Any MSC that requires an EIN has, indeed, bought the snake oil about the end of the world of MS as we know it. Flash and AV toots and I have all researched this extensively. In my case I have read hubdreds of pages of documents over the 40+ years that I have been self-employed, concerning IC status. When I ormed a small business corp that I used when i managed other folks rental properties, I had to have an EIN nd pass any "income" through to myself as dividends from the SB corp. However, at no time, in several careers as an IC has any attorney or enrolled tax accountant ever advised me to file under anything BUT my SSN, except for the purpose of dividends passed thru from the SB corp. Sole proprietors with no employees emphatically do not need to file with anything but their SSNs.

And so, walesmaven, the question still remains: what is Trendsource trying to circumvent from this requirement? It just sounds a bit shady to me.

SteveSoCal -- The problem with your premise is that this EIN issue has ABSOLUTELY NOTHING to do with whether we're ICs or employees. There is probably something else going on here that is causing them to take this action and it may have something to do with how they're categorizing people in their office which may have gotten them in trouble with the IRS. IF, and that's a big IF since I don't know what's going on with this MSC, they're having problems with the IRS, someone's given them so really bad counsel. The IRS's test to determine whether someone is an employee or IC has nothing to do with whether the shopper is using their SSN or an EIN. So, to suggest that this has anything to do with them having to bring us on as employees is not based on facts.

avitoots. I view this as just another means to further distance themselves from any responsibility to shoppers. I also think there are other undisclosed issues going on here...

The folks that keep emailing shoppers asking us to write to our Members of Congress to save our IC status are actually worried about what will happen if the law turns its spotlight on how they treat, and pay, their schedulers and/or editors. Many are treating those folks like employees for "span of control" purposes but claiming that they are ICs, and not offering tax withholding, benefits, etc. that they extend to their other employees. If they coud get over 1 million shoppers to write to Congress opposing legislation that might cause the MSCs to have to treat their staff like the employees that they should be (in many but not all cases) they would have more clout in opposing the law . It's not us MS who are in danger from the new legislation that has been proposed. Some lawyers advising the MSCs and the MSPA have told them that it would strengthen their case that they do not have an employment relationship with anyone who uses an EIN. Hence, scare the shoppers that new laws would end their IC status by telling shoppers that they will soon have to PROVE that they are ICs by having an EIN. And it's nasty old Congress' fault, so write to Congress to stop all of this. That's the snake oil.



Edited 1 time(s). Last edit at 05/29/2012 09:03PM by walesmaven.

Again, I will reiterate, whether they use an EIN or a SSN is immaterial as to proper classification. Furthermore, Congress doesn't need to do squat. The IRS is going after companies that have incorrectly classified employees. So, if they have editors or schedulers, whether in their office or virtual, whose hours and manner of conducting their work is controlled by the MSC and they are calling them ICs, they have miscategorized those ICsand will be in trouble with the IRS. This has nothing to do with the shoppers and whether the ICs who should be considered employees are using SSNs or EINs. The type of identifying number is not the issue and if they have professionals telling them that, then they are wasting those hourly fees and better hire some better advisers.

And of course for some of us, getting an EIN alerts state and local government that there is or may be a business and that calls for all sorts of licenses, inspections and permits and lengthy explanations. None of this is free and none of this takes an insignificant amount of time. Further, in some neighborhoods businesses are not allowed at all due to zoning or deed restrictions. So getting an EIN can indeed be not only a big deal but prohibit you from further work as a shopper.

And, Flash, I don't get why people are still buying the Trendsource party line that shoppers are in danger especially after I posted direct quotes from the IRS' website. Unless you have others performing shops for you, which is a breach of most IC contracts, there is no need to get one and/or provide one to a company that is clearly trying to cover it's butt.

Ok I'm confused, I read in 2 accounting books that I would have to have an EIN before filing my taxes and if I want a bank account for my business: Mystery Shopping. It's not called that, it's known as my own name. If I do not need an EIN at all, how do I get rid of it?

Did you already get one? If so, look at the IRS website and look up EIN. That's where I copied the information about when you would need an EIN. The website probably also has information about cancelling an EIN or if it is even necessary to cancel it.

Yes I have one, They walked me through the questions and just gave it to me. I was told at the bank to have a business account I would need the EIN. I was also told I would need it when filing my taxes. Now I find folks here saying you don't need one. I am so confused...

As a Schedule C business you can use your SSN, an EIN or both. That is not an issue. If you provide an EIN with a company name that you cannot bluff as your own name, you may find you need to open a business account. I.e. If your name is Sarah Jones and your EIN business name is Sarah Jones you probably can deposit your "business" checks into your personal account without issue. But if your name is Sarah Jones and your EIN business name is Jones Shops, most diligent banks will not even allow you to sign the checks over to Sarah Jones for deposit.

As a general rule it is unwise to mix personal and business moneys, though almost all of us do it on a regular basis. So if you decide to 'do it right' and operate a separate SSN based account for your shops and do the EIN thing with Jones Shops, you could quickly need two accounts for your business. Since most business accounts require minimum balances before they are low cost or no cost, having an EIN as something other than Sarah Jones could tie up money or cost you money pretty quickly.

It is precisely these kinds of considerations that make me realize Trendsource is making themselve uninteresting to attempt to work with.

Edited to add: Some MSPs will not accept an EIN to register with them.

Edited 1 time(s). Last edit at 05/30/2012 04:44AM by Flash.

Okay...I'm so not accounting inclined. Please forgive me if I get to be a pain. Trying to wrap my head around this. So, you are basically saying that since I operate under my own legal name (name on my BC) and not an assumed name I can set up the accounts for business moneys under my name and SS and do not have to have a "business account" like those used by (fake name intended) Bog Diddly Toys, Inc? I just want to be sure to keep the money from my MS and Merchandising work separate from what my husband brings home from his job. I have already setup a separate Paypal account and a Prepaid Visa, just need a bank account for companies that pay via check only.

