Oregon Construction Contractors (CCB) Practice Test

Which business structure is NOT required to obtain a federal Employer Identification Number (EIN)?

1. Corporations

2. Partnerships

3. Sole proprietorship

4. Limited Liability Companies

The correct answer is: Sole proprietorship

Sole proprietorships are unique among business structures in that they are not required to obtain a federal Employer Identification Number (EIN) unless they have employees or meet specific criteria that necessitate it, such as operating as certain types of trusts or having a Keogh plan. Typically, sole proprietors can use their Social Security number for tax purposes and business transactions unless they opt for an EIN for additional reasons, such as privacy concerns or to open a business bank account. In contrast, corporations, partnerships, and limited liability companies (LLCs) are generally required to acquire an EIN as part of their structure and operations, as they are considered distinct legal entities separate from their owners. This requirement helps the IRS track the activities and tax obligations of these business types.