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W-8BEN-E-Form-vs

W-8BEN-E Form vs. W-8BEN Form

W-8BEN-E is a significant tax document that allows organizations operating outside of the United States to claim tax exclusion on U.S. sourced earnings. The W-8BEN form and W-8BEN-E form differ in only one specific way. The form W-8BEN is for non-US sole proprietors and individuals, whereas the form W-8BEN-E is for non-US entities, like corporations or organizations. 

 

The W-8BEN tax form serves to: 

  • Authenticate that a sole proprietor or individual is a foreigner who is subservient to the 30% tax rate on indigenous income earned by foreign organizations. 
  • Claim that the sole proprietor or individual that is providing the W-8BEN is a nonresident alien (NRA).

 

The official name for the form W-8BEN is the Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting. While the form W-8BEN and the form W-8BEN-E need very similar data, the form W-8BEN-E is a bit lengthier and requires detailed information regarding the foreign organization entity. 

 

The Best Practices for Collecting W8 Forms

 

Handling and registering the flow of outbound and inbound payments of a business is merely one of the essential roles of accounts payable offices and staff members. The other significant role played by the accounts payable staff rotates around the vital problem of avoiding confusion and legal uncertainties related to sales and use tax claims. With tax laws and regulations continually in flux, an organizations’ risk of being audited increases exponentially without keen overlooking from accounts payable. 

 

Here are some of the best methods for W8 collection that reliable organizations should adopt:

  • Collect all the identification and tax forms digitally, whenever and wherever possible. The trouble of manual collection adds to inefficiencies, and the intensified risk of fallacious data could spell legal problems.
  • The W-8BEN-E form is a comparatively complex and elaborate document with numerous sections to be filled out, each demanding specific correctness under penalty of law. Organizations should use web-based applications and other digital services to assure that the forms are accurately filled out by payees.
  • Get software that automatically traces the latest modifications and developments about tax regulations.
  • Establish tax forms and information with data automation tools.

 

Advantages of W8 Automation

 

The advantages of W8 automation are numerous and profound. Hand-operated W8 collection requires a whole complexity of steps that are better off computerized. The steps involve executing hand-operated due attention on each supplier to determine the use of proper W8 form, exact withholding obligations on the basis of entity status, and assuring accurate completion of the W8 form. All these things can quickly snowball into an accounts payable nightmare if companies are negligent or unaware of the demanding entities of W8 collection and compliance. 

 

Final Words

 

W8 automation allows for a secure cloud-based solution to save organizations time and money, and present vital peace of mind in the midst of the tensions that can set in during tax season.

 

To know more about the W-8BEN form and W-8BEN-E form, attend the Compliance Prime webinar. 

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