Tax And Withholding
What is Revenue and Tax Withholding?
All author revenue that meets the true and legal definition of a royalty is subject to withholding.
U.S. Domestic Entities Or Individuals
- A US Domestic Entity is an individual, company or organization that typically (but not always) resides in the United States and is required to pay taxes to the government of the United States.
- Complete and submit a W-9 form to keep on file. A properly completed W-9 form provides your Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or Federal Employer Identification Number (FEIN).
- With a valid W-9 form on file, your withholding rate is 0%. If we have no W-9 form on file, your withholding rate is the default backup withholding rate for U.S. domestic entities as set by the Internal Revenue Service of the United States; currently this rate is 24%.
Foreign Entities Or Individuals
- A foreign entity is an individual, company or organization that typically (but not always) resides outside of the United States and primarily pays taxes to a government other than the United States.
- Withholding is waived when your published material is delivered, either physically or electronically, outside the United States.
- When your published material is delivered, either physically or electronically, within the United States, the Royalties earned on these sales are subject to US withholding.
- Non-US authors should complete and submit a W-8BEN form to remain on file. A properly completed form provides us with your US, or non-US tax identification number and assigns you to a Resident Country.
- With a valid W-8BEN form on file, your withholding rate is the percentage defined in the tax treaty between the U.S. and your Resident Country as appropriate for royalties. These rates vary by country.
- Without a valid W-8BEN form on file, your withholding rate is the default backup withholding rate for non-US individuals or entities as set by the Internal Revenue Service of the United States. Currently this rate is 30%.
Non-US Tax Payers
When a payee is considered a non-US resident, the Internal Revenue Service requires us to withhold US income taxes on any sales delivered to the US. The standard tax rate for these sales is 30%. To apply reduced tax treaty rates (if available) you must submit a completed W-8BEN form (or W-8BEN-E for non-individuals).
Why do some of my books have withholding, while others do not?
Only books with US ISBNs are subject to withholding. If you registered an ISBN, outside of the US, your earnings are Other Revenue, and are not subject to US income tax withholding.
Can I enter a corporate tax ID number instead of a personal one?
You may use a corporate name and tax identification number when you provide your remittance address. We report your earnings under the business number and name instead of your personal name and tax number. If you do not file a business tax return, please use your personal name and tax identification number.
What is the withholding rate for foreign entities?
With a valid W-8BEN form on file, your withholding rate is set at the percentage defined in the tax treaty between the U.S. and your Resident Country as appropriate for royalties. These rates vary by country. Without a valid W-8BEN form on file, your withholding rate is 30%.
Mandatory Distribution Requirements
Ebook retailers maintain a variety of minimum standards and requirements to list your ebook on their site. To comply with these standards and ensure your ebook can be listed with any and all of our ebook retail partners, we require ebooks meet these Distribution Requirements. Failure to comply with any of these standards can result in rejection from our Global Distribution service. Please note that all retail distributors manage their own retail site and requirements. Our distribution requirements reflect the minimums and standards we’ve received from these retailers. But any retail may, at their own discretion, update, amend, remove, or otherwise alter these requirements at any time and without notification. In the event of a discrepancy between our requirements and a retailer’s, the retailer requirements will supersede the list that follows. IMPORTANT: your ebook must be in English to be eligible for Global Distribution. All ebooks files must be in EPUB format.
Distribution Channel Information
The Global Distribution service sends your print and ebook to retailers for listing on their website. For ebooks, this includes all the most popular retail channels like Amazon, iBookstore, Google, and Kobo.
The following channels are included in Global Distribution for ebooks: Amazon, iBookstore (Apple), Barnes & Noble, Kobo, Google, Scribd, Libri and Lulu.
Publishing For Distribution
Creating an ebook for distribution requires adhering to all standards for all retailers. Note that all ebooks submitted for Global Distribution must be manually reviewed by our staff to ensure they comply with our more exacting retail channels. The ebook is also reviewed by retailers based on their individual requirements. This can result in a delay of up to 8 weeks from the time you submit your ebook until it appears for sale on retail channels.
