Want to know more about an EIN and how they work with your Amazon business?
This post will go over all the cases you need an EIN for your Amazon business, and the times you won’t require one.
At the end of this article, we’ll show you a step-by-step guide to get an EIN number for your business.
What is an EIN (Employer Identification Number)?
An EIN, or Employer Identification Number, as defined by the SBA, is “a unique nine-digit number that identifies your business for tax purposes.” The IRS assigns this number to businesses for various U.S. tax-related functions.
The EIN functions as your business's Social Security Number and is essential for various aspects of running an online business, including opening a business bank account, applying for a business license, and handling tax filings. If you’re a new seller on Amazon, understanding EIN requirements is key to setting up your Amazon seller account correctly.
For an Amazon business, when you either are putting in your business information for the first time, or are converting your individual account status to a business, then that is when you tell Amazon your EIN.
Is an EIN always required to sell on Amazon when you start operating through your LLC?
Contrary to what you might think, you might not need to have an EIN for your Amazon seller account, even if you want to run your account as a business.
Let’s look at each scenario to determine whether you need an EIN for your Amazon seller account.
Times You DON’T Need an EIN for Your Amazon Seller Account
Since this section will apply to most Amazon sellers, let’s start here.
1. You’re Selling as an Individual (Sole Proprietorship)
This is an obvious one.
If you’re just getting started selling on Amazon as an individual (sole proprietor), you can sign up for an account, add your bank account details, and run the account with your Social Security Number (SSN) or ITIN.
This has several benefits:
- Start selling faster
- You can “test” selling on Amazon while committing fewer resources, like incorporating
- You don’t need anything extra to start—you already have a bank account and SSN or ITIN
Most Amazon sellers get started on the platform this way and don’t have a formal business entity.
Using this method works for a while until sales start to take off and things get messy, especially from an accounting perspective.
2. You Have a Limited Liability Company (LLC) But You’re the Only Member (Single-Member LLC)
Many sellers start out as individuals with their SSN and personal bank account, then later decide to incorporate.
You create a Limited Liability Company (LLC) and might even get a business credit card to separate business expenses from personal spending.
At this point, you might think you need an EIN.
But stop right there!
If you are the sole member of an LLC, your business is considered a disregarded entity by the IRS. This means you can still use your SSN instead of an EIN when filling out Amazon's Tax Information Interview.
According to Amazon’s Tax Information Interview Guide, “If you are a single-member LLC, enter the owner's SSN or ITIN” in the Tax Identification Number field.
However, there are cases where you do need an EIN even as a single-member LLC.
Times You DO Need an EIN Number for Your Amazon Business
1. Single-Member LLCs with an S-Corp or C-Corp Election
If you elect for your LLC to be taxed as an S-Corp or C-Corp, then you are no longer considered a disregarded entity, and you must get an EIN.
If you’re unsure whether you should elect S-Corp or C-Corporation taxation, consult an accountant to determine the best structure for your business.
Each state has a different process to elect these tax statuses, so do some research or check IRS.gov for guidance on your specific state.
2. You Are in an LLC with Multiple Members
LLCs with more than one member that haven’t elected S-Corp or C-Corporation status are automatically considered Partnerships by the IRS. In this case, you are required to get an EIN.
3. You Have an S-Corp, C-Corporation, or Partnership That is NOT an LLC
Even if your business is not an LLC, you might have an S-Corp, C-Corp, or Partnership. These entities require an EIN for tax purposes.
When registering in Amazon Seller Central, select the correct business type in the Federal Tax Classification section.
How to get an EIN for Your Amazon Business for Beginners
If you determine that you need an EIN for your Amazon business, obtaining one is easier today than ever before, and it all starts on the IRS website. Here’s a step-by-step on how to start your EIN application:
- Go to the Internal Revenue Service website (IRS.gov)
- Click Apply for an EIN
- Hit the “Apply Online Now” button
- Follow the steps, and the IRS will issue you an EIN instantly
It’s quick, and best of all, it’s free.
Conclusion
Now you know exactly when you need an EIN for your Amazon seller account and when you don’t.
Understanding your tax obligations, including when to use an ITIN or EIN, is crucial for running a successful Amazon FBA business and managing your business income properly.
Choosing the best structure for your Amazon business depends on your financial goals. Consult an accountant or tax professional to ensure you're setting up your small business correctly.
By following these guidelines, you can confidently decide whether to use an EIN for your Amazon seller account and stay compliant with IRS regulations while growing your eCommerce business.
