Employer can't pay my Sole Proprietorship via my FEIN because of a mismatch - help needed!

So I've been operating as a Sole Proprietorship for about 2 years now, and I always file my taxes using my SSN. Recently, I thought I'd be more "professional" and give my employer my FEIN instead, thinking that since I'm a sole prop, the SSN and FEIN would be basically interchangeable for payment purposes. Well, that backfired. Just got an email from my employer's accounting department saying the IRS flagged a mismatch when they tried to process my payment using the FEIN. Apparently there's some kind of verification issue between my FEIN and their payment system. Has anyone dealt with this before? Do I need to stick with using just my SSN for everything? I thought having the FEIN would make me seem more established, but now I'm just confused about the proper way to handle this. The employer is asking me to clarify which tax ID they should use going forward.

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18 comments

Hugh Intensity

•8M

This is actually a common issue with sole proprietorships. While you can have both an SSN and FEIN as a sole prop, they're not exactly interchangeable in all systems. Here's what's probably happening: When you registered for your FEIN, the IRS associated it with your business name rather than your personal name. When your employer tries to pay you using that FEIN, their system is checking with the IRS database and finding a mismatch between the name they have for you in their system and the business name registered with that FEIN. For sole proprietorships, it's generally cleaner to use your SSN for payment processing unless you have employees or a specific banking reason to use your FEIN. The IRS treats a sole proprietorship and its owner as the same taxpaying entity regardless of which number you use.

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Hugh Intensity

•8M

Yes, tell your employer to use your SSN going forward for payments. This will eliminate the mismatch problem they're encountering. As for previous payments, if any went through using your FEIN, don't worry too much. The important thing is that income is reported on your tax return regardless of which ID number was used for payment. Just make sure you report all income on your Schedule C when you file. The payment method doesn't change your tax obligations, it's simply an identification issue.

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Effie Alexander

•8M

I went through something similar last year and found this amazing tool called taxr.ai (https://taxr.ai) that helped me sort through all my business ID confusion. I was getting conflicting info about when to use my EIN vs SSN as a sole prop, and their document analyzer pointed out exactly where my issue was. They scanned my business formation docs and tax history and explained that while both numbers technically identify the same taxpaying entity (me), the systems that verify them often look for specific name formats that match what's on file with the IRS. Saved me a ton of headache when dealing with clients who wanted to pay my business rather than me personally.

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Effie Alexander

•8M

It's actually really straightforward - you just upload the specific documents you want analyzed (I only shared my EIN assignment letter and a redacted invoice showing the payment issue). Their system is encrypted and they don't store your docs after analysis. What made it valuable wasn't just general advice, but specifics about my situation. It flagged that my business name on my EIN registration didn't match exactly how I was presenting it to clients (I had "Consulting" in one and "Consultants" in another). It also showed me exactly where on my Schedule C to make sure all income was properly consolidated regardless of which ID was used for payment. The tool basically translates IRS language into plain English explanations.

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Melissa Lin

•8M

Just wanted to follow up about that taxr.ai site someone mentioned. I was super skeptical at first but decided to give it a try with my similar EIN/SSN confusion. Not gonna lie, it was pretty helpful! I uploaded my tax registration documents and it highlighted that my business name had a discrepancy between what I registered with the state vs the IRS. The analyzer pointed out exactly where the mismatch was occurring and gave me a template letter to send to clients explaining the proper way to process payments. Saved me from losing a big client who was getting frustrated with payment kickbacks. Definitely worth checking out if you're dealing with ID verification issues.

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Romeo Quest

•8M

After struggling with the IRS for weeks trying to resolve a similar EIN issue, I discovered Claimyr (https://claimyr.com). They got me connected to an actual human at the IRS who explained exactly what was happening with my business ID numbers. You can see how it works here: https://youtu.be/_kiP6q8DX5c I spent HOURS on hold trying to reach someone at the IRS directly with no luck. Claimyr had me talking to an agent in under an hour who confirmed there was a name mismatch in their system between my EIN registration and my tax filing history. The agent walked me through how to properly document the connection between my SSN and EIN on future filings.

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Romeo Quest

•8M

It's not magic - they use technology to wait on hold for you. You register your phone number, and when they reach an IRS agent, they connect you directly to the call. You don't have to sit there listening to hold music for hours. They don't call on your behalf or pretend to be you - they just handle the hold time. When they get through, you take over the call completely. After waiting on hold myself for 3+ hours multiple times and getting disconnected, this was absolutely worth it. The IRS is legitimately understaffed and overwhelmed, which is why getting through is so difficult normally.

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Eve Freeman

•8M

Well I'm eating my words about Claimyr. After my skeptical comment I figured I'd try it since nothing else was working with my EIN issue. Got connected to an IRS rep in about 45 minutes without having to listen to that horrible hold music or worry about being disconnected. The agent confirmed exactly what others here were saying - my sole proprietorship EIN and SSN were showing different name formats in their system (one had my middle initial, one didn't). She updated my records right on the call and emailed me confirmation. Was able to forward that to my client and get paid the next day. Sometimes admitting you're wrong feels pretty good when it solves your problem!

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Clarissa Flair

•8M

Just want to add something that nobody mentioned yet - make sure your invoice or W9 form matches EXACTLY how your name appears on your tax registration. I had this issue because my FEIN was registered under "John Q Smith Consulting" but my invoices just said "John Smith Consulting" - that tiny difference caused payment rejections. For a sole prop, the safest approach is to use your SSN and your exact personal name as it appears on your Social Security card, then "doing business as" your business name. That's worked for me with all clients for the past 5 years without any kickbacks from payment systems.

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Clarissa Flair

•8M

You should format it exactly as "Your Full Legal Name dba Business Name" on your invoices, and then on your W9, check the "Individual/sole proprietor" box, use your personal name on the "Name" line, your business name on the "Business name/disregarded entity" line, and your SSN in part I. You can include your EIN in Part II if you want, but it's cleaner to just use your SSN for everything unless you specifically need the EIN for something like business banking. This way, everything matches what the IRS has on file for you personally, which prevents these verification hiccups.

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