Mandatory Distribution Requirements
Print book retailers have established minimum requirements to ensure they can print your book correctly and efficiently using their system and printing network. In order to make your print book available through the Global Distribution service, all requirements from all retailers must be met. Failure to comply with any of these standards can result in rejection from our Global Distribution service. IMPORTANT: your ebook must be in English to be eligible for Global Distribution.
All retail distributors manage their own retail site and requirements. The distribution requirements reflect the minimums and standards we’ve received from these retailers. But any retailer may, at their own discretion, update, amend, remove, or otherwise alter these requirements at any time and without notification. In the event of a discrepancy between our requirements and a retailer’s, the retailer requirements will supersede the list that follows.
Every print book submitted to the Global Distribution service must first be reviewed and approved by you. Doing so helps minimize delays when submitting your work to our distribution partners and ensures you have reviewed your project. Each time a change is made to the interior file, cover file, or book specifications, for a project using Global Distribution, you will be required to order a physical proof copy to approve the changes.
Distribution Channel Information
The Global Distribution Network makes your book available for purchase on Amazon.com, BarnesandNoble.com, and other online retail sites at no additional cost to you. Global Distribution also creates a listing for your book with the Ingram Book Company, which allows brick and mortar bookstores to purchase your book.
What does Global Distribution include?
With Global Distribution your book will be available for purchase on Amazon.com and BarnesandNoble.com as well as online retailers around the world in as little as 6-8 weeks. Once your book is approved for distribution, book data is sent to major bibliographic databases, including Nielsen and Bowker. Additionally, brick and mortar bookstores can order and stock your title at their discretion through Ingram. You will receive retail revenues on all books sold through Global Distribution partners. Sales made through Global Distribution listings are credited to your account approximately 6-8 weeks after a customer purchases your book. Payment from these sales is distributed according to the payment settings in your account. After receiving and carefully reviewing your proof copy, you can approve your book for distribution, or deny your book to make further required revisions/alterations. After you approve your proof copy, your book will be uploaded to the Global Distribution network and should begin to appear on online retail sites in 6-8 weeks. If your book is rejected for not meeting distribution requirements, you will be notified via email that the book must be revised.
How Do I Choose a Retail Price for My Book?
Ebooks and Global Distribution
Unlike a printed book, ebooks cost very little to create and have no production costs associated with selling them. Because there is so little cost to produce an ebook, the minimum retail price is set at $0.99 per ebook. This ensures everyone (you and the retailer) earn something from every ebook sale.
Profit vs. Revenue
Before we begin setting a price for your ebook, there are a few terms you should be familiar with if your intention is to earn income from sales of your ebook. Profit is the net income for your business after other expenses have been accounted for, including payment to authors, pre-production, labor, marketing, and overhead costs such as utilities and rent. Revenue is a general term for any money paid to you for book sales.
Determine a Retail Price
You may have created the best book ever on your chosen topic, but if the wrong price is set, your sales and/or revenue will suffer. Thankfully, setting the right price for an ebook is less challenging than for a printed book. Without print and production costs, ebooks need only cover the minimum listing price. Anything over the minimum is profit!
Retail Pricing Calculator
Since no single pricing formula works for all projects and no formula assures maximum creator revenue, every author must approach retail pricing individually. You can opt to set your list price based on a revenue goal, we’ll automatically provide the lowest possible retail price while meeting your goal. It’s that simple. We do all that math for you! For example, you may decide you want to earn $5.00 from every ebook sale. No matter what the listed price is, you want at least $5.00. Simply set your revenue goal to $5.00 and we’ll display the retail price for each channel and in each currency.
Note that most retail channels will provide more than $5.00 per sale in revenue. We match your desired revenue amount to the lowest revenue channel (in this case Kindle); once we establish which channel will offer the least revenue, we set a minimum price to reach that goal. All other channels must match this price.
