Hello, how are you?
As you are aware from my previous posts, I began the journey of self-publishing in the earlier part of last year. I announced that I would be completing my Break through the barriers of redundancy book in the beginning part of this year, to sell on Amazon and in the future through my own e-Book store, quirkybooks.net, that is still in the early stages of construction. You are probably wondering why on earth I haven’t just got on with it and published it by now. The truth is, I have been getting on with it, most weeks, over a number of days, for many hours. I guess I naively thought when I started out, that I would write a book, get a good cover design, upload it and hey presto, job done. I was wrong. In the most simplistic of terms, yep, that’s what you do and it’s good to think about it in those simplistic terms, otherwise it can be a real mind boggler, particularly when trying to publish through CreateSpace, that is for print, as well as KDP, for Kindle. After hours of writing and time spent on styling the book; page layout, formatting, indexing, pagination, I could go on, I finally created my CreateSpace account. When I next logged into CreateSpace, I had this message alert from them:
Welcome to CreateSpace!
Some things you should know about your account and how we report your earned royalties to the Internal Revenue Service: We are required to report your earned royalties to the Internal Revenue Service. If you currently reside in the United States, you must provide us with a Tax ID number, payee address and business type before your title can go live and be available for purchase. If you are currently living outside of the United States, you must provide us with your payee address and business type before your title can go live and be available for purchase.
Please refer to http://www.CreateSpace.com/International for additional information for non-US members.
To update this information, visit https://eu.createspace.com/pub/accountsettings.royaltypaymentinformation.do to access your “Royalty Payment Information.”
Upon opening this link:
On Monday the 2nd of June 2014, I spent hours trawling the internet to find out what I needed to type into the Tax and Business Information section of my Royalty Payment Profile. I needed to type in a Tax Reporting Name and Business Type, plus a Tax Identification number, that I hadn’t got a clue about. I had previously bought a book on self-publishing and even that confused me.
Tax & Business Information
US Tax Information
Tax Reporting Name
Tax Identification Number
After hours of tearing my hair out (not literally, I am not bald) and painstaking arrrrgh! Moments; to cut a very long story short, I managed to find out what I needed to type in, as you can see from the above screen shot. To do this I discovered; if you sell books on Amazon through CreateSpace or KDP, all UK and EU sales, have no tax withholding on your royalties. However, the USA withholds 30% tax on your book royalties, unless you obtain either an ITIN (Individual Tax Identification Number) otherwise known as TIN or EIN (Employer Identification Number) from the IRS (Internal Revenue Service) from the USA. Then fill in a W-8BEN and post it to CreateSpace at the address given in your CreateSpace account. Because the UK have a treaty agreement with the USA, residents of the UK can pay 0%. From my research, it was clear that getting an EIN is a lot easier than obtaining an ITIN, which can take several months. As soon as I discovered that if you are self-employed, you can apply for an EIN, and it’s as easy and simple as downloading a form and making a phone call to the IRS in the USA, I did it.
The procedure I followed is below:
- I got the phone number of the IRS in the USA – From the UK it’s 00 1267 941 1099.
- I contacted my phone company to find out how much it would cost to phone the number, so I didn’t have any nasty surprises. I had read that the phone call would be between 20 – 30 minutes in duration.
- I downloaded form SS-4 (Application for Employer Identification Number) from the IRS website to have to hand when I made my phone call.
- I filled in the form SS-4. I wrote my name and address details. Type of entity I wrote; Other – sole trader. (I was told during the conversation with the IRS that is was Sole Proprietor because I am a sole trader not Other.) Reason for applying was Compliance with IRS withholding regulations. A date that I started my business, (registered with HMRC). Principal merchandise sold, specific construction work done, products produced or services provided, was book royalties. Has the applicant entity on line 1, ever applied for an EIN – No.
- I downloaded the form W-8BEN-E to send to CreateSpace. (I was subsequently advised that you actually need form W-8BEN 2006 version, until July 2014, because the new W-8BEN-E that is 43 parts long, has been released too early and there are no instructions for it yet!)
- I then phoned the IRS in the USA, that I was informed is open 12 hours a day.
The lady at the IRS gave me her badge number at the start of the conversation, I had to say that I was applying for an EIN, that I own my own business and I am a sole trader. After 20 minutes of talking to the lady at the IRS and answering the questions that I had filled out on the SS-4 form, I was given my EIN number on the phone that was a 9 digit number starting with 98-. I asked to be put through to another department to have help filling in my W-8BEN-E, that ended up being the W-8BEN (see previous mention). I needed to post this form to CreateSpace Asap, because it states they only process these forms on the 10th of each month.
Filling in W-8BEN
- Part 1: Identification of Beneficial Owner. The beneficial owner was my name and the type was Individual, as I am a sole trader.
- Part 1 – (8): Is the EIN number that I just received, with a tick in the EIN box.
- Part II Claim of Tax Treaty Benefits was A – Resident of the United Kingdom (no abbreviation) and B.
- Part II 10 Special rates and conditions Article (12) of the treaty identified on line 9a above to claim a (0%) rate of withholding on specify type income): (Royalties.) Explain the reasons behind the beneficial owner meets the terms of the treaty article: (I was told to write the following)…...I am a resident of the United Kingdom and all of the products are made in the United Kingdom with no fixed base of operation within the United States.
- Part IV Must be signed, with an original signature, dated and title added (Owner).
I posted my W-8BEN form off by airmail to CreateSpace the next day. It takes 4 days to get there, so it should get there in time for processing on the 10th of June 2014. Something else I need to bear in mind, is that US sales are only paid in $, so I may want to open a USA bank account because of conversion fees. More stuff to boggle the mind. I hope this step-by-step guide will help a ton of people, including yourself, and ensure you don’t go bald in your journey into print.
One article I found particularly helpful about an ITIN and EIN was:
I don’t have the instructions for the ITIN because I decided to not go down that route and if you Google ITIN or TIN, there is a ton of information about what to do.
Until next time, write soon