Hello. We are having a discussion and need some clarification for opening a bank account for a sole proprietorship. If John Doe opens an account using his SSN as a sole proprietorship, we would title the account John Doe DBA John's Towing. If John Doe opens an account using an EIN for the business, we open it the same way, John Doe DBA John's Towing. Is this a correct way to do this?

I have read some information that says if a business has an EIN, it can no longer be considered a sole proprietorship. I personally do not believe this is true because John Doe could register his business as a Trade Name or Fictitious Name and still not be considered a legal entity. In Ohio, you can apply for an EIN easy enough for many purposes, so you don't have to run the business or club under someone's SSN. Secretary of State of Ohio states that all businesses must register, but we know that isn't always the case. Our bank does not require our sole proprietors to register with the State (I wish we did) but the bank next door to us does require it.

Please advise.

Thank you

An EIN issued to a sole proprietorship is issued to the person and not the DBA name. An individual can only have one EIN even if they had a dozen DBA names. Read the instructions on the W-9. It encourages them to provide a SSN. The EIN is used solely for employment tax purposes.

Hi Randy, so you're saying that no matter if someone presents us with an EIN for a sole proprietorship, we should still open the account using the SSN of the individual and not use the EIN? We have never done it that way. Is what we are doing considered wrong?

I'm thinking we need to seek legal advice from our attorney.

Thank you

https://www.irs.gov/businesses/small-businesses-self-employed/do-you-need-a-new-ein

Sole Proprietors
You will be required to obtain a new EIN if any of the following statements are true.

You are subject to a bankruptcy proceeding.
You incorporate.
You take in partners and operate as a partnership.
You purchase or inherit an existing business that you operate as a sole proprietorship.

You will not be required to obtain a new EIN if any of the following statements are true.

You change the name of your business.
You change your location and/or add other locations.
You operate multiple businesses.