Inexplicably completing forms SS-4 8832 are not at the forefront of people’s minds. Hear those words, and you may be looking for that drying paint.

However, if you are a non-US resident company receiving income from the United States, then you need to

• Firstly pause
• Secondly, listen to episode 119 of my I Hate Numbers podcast
• Lastly, watch the drying paint later.

Your nonresident income is liable to have 30% held back if you don’t complete form W-8BEN-E.  Check out episode podcast episode 68 for the audio, and my YouTube video if you want to see what goes in the form.

It doesn’t stop there.  If you are a business owner with just yourself as the only shareholder, then two more forms to add.  What are those forms I hear you ask.  Great question, Those forms are

IRS forms

• SS-4; and
• 8832

The idea of completing IRS Forms SS-4 and 8832 may make you feel like your head is going to explode. You're not alone! Completing these forms can be confusing, but it doesn't have to be.

In this weeks episode, I'll walk you through the process step by step, and make it as simple as possible.

Why we need forms W-BEN-E , SS-4 and 8832

You can ignore these forms if you wish.  That’s not such a good idea

Not completing and submitting form W-8BEN-E means your US client can and will have to withhold up to 30% of your US income. That's 30&% OF financial pain. Thanks, Uncle Sam!

What about forms SS4 and 8832? Well, not all tax jurisdictions are created equally. And the IRS does not recognise single member companies as corporations. So, step forward those extra forms.

Conclusion

So, there you have it. The process of reclassification for a single member shareholder company is made easier.  However, it is important to remember the two steps involved. Applying for an EIN and then form 8832.  Do you fancy seeing what the forms look like, and what goes into them?  Then check out my You Tube video , even better subscribe to the channel.

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Strangely, IRS tax forms are not on most business owners reading list. However, if you are a non USA resident company receiving income from the United States then you need to make space on that reading list. That reading increases it troubles if you also have happen to be a single member shareholding company, you can ignore the forms by all means but your US client can and will have to withhold up to 30% of your US income. That's going to hurt your bank balance.

Tribute to Uncle Sam there. Those forms are, wait for it, forms W-8BEN-E. And in addition, if you are a single member, a single shareholder company, the two additional forms that you need to complete will be forms SS-4 and forms 8832. In this week's podcast, episode 119 of I Hate Numbers I'm going to be talking through what these forms are. I'm going to be focusing on SS-4and 8832 because we covered W-8BEN-E. Check out episode 68 of the I Hate Numbers series. We look specifically how to get hold of forms, what goes into the forms, which bits you need to focus on and how to submit it and send that off to the IRS.

You're listening to the I Hate Numbers podcast with Mahmood Reza. The I Hate Numbers Podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Hi folks. Welcome to episode 119 of I Hate Numbers. The channel that's there with a mission to improve your financial awareness, help you and your business make more money, save tax, save time in your business and make you win more battles than you lose in the battle between your ears. In over 27 years of being in business, I've helped thousands of business achieve that objective and as an accountant, mentor and proud author of I Hate Numbers, I'm here to help you. Let's crack on with the podcast.

Now the three forms I mentioned earlier were forms W-8BEN-E. As a heads up, check out episode 68 for more details. You then got form SS-4 and forms 8832. Why are the three forms? I can hear you ask. Well, W-8BEN-E, if you are in a situation as a company, a partnership or a charity receiving income from the United States, and you're a non US resident taxpayer, then you've got to make a declaration, complete the form accordingly, and submit that to the person who's been paying your fees, your income, your royalties, your ad revenue, etc.

So if they don't, then 30% can be withheld at source. Now, within the W-8BEN-E, we have a paradox here. The IRS do not recognise, do not see single member shareholder companies which are very popular outside the US as bona fide corporations. The word corporations is the US version of a company. In order to be recognised and treated as a corporation, then we have to go through a reclassification election. Now, that reclassification election comes in two stages.

Stage number one is you have to complete and submit what's called an SS-4. Now, the SS-4 form is whereby you can obtain and apply for an employer identification number, EIN for short. This form, where you request an EIN number, has got multiple applications, but in our particular example, we're looking at it so we can get the Identification Number form, so we can apply to be reclassified as a corporation and treated as such. Remember, if you are a company with more than one member, more than one shareholder, then this form, SS-4 and 8832, is not required and is not relevant.

The W-8BEN-E form is all that's required. These forms, by the way, folks, are obtainable free of charge via the IRS website. Check out the show notes and I'll give you a link to how to download them. The forms are online, PDF-able, so you can fill them online, you can print them off, sign them and then dispatch them off to the IRS. Please do not succumb to having to pay someone for actual forms themselves. They're freely available, courtesy of our friends at the IRS. Now, once you get this form, the SS-4 form effectively is to convert it into two main sections. The first part of it is dealing with what one would normally expect and that's you identifying yourself and your company. Typically you're going to enter in the first section your legal name of your company as it's formally registered with Company's House.

