Best Practices For Importing Products Into The USA

So you are either wanting to import and sell your products into the US market, as a foreign-owned business, or you are already a US based business wanting to import your products to sell in the US.  Good move.  The US market is ripe for opportunity for businesses willing to go through a bit of paperwork to make it happen, as well as a way to import with $0 and 0% duties/taxes with using an FTZ.  Here are the best practices for importing products into the USA:

KEY INFORMATION
To begin with, there are two vital pieces of information that you need to be aware of:

  1. You will need a business tax number (BTN), which you can get through the IRS.   This is the number used as the “importer number” when importing goods.

  2. You will need to obtain a Continuous Bond (renewed yearly) or Single-Entry Bond (one time use).  These are available through a US Customs agent in the US.  FedEx Trade Networks, for example.

    • A continuous bond is 10% of duties, taxes and fees paid for the 12 month period. Current bond formulas can be found on www.CBP.gov. A single entry bond is generally in an amount not less than the total entered value, plus any duties, taxes and fees.

    • If you are importing merchandise into the United States, (U.S.) for commercial purposes that are valued over $2,500, or a commodity subject to other federal agencies requirements (i.e. firearms or food), you must acquire a Customs bond.

* Pro Tip 1: With a BTN, you can easily open a bank account in the US for all transactions.  This helps with the trust of the US consumers and other possible domestic suppliers.  

DOCUMENTATION 
When importing goods into the US, it is vital to your success to ensure that all paperwork and documentation is up to date and completely accurate.  You can ensure a smooth and fast importing process, if...

  • Your commercial invoice and packing list are clear, and contain all the relevant information

  • Each package (carton) is clearly marked and numbered so it can easily be identified against the commercial invoice and packing list

  • A detailed description of the merchandise in each package is listed on the packing list

  • The country of origin is clearly marked on all of the shipment documentation

  • Your supplier packs and secures your shipment properly for container or air transportation

  • If Verde is your final destination, then “Verde Fulfillment USA” with our shipping address should be listed as the “Ultimate Consignee” on your commercial invoice.

* Pro Tip 2: Send your documentation to your freight forwarder in the USA before your goods leave the foreign country or Port.  This avoids headaches when trying to clear Customs without proper or correct paperwork.

DUTIES/TAXES
The US government wants to make sure they are paid before your goods make it into the US market.  They guarantee they’ll get paid by your posting an import bond as stated above.  The other way, it by classifying your goods with a universal HTS code.  HTS is Harmonized Tariff Schedule.  

  • You must have an HTS code for each unique product (SKU) you are importing into the US.  The HTS code determines the duty rate you will pay per product as a percentage of the overall value per SKU.

  • Do not rely on your factory to give you the correct HTS codes for your goods.  Ultimately it falls on you to make sure this is 100% correct, otherwise you could end up paying more for duties/taxes than you anticipate, delayed shipments, and extra ancillary costs.  Once the import is completed and finalized, there is no going back to correct it later, so make it correct the first time.

  • HTS code example is 9201.00.2001  You can do your own research on how to get the correct or most-correct HTS code by researching using these resources are: https://rulings.cbp.gov/ and https://hts.usitc.gov/

    • Some US Customs agents will help validate your HTS code choices, but be aware that they may charge for their time to do so.  Ultimately, this all falls on you to make the final HTS code decisions.

  • The duty rate can also vary depending on the country of origin.  When researching the HTS code of your products, there will be two columns on the right:  General and Statutory.  The General column is usually a lower duty rate for “most favored nation” status in the country of origin.  Statutory is the full rate.

* Pro Tip 3: If you are just importing small amounts with a value of $1,000 or less, USCBP will pretty much wave you through without delay.  

* Pro Tip 4: Air shipments move quickly and clear USCBP quickly, too.  These are usually smaller shipments and they just want to clear them out as fast as they can to work on the large shipments.  

FOREIGN TRADE ZONE
If you want to import your goods into the US, but then also turn around and ship some out to other countries, utilizing the services of an FTZ (Foreign Trade Zone) is a great choice.   

  1. Foreign-Trade Zones are secure areas under U.S. Customs and Border Protection (CBP) supervision that are generally considered outside CBP territory. An FTZ is also known internationally as free-trade zones.

  2. Foreign merchandise may be moved into zones at any time for storage, light-assembly, light-manufacturing, quality control, testing, relabelling, repackaging, cleaning and processing.

  3. Under FTZ procedures, CBP entry procedures and payments of duties are not required on the foreign merchandise unless and until it enters the US CBP territory for domestic US consumption.  Check out more information here:  Foreign Trade Zone Info.  

  4. Merchandise in a zone may be:  Assembled, Cleaned, Manipulated, Manufactured, Mixed, Processed, Relabeled, Repackaged, Repaired, Salvaged, Sampled, Stored, Tested, or Destroyed.

* Pro Tip 5:  Use an FTZ to store your goods without paying duty until you are ready to actually sell it in the US market.  Products can sit in the FTZ indefinitely, so use it to manage your cash flow.

BENEFITS OF USING A FTZ

  • Duty Elimination: The duty and federal excise tax are paid only when the merchandise is transferred from the FTZ for US consumption. Goods may be exported from the zone free of duty and excise tax.

  • Duty Deferred: While in the zone, merchandise is not subject to U.S. duty or excise tax, and merchandise may remain in a zone indefinitely,whether or not subject to duty.

  • Inverted Duty: The rate of duty and tax on the merchandise admitted to a zone may change as a result of operations conducted within the zone. Therefore, the zone user who plans to enter the merchandise for consumption to CBP territory may normally elect to pay either the duty rate applicable on the foreign material placed in the zone or the duty rate applicable on the finished goods transferred from the zone whichever is to his advantage or lower.

For more information on importing or using Verde’s Foreign Trade Zone, visit us here:  http://www.verdefulfillmentusa.com/foreign-trade-zone/ 

Feel free to drop us an email with your own feedback and comments.  They are always welcome, as we are all in this together to help make you and your company be as profitable as possible.