Tax Filing and Compliance: An EIN is required if you have employees, as it is necessary for paying payroll taxes and withholding taxes from employee paychecks. It also simplifies tax filing and compliance for your business.
• Access to Business Loans: Lenders tend to view businesses with an EIN as less risky, increasing your chances of getting approved for business loans. An EIN also helps build business credit, which lenders consider.
• Simplified Employee Hiring: If you plan to hire employees for your Shopify business, having an EIN makes the process of setting up payroll and withholding taxes much easier.
• Reduced Risk of Identity Theft: Using an EIN instead of your Social Security Number for business purposes reduces the risk of your personal information being compromised or misused.
• Eligibility for Government Assistance: Having an EIN and properly filing tax returns can make your Shopify business eligible for government assistance programs like the Paycheck Protection Program (PPP) loans during economic crises.

Do you need an EIN for Shopify?

No, you do not necessarily need an EIN for Shopify, but you do need some form of tax identification number, such as an SSN or ITIN. An EIN is required if you have a business or enterprise rather than selling as an individual.

Can Shopify provide me with an EIN?

No, Shopify does not provide EINs. EINs are issued by the IRS or your country’s tax authority, not by Shopify.

How do I update my EIN number with Shopify?

You can update your EIN number with Shopify in the Payments section of your Shopify admin. The specific steps may vary depending on your country.

Can I use EIN instead of SSN for Shopify?

Yes, you can potentially use an EIN (Employer Identification Number) instead of an SSN (Social Security Number) to set up Shopify Payments, but it is not guaranteed. Shopify requires an SSN by default, but you can submit a request to use an EIN instead. 

However, Shopify cannot guarantee they will be able to accept the EIN, and you may need to provide additional documentation. The best approach is to contact Shopify support directly to discuss your specific situation and see if they can accommodate using an EIN instead of an SSN.

What is the difference between an EIN and an SSN for Shopify?

An EIN is to a business what an SSN is to an individual. The EIN is required for tax purposes if you have a business, while an SSN is used for individuals.

Wrapping Up

Getting an Employer Identification Number (EIN) for your Shopify business isn’t necessary but essential for tax reporting and compliance. It allows you to separate your personal and business finances, establish credibility with suppliers, and hire employees if needed. Ensure to apply for an EIN to streamline your business operations.