I originally wrote this for Journey To Get Paid.
Any of you that have researched and delved into the world of online advertising to any extent have learned that most of these companies require you to give them your social security number. You may wonder why you have to do this and the answer is quite simple, they report the expense of paying you to the IRS. The IRS at this point needs to know who to tax for the income. Any money you make is subject to federal tax laws whether the advertisers report the money to the IRS or not. How you handle your taxes and reported income is up to you but remember the tax benefits for your cost of doing business:
- Write off hosting fees
- Write off domain registration fees
- Possibly write off hardware (I need to look into this one)
What are your choices?
Now we’ve already stated that the advertisers need to tax you somehow and your normal tax ID is your social security number. What other options do you you have? Well lucky for US citizens there are at least two routes you can take, an EIN (Employer Identification Number) or a TIN (Tax Identification Number). A TIN from what I understand works identically as a social security number for purposes such as employment or money received. An EIN gives you business benefits. With an EIN you can open a business bank account and you can apply for a business license.
How do I get an EIN?
Thankfully the IRS has made it easier to obtain an EIN than it has in the past. You can apply online. The IRS has setup a website that allows you to request one in just a few minutes. You will need to give them your social security number, but then again they already have it. You will more then likely choose a sole proprietorship and under business activity choose and other and when they ask for a description type in blogging (that does feel good). You don’t have to be a blogger, but I’m pandering to my audience.
After going through a few screens that are all logical and self explanatory (if you have have questions feel free to email us and we’ll answer them to the best of our ability). At the end of the process you are given your EIN immediately and a PDF with your documentation. While you can retrieve your number at a later time I would suggest e-mailing yourself the PDF for future reference. You now have a legal tax number you can give advertisers without giving them your social security number.
Why do I want this again? Why shouldn’t I just give the advertisers my social security number?
The simplest answer is how do you know to trust them? This is about keeping your social security safe from identity theft. If the advertisers database is compromised your social security number could be released for any and all to use. If it’s a fly by night advertiser that may be offering huge rates – their true business may be collecting social security numbers. By keeping your blogging business separate from your personal finance record you can maintain an easier separation from your day job and your online business.
I hope this was useful for you and it helps insure your personal security
Be warned though – some sites are trying to charge you for the privilege of getting an EIN which is free to you for the taking.
For more information on the online EIN application process go here.