If you sell online as an individual with no employees, you almost certainly do not need a separate tax ID to sell online — your Social Security Number already does the job. Every major marketplace is required to collect some form of taxpayer identification when you sign up, and the IRS expects that number on your return, but for a sole proprietor working alone, the SSN you already have satisfies both. An Employer Identification Number becomes necessary only when your situation crosses specific lines: hiring, partnering, incorporating, or setting up a retirement plan.1Internal Revenue Service. Get an Employer Identification Number Separate from any federal ID, most states will also want you registered for sales tax once your activity in that state passes a threshold.
When Your SSN Is All You Need
A sole proprietor with no employees uses their SSN as their federal tax ID. Business income and expenses go on Schedule C, which flows into your personal Form 1040.2Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) There’s nothing to register, nothing to apply for, and no federal fee. You can start listing items today.
People who aren’t eligible for an SSN use an Individual Taxpayer Identification Number instead. The IRS issues ITINs specifically for federal tax filing, and they work the same way as an SSN for reporting online sales income.3Internal Revenue Service. Individual Taxpayer Identification Number (ITIN)
Single-member LLCs sit in the same category, as long as you haven’t elected corporate tax treatment. The IRS treats them as “disregarded entities,” so the owner’s SSN or ITIN handles all federal income tax reporting. The LLC itself only needs an EIN if it has employees or owes excise taxes.4Internal Revenue Service. Single Member Limited Liability Companies
When You Must Get an EIN
The IRS requires you to get an Employer Identification Number if any of the following apply to your online selling operation:1Internal Revenue Service. Get an Employer Identification Number
- You hire employees. The EIN is how you report payroll taxes and issue W-2s.
- You operate as a partnership or corporation. These entities cannot use a personal SSN on business tax filings.
- You set up a Keogh or other qualified retirement plan.
- You change your business structure, for instance converting from sole proprietorship to a multi-member LLC or corporation.
If none of those describe you, the IRS does not require an EIN. That doesn’t mean skipping one is always the right call.
Why an EIN Is Often Worth Getting Anyway
An EIN acts as a firewall between your personal identity and your business dealings. Every time you complete a W-9 for a marketplace, hand tax information to a wholesale supplier, or sign a vendor agreement, you’re giving someone your taxpayer ID. Using your SSN puts your most sensitive personal identifier into multiple third-party systems. An EIN gives those parties a number that cannot be used to open credit cards in your name.
Banking is the other reason. Sole proprietors can technically open a business bank account with just an SSN, but most institutions make the process easier when you present an EIN, and corporations, multi-member LLCs, and nonprofits need one to open an account at all. Keeping business money in a dedicated account also makes Schedule C reporting much easier at tax time.
State Sales Tax Permits Are a Separate Thing
Federal tax IDs cover federal income tax. Sales tax is a state matter, and most states require a separate registration before you can collect it. This is usually called a seller’s permit or sales tax license, and it comes with its own state-issued number.
You need this permit in any state where you have nexus, meaning a connection strong enough for the state to tax your sales. Since the Supreme Court’s 2018 decision in South Dakota v. Wayfair, nexus no longer requires a physical warehouse or office. Purely economic activity counts. The most common threshold is $100,000 in annual sales or 200 transactions in a state, though the exact numbers and whether both must be met vary by jurisdiction. Most states with a sales tax have adopted some form of economic nexus rule.
Registration is typically free or costs a nominal fee. Holding the permit lets you collect sales tax from buyers, remit it to the state on the required schedule, and use resale certificates to buy inventory tax-free. Selling without the required permit can result in back taxes, interest, and fines. Some marketplace platforms now handle collection and remittance on your behalf, which may reduce but does not always eliminate your registration obligations.
What the Platform Does With Your Tax ID
Amazon, eBay, Etsy, and similar marketplaces are legally required to collect your tax ID at signup. They use it to file Form 1099-K with the IRS, reporting the gross payments you received during the year.
For 2026, the federal reporting threshold for third-party settlement organizations is $20,000 in gross payments and more than 200 transactions. This was restored by the One, Big, Beautiful Bill Act to the level that existed before the American Rescue Plan attempted to lower it to $600.5Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill Two caveats matter: credit and debit card payments have no threshold at all, so any amount processed through a payment card can generate a 1099-K, and your state may set a lower reporting threshold of its own.6Internal Revenue Service. Form 1099-K FAQs – General Information
Not receiving a 1099-K does not make the income tax-free. The IRS expects you to report all business income whether or not a form was issued.7Internal Revenue Service. Gig Economy Tax Center
What Happens If You Don’t Provide a Tax ID
Platforms aren’t asking for your tax ID as a formality. If you fail to provide a valid SSN, ITIN, or EIN, the platform is required to withhold 24% of your gross payments and send that money to the IRS.8Internal Revenue Service. Topic No. 307, Backup Withholding This is backup withholding, and it applies to the entire payment amount, not just your profit. On a $500 sale where your actual profit was $100, the platform withholds $120, which is more than you earned. You can recover the excess when you file your return, but your cash flow suffers in the meantime. Many platforms will also suspend your account or freeze payouts until valid tax information is on file.
How to Get an EIN
The fastest path is the IRS online application, which validates your information in real time and issues an EIN immediately. It’s free. Paid services that advertise EIN “filing” charge for something the IRS does at no cost. The online tool is available Monday through Friday from 6:00 a.m. to 1:00 a.m. Eastern, Saturdays from 6:00 a.m. to 9:00 p.m., and Sundays from 6:00 p.m. to midnight.1Internal Revenue Service. Get an Employer Identification Number
Have this information ready before you start:9Internal Revenue Service. Instructions for Form SS-4 (Rev. December 2025)
- Your entity’s legal name, exactly as it appears on formation documents, or your personal name if you’re a sole proprietor.
- The responsible party’s name and SSN or ITIN. This has to be an individual, not another business.
- A physical street address. The IRS will not accept a P.O. box as your primary business location.
- Your entity type: sole proprietor, LLC, partnership, corporation, or other.
- The reason for applying, such as starting a new business, hiring employees, or opening a bank account.
If you prefer paper, you can fax Form SS-4 and typically receive your EIN within four business days, or mail the form and wait roughly four weeks.9Internal Revenue Service. Instructions for Form SS-4 (Rev. December 2025)
If You’re Selling From Outside the U.S.
Sellers whose principal place of business is outside the United States cannot use the online EIN application and must apply by phone, fax, or mail.1Internal Revenue Service. Get an Employer Identification Number International sellers on U.S. marketplaces still need an EIN or ITIN to avoid backup withholding and to comply with U.S. tax treaty obligations. Without an SSN, the phone application is usually the most practical route, since the IRS can issue the number during the call for applicants in non-U.S. locations.