Merchant Account for Sole Proprietors: How to Get One

Yes, you can get a merchant account for sole proprietors. You don’t need to form an LLC or a corporation first. Processors work with sole proprietors regularly, but underwriting leans more on you personally: your identity, your credit, your bank account, and how clearly your business is set up to sell online. This guide covers what underwriters check, which taxpayer ID to use, the documents to gather, and the steps to apply.

Can a sole proprietor get a merchant account?

Yes. A merchant account is simply an account with an acquiring bank that lets you accept card payments and receive the funds. Banks and processors don’t require you to be incorporated. They require you to be a real, legal business with a clear product, a bank account, and an owner they can verify.

According to the SBA’s guide to business structures, you are automatically a sole proprietorship if you do business without registering as another type of entity. A sole proprietorship does not create a separate business entity, so your business and personal assets and debts are not separate.

That legal fact shapes underwriting. When there is no separate company, the processor is really underwriting you. Expect more attention on your personal identity, personal credit, and personal banking history than an LLC owner might see.

How a merchant account for sole proprietors is underwritten

Every application goes through merchant account underwriting, where the acquiring bank decides whether to approve you and on what terms. For a sole proprietor, these are the areas that usually carry the most weight.

Owner identity and credit

Underwriters verify that you are who you say you are with a government-issued photo ID. Many also run a personal credit check. A thin or imperfect credit file doesn’t automatically mean a decline, but it can affect the terms you are offered.

Your business model and website

Since most sole proprietors who apply sell online, by phone, or by invoice, your website is often the main proof your business is real. Underwriters look for a clear description of what you sell, visible prices, a refund or cancellation policy, terms of service, a privacy policy, and contact details. Missing policies are one of the most common reasons files get sent back.

Risk level of what you sell

Your industry matters more than your entity type. A freelance designer billing project fees is usually treated very differently from a one-person supplement brand selling subscriptions. If your products, billing model, or chargeback exposure put you in a higher-risk category, you may need a high-risk merchant account rather than a standard one.

Bank account and expected volume

You will need a bank account to receive deposits. Underwriters also ask for your expected monthly volume and average ticket size. Realistic numbers help. Estimates far above what a one-person business can plausibly do tend to raise questions, not approval odds.

Sole proprietor vs LLC: what changes on your application

Many owners wonder if they should form an LLC before applying. You don’t have to, but it helps to know what differs. This table compares the two from a payment-processing point of view.

Entity type rarely decides approval on its own. Your business model, website, and risk level usually matter more. One practical point: with either structure, the owner usually signs the processing agreement and may be asked for a personal guarantee. Forming an LLC doesn’t always remove your personal responsibility to the processor, so read the agreement either way. Talk to an attorney or tax professional about which structure fits your situation.

SSN or EIN: which tax ID should a sole proprietor use?

A sole proprietor with no employees often isn’t required to have an Employer Identification Number. The IRS page Do you need an EIN? lists when one is required, such as when you have employees, operate as a corporation or partnership, or file employment or excise tax returns.

Even when it’s optional, an EIN is worth getting before you apply. It keeps your Social Security number off more forms, and it looks more established to banks and partners. The IRS says you can get an EIN directly from the IRS for free, and an approved online application gets the number right away. The IRS also warns to beware of websites that charge for an EIN.

Why your name and tax ID must match exactly

Processors report your card sales to the IRS on Form 1099-K. The IRS Form 1099-K FAQs explain that there is no minimum threshold for payment card transactions, so every dollar you process by card is reportable. (The higher federal threshold of over $20,000 and more than 200 transactions applies to third-party settlement organizations, not payment cards.)

If the name and tax ID you give the processor don’t match IRS records, you risk backup withholding. The IRS sets that rate at 24 percent, and payment card transactions reported on Form 1099-K are among the payments it can apply to. To avoid this:

• If you use your SSN, enter your personal legal name exactly as it appears on your Social Security card.
• If you use an EIN, enter the name exactly as it appears on your IRS EIN confirmation notice.
• Put your trade name in the DBA field, not the legal name field.

Do you need a DBA to get a merchant account?

Only if you sell under a name other than your own. If you’re “Jane Smith” and invoice as Jane Smith, you can apply under your name. If you sell as “Northfield Design Studio,” that’s a trade name, also called a DBA (“doing business as”).

The SBA notes that most states require you to register a DBA if you use one, and registration may happen at the state, county, or city level. A DBA doesn’t create legal protection, but it matters for payments. Your DBA is typically what customers see on their card statements, and a recognizable name helps prevent “I don’t recognize this charge” disputes.

Documents checklist for sole proprietors

Having these ready before you apply is the easiest way to speed up approval. Exact requirements vary by processor and risk level, but most sole proprietors should gather:

• Government-issued photo ID for the owner (driver’s license or passport).
• Taxpayer ID: your SSN, or your EIN confirmation notice from the IRS.
• DBA registration, if you sell under a trade name.
• Voided check or bank letter for the account that will receive deposits, ideally a separate business checking account.
• Recent bank statements, often the last three months, personal or business.
• Prior processing statements, if you’ve accepted cards before.
• A live website with product details, pricing, refund policy, terms, privacy policy, and contact information.
• Volume estimates: monthly card volume, average ticket, and highest single transaction.
• Licenses required for your profession or industry, if any.