If you're listening to this podcast outside of the United Kingdom, then it will be whatever your regulatory body has been formally registered as. That's not going to be the same as your trading name. So again, we make that distinction. Put in your address your contact details, put in your postal code, which is what the Americans call your zip code, name the requisite designated contact person, and then you have to enter into box seven B, what's called an Identifying Tax Number. It's either a Social Security number which means more pertinent, if you are applying in the US, ITIN is the International Tax Identification Number. For most companies it will be the unique tax reference of the shareholder brackets director. If you don't have a UTR, as we would call it in the UK, then a National Insurance number will be sufficient. You're then going to state that you're making an application as an LLC, which stands for Limited Liability Company. If you're based outside of the United States,

which one assumes we are, for the purpose of this broadcast, then your company will be on what's called a foreign equivalent. The US, by the way, designate anybody who's not a US citizen as foreign. So it's not a prejudiced term, it's just a term that the IRS will use. If you're applying to a single member company, then you're going to say there's only one member. The word member by the way, is the IRS’s version and definition of a shareholder. Now, box nine A, you have to then choose what type of entity you are.

There's an option to tick other and then write in the word foreign disregarded entity. Now, folks, if you're finding it difficult to visualise the completion of this form, in the show notes, I've also got a link to a YouTube video that you can see and where we lay out the forms more clearly. And you can see the visuals as well as hearing the audio of the video, as well as this podcast. Box ten will ask you why you're applying in the first place and you're ticking box which says other and you're stating that you're a foreign disregarded entity for the purposes of completing and filing form 8832. The remaining of the form is ask you what's the nature of your business?

What sector do you classify yourself in? There are default categories given and then they just want an additional narrative and one sentence of what your company actually does. Lastly, if you're completing the form yourself and you're not using the services of your accountant or an agent, then you ignore the designee box. The designee is just the term describing an agent that could be your accountant, your financial advisor or whatever role. Lastly, put in your own contact details. Remember, the date format in the US will be month, day and year.

Put in your contact details, your number. Faxes by the way, are still in operation at the IRS and fax facilities are a good and powerful way to get information across to the IRS. Having a completed SS-4, you then submit it and you've got a few options. You can either post it out, obviously there's going to be a time delay while it gets processed, you can fax it across to the IRS. Again, if you check out the show notes, there will be a link to the IRS website where the contact details will be provided, or as I've done myself and other clients of mine have done so, you can ring the IRS directly, take into account the time difference and you can actually get the number over the phone.

Again, be patient, you may have the IRS, like most tax jurisdictions, faces resources battles, so don't expect to get the phone answered straight away. So that's the options that you can have. Now, once you get your EIN number returned back to you, you can now complete the last form which is called the 8832. And this is a form where you're reclassifying what you are. Now you're not fundamentally changing your business structure, but you're reclassifying yourself in the eyes of the IRS. It's called an entity classification election.

Now the first part of it is where you're going to enter the EIN number that you've been provided. Typically, the format is two digits followed by six thereafter. Put in your name, your contact details and then part one is the election you're making. Now the options are in question one that you're going to be selecting initial classification by a newly formed entity. Assume that you've not submitted one of these applications before. That will be the appropriate answer. The second question where they going to reinforce that is have you made an election in the last six months or five years? One assumes the answer will be no. And then you go to line three. Obviously if you have made an application before, complete sections to be as a consequence. Now if you are applying for a single member company, question three you got to select no where it asks you whether you have more than one owner or not.

Having completed that, go to line four, put in your name the name of the single member, your identification number which will be typically your UTR or in worst case scenario enter in what your National Insurance number is. Again, in the main, most single member companies will have a tax reference, a UTR for the shareholder brackets director. And the last part of the form 8832 is selecting the type of entity that you will be and it's subdivided into two main groups. There's what's called a Domestic Eligible Entity with three variations and that will apply if your company is incorporated in the United States.

For most people completing this form that have had to complete W-8BEN-E, they'll be located outside the US. Their companies will be incorporated also outside of the US. So domestic eligible entity will not apply. You then have three options. All the three options start with the Foreign Eligible Entity and the options are to be classified as an association tax or as a corporation, as a partnership or with a single owner electing to be disregarded as a separate entity. Now the most popular, the most common, the most usual request is to tick box D where you're going to be classified as a Foreign Eligible Entity electing to be classified as an association taxpayer, as a corporation.

Don't you just love tax forms? How succinct and short they actually are. Disregarded entity by the way folks, is a business with a single owner that is not separate from the owner for US federal income tax purposes. So the tax treatment is as they are outside of the US. In the UK, having done that, the last thing you've got to do is to then sign it, make sure you put your contact details in the date that you must put in there as well. So it's month, date and year. The default position is to use the four digits for the year. That would be the safest thing. Put in your contact number using the international dialing code and then sign the form accordingly.

Now, one of the questions you answer in the final part of the form is when you want this election to start from, you can backdate the form, make sure you seek out appropriate advice. If you decide to go back and backdate it prior to the date of the submission of the form itself. Lastly, sign it, date it, put your title in there and then submit that off to the IRS. And that's how we have it, folks. So we've got the two supplementary forms that we have once we complete the W-8BEN-E form, the SS-4 and the 8832. In English, fundamentally, that is there to make sure that you apply for an EIN number, an Employee Identification Number, and also, once you've got that,

it's then go through the reclassification process. And remember, the reason we're doing this, folks, is because the US Government, the IRS, do not recognise single member companies as we do in the UK and for most of the world. Hope you found this podcast useful. Hope you answered some questions. Check out the show notes for the links to get some more information on these forms. Check out the YouTube video to get a visual. If you've got any feedback, I'd love to hear your thoughts on that. I'd love it also, if you can make other people aware and share and provide some feedback. Until next week, folks, happy form filling.

We hope you enjoyed this episode and appreciate you taking the time to listen to the show. We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.