I run a single member California LLC, and my major activity is software resale. I purchase downloadable software from a foreign company and resell it in the US. Thus, I collect payments from US customers, and once in a while make payments to the foreign vendor. Please explain: are these payments for the software subject to a withholding tax of 30%?

“Thus, I collect payments from US customers, and once in a while make payments to the foreign vendor. Please explain: are these payments for the software subject to a withholding tax of 30%?”----> Most types of U.S. source income paid to a foreign person are subject to a withholding tax of 30%(in the normal course of your trade or business, you may make payments to persons/entities from outside the US. If the payments you are making constitute U.S. source income, the payee may be liable for U.S. income tax, and you as the payer may be responsible for withholding U.S. income tax.) , although a reduced rate or exemption may apply if stipulated in the applicable tax treaty. A payment to a foreign person is subject to withholding if it is from sources within the US, and it is either fixed or determinable annual or periodical income, or certain gains from the disposition of timber, coal, and iron ore or from the sale or exchange of intangible property (such as patents or copyrights). In general, a person that makes a payment of U.S. source income to a foreign person must withhold the proper amount of tax, report the payment on Form 1042-S and file a Form 1042 by March 15 of the year following the payment(s). When you make a payment of U.S. source income to a foreign person or entity you are normally required to withhold U.S. income tax at a rate of 30% and report it on Forms 1042-S and 1042 by March 15 of the year following the payment(s). You are required to withhold tax at the time you make payment of the income that is subject to tax withholding.The penalty for not filing Forms 1042-S and1042 when due (including extensions) is usually 5% of the unpaid tax for each month or part of a month the return is late, but not more than 25% of the unpaid tax. Additional penalties apply for failure to provide complete and correct information or if you fail to provide a complete and correct statement to each recipient. The maximum penalty is $100,000 per year;however,the foreign entity must give Form W-8BEN to ,you or payer to provide for a reduced (or maybe even zero) withholding rate, under the US and the country’s treaty, on the type of income involved.I mean W8BEN is to establish that the foreign payee is a resident of a tax treaty country so the payor doesn't have to withhold 30% of tax.