Can I use my new business’s employer identification number (EIN) to subcontract at my 9 to 5 job?

by Carlo J. Silvesti, CPA | Dec 20, 2018

I own a business with a partner. It is new, and we're not making any money at the moment. Can I use my employer identification number (EIN) to subcontract at my 9 to 5 job?

If your intent is to take the losses from the business. There are many ways this can be accomplished if you and your partner are organized as either a partnership or Subchapter S or an LLC. Your business losses will pass through to you and your partner. Thus, in most cases you will get the tax benefit of the losses.

Also, if you decide to become a subcontractor from your employer, there are many considerations that need to be made, including the following:

  1. Will your employer allow it, and if so will it meet IRS regulations?
  2. If you have benefits from your employer, such as medical or 401(k) benefits, these will be lost.
  3. You will pay double your Social Security and Medicare taxes.
  4. If it is paid to your business, how will this money be paid to you? What does your compensation agreement say?

Depending on how your business is organized, you could be dealing with filing payroll tax returns in addition to your personal and business tax returns.

My recommendation is to take all your information to your CPA, and then work out what the change will look like. In my experience, it will usually cost you more time and money to do what you proposed in the question.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Carlo J. Silvesti, CPA, is an assistant professor of accounting at Gwynedd Mercy University in Gwynedd Valley, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
Financial FAQs

Search the most frequently asked finance and accounting questions and read the responses from PICPA members. Always consult a CPA before taking action.