To do that, as a non-American (or 'alien' as they like to call us) you need an EIN - an Employer Identification Number. and you have to apply for it to the American IRS (Inland Revenue Service). The EIN prevents amazon etc, from taking 35% of the royalties from your sales. If your country has a treaty (or trade agreement) with the USA, you are eligible to apply for one of these to reduce the tax to 5%! Isn't that kind of them.
And definitely worthwhile!
When I first heard that I needed one of those my heart dropped to my stomach. I am the worst person ever when it comes to tax and money and percentages and anything to do with math or filling out forms. My brain is definitely not wired that way. I am form-filling-out-challenged; and let's face it - tax and all related activity really is very boring. B.O.R.I.N.G. There's no fun it it.
Because, in the end, it wasn't that hard. After you have your EIN you need to apply for a W-8BEN, but this post is just about the EIN. The EIN is where you start. And this is how I got mine.
1. Print out the EIN form. (or have it open on your computer when you make your call).
2. Phone this number: 001 267 941 1099. (It's in Philadelphia, USA, so make sure you phone within working hours. I called at 9am New Zealand time on a Tuesday), which made it approximately 3pm American time on a Monday).
It will then give you a list of department extensions. The EIN application is ext #1.
3. Then wait. And wait. The robot-lady will tell you how long your wait is estimated to be. For me, two days before Thanksgiving it was 'exceeding 30 minutes'. But I've heard that some people get straight through. I ended up waiting a whole hour and that was actually the worst part. The waiting. And the 'on hold' music. That nearly drove me crazy.
4. I think the ease of your phone-application depends on who you get. I got a really sweet-sounding young woman who tried to make it as easy as possible for me. (Bless her). The first thing she asked me was if I had the forms in front of me. I did. She said that it makes it easier for them if you have the forms and can follow along.
*I have read stories of the IRS people telling you that you need to print the form out and mail it in. You do not have to do that. If they say something along those lines to you, just tell them that you understood that it wasn't necessary. If they persist, you will need to nicely end the phone call and call back in the hopes that you will get a more cooperative person.
5. They will ask you for your name. Give them your real name. Then all the details of the address. You may need to spell some things, but they will repeat it back to make sure it is accurate.
6. Speak clearly and slowly. Everyone knows we kiwis talk too fast. I thought about putting on my American accent that I acquired years ago while living in Chicago. Because I spent a lot of time on the phone back then I can sometimes naturally slip back into it when talking to Americans, but in the end decided against it. Americans love the kiwi accent. They think it sounds 'posh' and British, so work it baby! But just speak S L O W L Y.
Here is a copy of the EIN form and the questions I was asked, which I'll list underneath.
So, numbers 1-7a are just the basics about you. Name, address…. that sort of thing.
The person I spoke with did not ask me all of the questions on the form. Some are relevant and some are not, so I'm assuming she just filled them in herself without bothering me with them. Here are questions she asked me.
9a - Type of Entity.
Tick Sole proprietor
(SSN is Social Security Number, and as a non-American you don't have one, so you don't need to worry about that).
10 - Reason for Applying.
Tick Compliance with IRS withholding regulations
11 - Date business started or acquired
- that's an easy one to answer
13 - Highest number of employees - or as my person explained to me - do I employ anyone in the USA?
- answer 0 - no employees (remember you ticked sole proprietor).
16 - Check one box that best describes the principal activity of your business
- I checked Other and said it was for e-books. She was happy with that.
17 - Principal line of business
18. Have you ever applied for or received an EIN?
And that was it.
She then explained that she would give me the number and that I should write it in the top right-hand space provided on the form. (That is why it's a good idea to print out the form first). When she said that, I felt like I wanted to reach through the phone and kiss her, I was so relieved and excited!
She wished me well with my endeavours, asked me if I had any further questions, and then the phone call ended. Took probably 5 minutes at the most.
I copied my number 5 times on the printer. Embedded it into several secure places around my home and am considering getting it tattooed somewhere on my body. This is a number you do not want to lose!
* One other thing I have discovered. Amazon will mail you the cheques (or pay you), using the name you have registered with. They also check (when you fill out the online amazon tax information) that the accounts all relate, so it's really best to use the same name on all the forms, just to avoid any confusion or extra work later on.
The form will be posted out to you from the IRS and should take around 2 weeks to arrive.
I hope this information is helpful to someone and hopefully you won't lose any sleep over it, like I did!