I use my own name for my acting, house/pet sitting and mystery shopping business. I have applied for an EIN only once when I created a murder mystery company with a partner and we actually hired actors as ICs. It was a completely different situation than mystery shopping. I don't see why you can't run your mystery shopping business under your own name. And, as far as I know, you can open as many banking accounts under your own name so that shouldn't be a problem. I would take a good hard look at that prepaid Visa because I just saw a story about exhorbitant fees attached to them and how you may not have the same protections that you have with a regular credit card. Also, if you file your taxes jointly, you'll still have to include your shopping income on the tax return.

A prepaid Visa card is not a credit card by it's very nature. It is a debit card. You can only take out what you have in. Some of the co's charge monthly maintenance fees but most anymore do not. I do not believe that for instance, the Paypal card has a fee. Easy enough to check If I recall correctly, you just put your name for the EIN. You do not have to come up with a separate name to get one. Again, please let us try to keep the info straight. If I am wrong re any of this please let me know and I will research further.

cynb -- I did not say that her prepaid Visa had a fee. And, by the way, just because your experience does not include what I mentioned does not mean that my information was incorrect. They are trying to pass legislation in Congress to provide the same protections for consumers have for credit cards applied to the prepaid cards. There also are companies that do nickle and dime people with small fees. So, before you accuse someone of not keeping info "straight," do your homework and make sure the person is wrong. And, by the way, I attempted to get a PayPal debit card and it was a PITA and they froze my account demanding multiple pieces of identification. My whole point is to be careful when you're purchasing some of these financial instruments because it can end up costing you money that you shouldn't be paying.

I was not meaning to accuse you of misinformation just stating that in general I was hoping we could all do our research. But yes you did say to be careful about exorbitant fees for prepaid cards and I agree. I see what I missed on your point meaning that debit cards should have the same protections as credit cards, which I have heard Suze Orman talking about. I think that she was also talking about prepaid cards, which she champions one of, should be attached to credit scores..Great idea.

And, there is a difference between prepaid debit cards and prepaid credit cards. The prepaid credit cards had been called secured credit cards. Not sure if there is still a differentiation. Most debit cards are connected to some kind of bank account.

kathryn,
All you need is two bank accounts, both in your legal (personal) name. Use one for household and personal expenses; use the other for business (MS) expenses. When you make a profit at MS, you can py yourself from the business account and do whatever with the money; spend the cash or deposit to any account that you may want to draw it from. It's none of the bank's business what you use either account for. Both will be under your SSN. Even though you have an EIN already, you are NOT obligated to use it unless you meet some threshhold like hiring employees of your own for whom you would be paying withholding taxes or something. Virtually no shopper will meet any of the tests that would require use of an EIN for tax or banking purposes.

Katherine, I agree with Walesmaven. I think it is a good idea to operate a separate account for your shopping, but for a different reason. The balance I keep in my shopping account I refer to as my 'shop kitty'.

I hate using household money to do shops and then trying to remember to put it back in 'household' when I get paid and reimbursed. The 'kitty' account allows me to pay the credit card charges due to shops from the 'kitty' and pull a little cash for those shops that require cash payments. When the 'kitty' gets too fat, I move the money over to 'household'.

I definitely use my normal credit cards for shops because of the cashback bonuses that I accrue over time. And because the 5% cash back deals change month to month, I carry a variety of cards. For May, for example, the 5% was on the Discover card for groceries, restaurants and movies. My business put about $300 on my Discover card in May, which is only $15, but over time mounts up nicely. Since over the course of a year I am likely to lay out $5000 to $7000 on shops to be reimbursed, using the card with the best bonus for that type of establishment for that month works well for me.

I applaud you looking at accounting information to get yourself set up and started. Single entry bookkeeping will do fine for IRS purposes and it is primarily IRS that you need to satisfy. They are going to be happy enough with any contemporaneous record keeping that is easy to follow and complete. My personal choice is a Excel spreadsheet that has dates, jobs, addresses, mileage, company I did the work for, fee, bonus, reimbursement, date paid and amount paid. Paypal and bank records can show the relevant receipts. Credit card statements (highlighted for those charges that are shop related) and copies of the receipts submitted for reimbursement show the outflows. Receipts from oil changes on my vehicle help support my overall mileage claims, while a quick visit to Google Maps or similar can support a specific mileage claim for a shop or a route. Even the simplest of consistent record keeping will go further in protecting you that you are indeed a small business than having or using a EIN.

Here is some food for thought -

[www.forbes.com]

mrcomputer101 Wrote:
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> Here is some food for thought -
>
> [www.forbes.com]
> californias-tough-new-independent-contractor-law/

So this is a 'tough' law. For shoppers, p 2, #7, 9 and 10 pretty much establish our 'independence' by themselves.

Being from California I was interested, however this link is no longer available.
mrcomputer101 Wrote:
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> Here is some food for thought -
>
> [www.forbes.com]
> californias-tough-new-independent-contractor-law/

It came right up on my computer less than 10 minutes before your post, Irene, and I just got back there easily. Ignore the video. Go to the top of the page where there is a 'Continue'.

[www.forbes.com]

Still comes up for me also. There might be a provider/server issue in some areas...

If I missed this earlier forgive me. If you open a business account through PayPal aren't you subject to fees that personal accounts don't have?

o.k., I got it, thanks.

Irene. Request feedback from you as someone in California...

EDITED: Personal attacks are not tolerated. You have the right to disagree. Just be objective about it. A single post does not make you an expert...