Do I need an EIN for mystery shopping?

Dear Buzzy

Dear Buzzy,
I was signing up with some mystery shopping companies that you recommended, and one of them stated that you had to have an EIN to shop for them.  Here is what is in their IC agreement:

“Shoppers are independent contractors. In being an IC you must register yourself as a business in the state in which you live and to obtain a Federal Employer Tax ID number to file your taxes. This is the responsibility of all shoppers.”

Can you give me some advice as to where I might go to get this?  Do I need to register myself as a business and my Tax ID number before I sign up as a mystery shopper?

Taxed-out Tessa

Dear Tessa,

First let me explain to others who are reading this: An EIN is an “Employer Identification Number” which you can receive from the IRS, free of charge.  Essentially, it is an Employer’s Social Security Number.

The benefit of using an EIN instead of your SSN for mystery shopping assignments is that you’ll be possibly protecting the mis-use of your SSN.  Remember, you’re going to be signing up with a plethora of companies, and the more companies that have it, the more at risk you are for mis-use.

However, according to US law, you do not need an EIN unless you are hiring employees, (to pay their taxes) and in some cases, to open a separate business banking account, (it depends on your bank).  As of this writing, you are not legally required to have an EIN to be an Independent Contractor (IC) with mystery shopping companies or otherwise.

Some mystery shopping companies prefer that you have an EIN to protect them from IRS tax fraud. Their thoughts are that if you’re an IC, you’re in business for yourself so you need an EIN.  Many shoppers don’t bother to file their shopping income because sometimes it’s only a few bucks here or there.  By putting this stipulation in the agreement, the Mystery Shopping company is just taking extra steps to protect itself in case one of its shoppers doesn’t abide by the laws.

Even if you were to get an EIN, you’d still be a sole-proprietor, and you’d mix all the income together anyway…but will still file separate forms (1099s for misc income, itemizing your deductions) at the end of the year.

Bottom line: talk to a tax man if you’re really concerned, and verify that this information is correct for your particular state. You just need to make sure you keep track of your money as an IC and report it to Uncle Sam as required by law.

 

 Think about all the extra money you could make by being a mystery shopper, starting your own business, or working from home for a legitimate company.  Take control of your income and check out our LEARN page for a list of classes, books, and more!


 

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