Social security numbers (SSNs) are unique nine-digit numbers that most US residents have. As an employer, you may wonder if you can use your SSN to process payroll.
Unfortunately, employers cannot use their SSNs to pay employees. Instead, you need a Federal Employer Identification Number (EIN or FEIN). But you can use your SSN to apply for a FEIN.
FEINs allow you to withhold taxes on your employee’s behalf. As an employer, you also need a FEIN to pay your business taxes and run payroll.
But who, exactly, counts as an employer? And how do you get a FEIN if you count as an employer in the US? We answer these questions and more in this guide, so keep reading.
What Counts as an Employer?
At the most basic level, an employer is any entity or individual with employees. The employer must compensate its employees with an hourly wage or annual salary. Employers in the US also have additional responsibilities, such as:
- Paying a rate above the Federal minimum wage
- Providing employees with W-2 tax forms
- Paying employer and employee taxes
It is also essential to differentiate between employees and independent contractors. That is because employers of independent contractors do not have to pay employee taxes or provide W-2s. Learn more about the distinction here.
Can Employers Process Payroll With an SSN?
No, employers cannot run payroll with their social security numbers alone. Even if you only employ one or a few employees, you must have a Federal Employer Identification Number.
FEINs are unique to your business or individual proprietorship. They consist of nine numbers. Only employers with locations in the US need FEINs, but other countries have their own business identification systems.
How Do You Get a FEIN?
You would apply for a FEIN through the Internal Revenue Service (IRS). First, you must have a valid taxpayer ID number. In this case, your SSN does count as a taxpayer ID number.
Next, you must complete an application. Once the IRS validates your employer information, you will receive your FEIN immediately.
Do Employers Need Employee SSNs to Run Payroll?
Yes, employers need employee SSNs to run payroll and report wages to the IRS. If your employee(s) are not US residents, you can also accept Individual Taxpayer Identification Numbers (ITINs).
Prospective employees who do not have SSNs can file Form SS-5. Your employees first need proof of US citizenship and identity to fill out this form.
Looking for Expert Payroll Assistance?
So, can you process payroll with a social security number alone? No, businesses need Federal Employer Identification Numbers to run payroll. You also need your employees’ social security numbers to report their wages.
Are you searching for payroll service providers in Oklahoma and Northwest Arkansas? Valor Payroll Solutions specializes in payroll and other human resources services for small businesses and employers like you.
Contact us today to learn more about our services and get the payroll help you need today!