A Simple Guide to EINs for Business Owners and Individuals
Most people are comfortable with Social Security Numbers (SSN). You deal with your own or your families SSN’s regularly.
When it comes to EIN’s – Employer Identification Number – they are typically unfamiliar territory.
Most people think about them only in the context of a business. So if you don’t have a business, you think you don’t need one.
However, if you have a business, you don’t necessarily need an EIN. And, if you don’t have a business, you might still need an EIN!
If you decide one is needed, see my simple guide to obtaining one: 👉How to Get an EIN (Quick and Simple) – Gilbert Wealth
What is an EIN (Employer Identification Number)
An EIN is a tax ID issued by the Internal Revenue Service (IRS) for the purpose of identifying an entity. It’s like the SSN for the entity.
While you only have one SSN, you can have multiple EIN’s for different purposes.
You may have an EIN for:
- Yourself (personally)
- A business or multiple businesses
- A retirement plan
- A trust
Common Uses for EINs
EIN for a Business
You need a business EIN if:
- You have employees
- You operate as an LLC, partnership, or corporation
- You want a business bank account
- You don’t want to use your SSN on forms
You might still get one even if:
- You’re a sole proprietor with no employees
- You just want cleaner separation and privacy
EIN for a Solo 401(k)
If you open a Solo 401k, you will need to provide an EIN number. This is typically your business EIN number, if you have one.
However, you may also need a separate EIN for your Solo 401k which is considered legally separate from your business. Solo 401k providers may or may not ask for this.
When you need a 401(k) EIN:
- Opening a solo 401(k) account (most custodians require it)
- Filing Form 5500-EZ (once plan assets exceed $250,000)
- Keeping reporting clean and separate
EIN for a Trust
Trusts can be fairly simple or quite complex. Depending on what type of trust you have, you may or may not need an EIN for that trust.
If you work with an attorney to craft the trust, they will be able to answer if your particular trust needs one.
Most trusts are revocable and typically do not require a separate EIN until the grantors pass away.
However, if a trust is irrevocable or is a more complex trust, it may very well need an EIN.