So, as I embark on this next series of posts - the steps to bringing your book into the world, it seemed apposite to remember - writing is, first and foremost, an art. Words have power; words can change a world.
|Neil Gaiman - Fragile Things|
In an earlier post 'Steps to Self Publishing' I listed the things I did before Inner Fire hit the Amazon shelves. I'm going to cover them sequentially, in detail. The purpose of these posts, dear reader, is help you in the creation of your art.
Step One: Tax Number
Witholding tax is tax that is deducted from your earnings ('withheld') by the vendor you have listed your book with. If your book is on Smashwords, Smashwords have to deduct tax on behalf of the US government. Amazon does the same, as does Draft to Digital. These witholding tax rates vary depending on your country of origin and the country of earnings, however it can be quite significant. (You can find a lot of information here.)
However, if your country has a tax treaty with the US you can be eligible for the standard US withholding tax rate, which is currently only about 5 percent. New Zealand has a tax treaty, and it's definitely worth the tax deduction it allows. To access these lower tax rates you need to have a number. Amazon will now accept your domestic tax number - for New Zealanders this would be the IRD number - but other vendors are a little less flexible, and seem to still require a US tax number.
Therefore, if you want to sell on a number of platforms currently it's way simpler if you have a US tax number. Basically, there's two types of numbers - a number for an individual (ITIN) or a number for an entity (EIN). Writers are both: an entity (i.e. we write for generating profit so therefore we are a business) and an individual. Therefore, we have a choice of number types.
Well, dear reader, following my own long and bitter experience over the ITIN, I can tell you now - it's a lot lot easier to get the EIN. Here's a brilliant blog post which explains it much better than I can. Amazon also has useful information.