Every sole proprietor application starts with this same core file, so gathering it once saves time if underwriting asks follow-up questions.

How to get a merchant account as a sole proprietor: 7 steps

1. Decide on your name. Sell under your own legal name or register a DBA with your state or local government.
2. Get a free EIN from the IRS (optional for many sole proprietors, but recommended).
3. Open a dedicated business checking account so deposits, refunds, and fees stay separate from personal spending.
4. Get your website application-ready. Publish policies, real product descriptions, prices, and a working contact email and phone number.
5. Decide how customers will pay. Online checkout runs through a payment gateway; phone and emailed orders can run through a virtual terminal; recurring clients may prefer bank payments by ACH.
6. Submit a complete application with matching names, tax ID, and documents. Answer underwriting follow-up questions quickly.
7. Review the pricing and agreement before signing. Check the pricing model, monthly fees, reserve terms, and contract length. Transparent interchange-plus pricing makes it easier to see what you actually pay.

For a broader walk-through that applies to every business type, see our guide on how to get a merchant account.

Common types of sole proprietors who process cards online

Plenty of one-person businesses use their own merchant account rather than a shared payment app. (Our guide to payment facilitators vs. merchant accounts explains the trade-offs.) Common examples include:

• Consultants, designers, and freelancers billing by invoice. See payment processing for professional services.
• Coaches selling packages and programs. Our guide to a merchant account for a coaching business covers this in depth.
• Course creators and tutors selling online education.
• Solo online store owners running e-commerce or direct-to-consumer shops.

Your own merchant account gives you a direct relationship with the acquiring bank, more control over pricing, and terms underwritten to your business instead of a one-size-fits-all policy.

Common mistakes that slow down sole proprietor applications

• Mismatched names. Putting a DBA in the legal name field while using your SSN creates a tax ID mismatch.
• A “coming soon” website. Underwriters need to see what you sell and your policies.
• Mixing personal and business funds. A shared account makes your deposits and refunds hard to review.
• Inflated volume estimates. Large projections with no history can lead to more questions or tighter limits.
• Leaving out how you bill. Subscriptions, deposits, and pre-sales should be disclosed up front so the account is set up correctly.
• Paying for an EIN. The IRS issues them free; third-party filing fees are unnecessary.

Keeping your account healthy after approval

Approval is the start, not the finish. As a sole proprietor, you handle security, customer service, and disputes yourself, so a few habits go a long way.

Stay PCI compliant. The PCI Security Standards Council says PCI DSS is intended for all entities involved in payment processing, including merchants. Many small merchants validate with a Self-Assessment Questionnaire (SAQ), and your acquirer tells you which applies. Using a hosted checkout or tokenization from your gateway can shrink your scope; our payment gateway integration guide explains how.

Watch disputes closely. Clear descriptors, prompt refunds, and documented delivery all reduce chargebacks. Our chargeback prevention guide lays out a practical routine.

Know your costs. Review your monthly statement and compare payment methods with our ACH vs credit card fee calculator.

Related guides and next steps

• New to merchant accounts? Compare options on our merchant accounts page.
• Getting your documents together? Use the merchant account approval checklist.
• Selling in a higher-risk category? Learn how high-risk merchant accounts work.
• Want to understand the review? Read what underwriters check.
• Comparing costs? See how our pricing is set by risk level and volume.
• Just starting to take cards? Read how new businesses can start accepting credit cards.
• Taking payments by phone or email? Compare a virtual terminal vs a POS system.
• Ready to apply? Start your merchant account application.

Frequently asked questions

Can I get a merchant account without an LLC?

Yes. A merchant account for sole proprietors is a standard product, so an LLC isn’t required to accept cards. Underwriting will focus more on you as the owner, including your ID, credit, and banking history.

Can I use my Social Security number instead of an EIN?

Many processors accept an SSN for sole proprietors. If you use it, the legal name on the application must be your personal name exactly as the IRS has it. An EIN is free from the IRS and limits how often you share your SSN.

Do I need a separate business bank account?

Some processors will deposit to a personal account for a sole proprietor, but a dedicated business account is strongly recommended. It keeps sales, refunds, and fees easy to track and makes underwriting reviews smoother.

Will I get a 1099-K as a sole proprietor?

Card sales processed through a merchant account are reported on Form 1099-K. The IRS says there is no minimum threshold for payment card transactions, so expect one for any year you process card payments.

Is it harder for a sole proprietor to get approved?

Not necessarily. Your industry, website, and expected volume usually matter more than entity type. No legitimate processor can promise approval, but a complete, consistent application gives you the best chance.

Sources and further reading

• U.S. Small Business Administration: Choose a business structure
• Internal Revenue Service: Do you need an EIN?
• Internal Revenue Service: Get an employer identification number
• Internal Revenue Service: Form 1099-K FAQs: General information
• Internal Revenue Service: Backup withholding
• PCI Security Standards Council: Merchant resources