Ebook Retail Pricing Minimums and Maximums
Selling your ebook through Global Distribution requires adhering to distribution requirements as well as each retail channel’s pricing model. All retail channels provide a minimum ($0.99 for all ebooks) and a unique maximum price. Below, find the currency adjusted list of maximum pricing for an ebook:
USD – 200.00
EUR – 215.00
AUD – 220.00
GBP – 150.00
CAD – 200.00
The minimum price for a print book is the manufacturing cost. If you wish to distribute your book through online retail sites, there is also a distribution fee. Then you add the amount of revenue you wish to earn from each book purchased.
Books Eligible for Retail Distribution
Not all book sizes and binding types are eligible for distribution through retail channels. If you choose the option to sell your book through major online book retailers in the publishing tool, only those formats that qualify for retail distribution AND match the page size in your PDF are available for selection.
Retail Pricing: Getting Started
In any business, the ultimate reason for an effective pricing system is to earn revenue from your work. Since the amount of revenue earned depends on manufacturing costs, selling price, and the number of books sold, you should consider the following when pricing your work:
- What are the manufacturing costs for my book?
- How much profit do I want to make?
- What are my fans willing to pay?
- What is my competition charging for a similar product?
Profit vs. Revenue
Before we start setting a price for your printed book, there are a few terms you should be familiar with if your intention is to earn income from sales of your book. Profit is the net income for your business after other expenses have been accounted for, including payment to authors, pre-production, labor, marketing, and overhead costs such as utilities and rent. Revenue is a general term for any money paid to you for book sales.
Determine a Product Price
You may have created the best book ever on your chosen topic, but if the wrong price is set, your sales and/or revenue will suffer. Therefore, you must first know your book’s manufacturing cost so that a break-even point can be established. Keep in mind that publishing manufacturing costs include both materials and labor. If you find that your selling price is noticeably higher than that of authors offering comparable works, you may want to look for ways to reduce your manufacturing costs or expected revenue per book in exchange for potentially selling more units.
“Wholesale Price” refers to the minimum price at which you are willing to sell your book to retailers, who will in turn sell it to their customers for a profit.
Wholesale Price per Book = Manufacturing Cost + Revenue + Retailer’s Commission
Example: $5.50 + $4.00 + $1.00 = $10.50 per book
Since manufacturing costs are somewhat out of the author’s control, this pricing example relies on your decisions about the revenue you wish to make from each retail purchase of your book. An author should also consider that while you may be earning a smaller royalty per book when offering it at a wholesale price, you could eventually earn more income from higher book sales through retail channels.
Retail (or List) Price
The generally accepted retail pricing formula is: Wholesale Price x 2
Example: $10.50 x 2 = $21.00
When you decide to offer your work to retailers at wholesale prices, it is with the understanding that the retailer expects to sell your work at a price sufficient to cover their costs and still make a profit – even if the retailer chooses to offer your work at a discount.
Suggested Retail Price and Your Revenue
The wholesale price you set for your book is the price retailers pay to purchase your book for resale from their sites, stores, or shops. The suggested retail price includes a price markup sufficient to cover the retailer’s labor, marketing, rent, utilities, and other fixed costs associated with owning and running a business. The retailer may choose to sell your work at the full retail price ($21.00 from our example above), they may offer a standard discount like free shipping, or they may run a special for a defined period of time such as 25% off all print books. The selling price set by the retailer has no effect on the revenue you earn from selling your book at the wholesale price – in other words, if your Retail Revenue is set at $4, you will make $4 for every book sold in retail channels, even if the retailer offers a discount.
Since no single pricing formula works for all projects and no formula assures maximum creator revenue, every author must approach retail pricing individually.
It is probably easier to set a preferred retail price and let us calculate your maximum revenue based on your book’s specifications (page count, paper quality, binding, etc.). Using the $21.00 retail price from the above example and assuming a 100% markup, the calculator automatically sets a wholesale price of $10.50.
The wholesale price minus production costs determines what is left over for your revenue and the commission.