So, you’ve identified an exciting business opportunity and it’s your first time looking to buy or sell goods abroad, and you’re utterly confused about what to do? Well look no further; here is a quick guide on what you need to know and do to help you on this exciting journey.
First thing’s first, whether you are importing – bringing goods into the country, or exporting – moving goods outside the country, it is of utmost importance that you understand the product and the target market or country. Exploring your ideas and conducting market research will give you a better understanding of the demand and the market. Just as with any business, you will be investing time, energy, and money. Therefore, it’s important to make sure you know what you are getting into before you jump into it. Skipping this stage would be like walking around with blindfolds.
Before importing or exporting
Before getting into specific requirements for export or import, here’s what’s common for both processes:
Register your business
Be sure to register your business name and structure (sole proprietorship, partnership or corporation). You’ll also need to secure a business license from the city or town you’ll be operating in. Simply use a search engine like Google (search terms: your town/city name + business license) to learn about local business licensing requirements.
Get a business number and obtain an export account
Apply for a business number – a unique number assigned to your business – online and obtain an export/import program account with the Canada Revenue Agency, CRA. You can also reach the CRA at 1-800-959-5525 for more information.
What to know and do when you’re ready to export
Write your export plan
An export plan is like any other business plan but with a focus on the export activities. The export plan helps you identify your market and find potential clients for your products. Business is an ongoing concern and never a one-time interaction or transaction. Your plan will help you identify and develop ways of building and maintaining relationships with selected markets.
Know the regulations and permits required
International trade is guided by several rules and regulation, put in place to reduce the risk associated with trading. As the business owner or operator, it is imperative that you know these rules and regulations and that you abide by them.
You can find requirements specific to your business through the Canada Border Services Agency (CBSA). You will need to determine whether the goods intended for export are subject to any permits, restrictions or regulations by the CBSA or other government agencies.
Have the right product and labelling requirements
Different countries and their government departments may have different labelling standards depending on the industry. Contact the relevant government of the foreign country or ask your buyer to provide information about labelling requirements.
Tariff classification (HS code)
With the constant movements of goods and services across borders, it makes business much easier if there’s a standard language between all countries concerning these trade activities. The standardized classification system for international trade is known as the Harmonized Commodity Description and Coding System (HS). An HS code is applied to each export item to ensure a common ‘language’ and understanding across borders. Determine what HS code to use for your goods and services.
Certificate of Origin
Another document that may be required if you are exporting products valued at $2000 or more is a certificate of origin. This document certifies that goods being exported are wholly obtained, produced, manufactured or processed in a particular country. Customs documentation is completed based on the information in the certificate of origin.
What to know and do when you’re ready to import
You will soon find out the reverse of some of the export process is true for importing.
You will find it useful to develop a business plan for your import business, which will not be any different from a plan for buying and selling locally.
Regulations and labelling requirements
Just as with export, you will need to determine if the goods you are looking to import are regulated by a federal or local government department and agency. For instance, you will find that most consumable goods such as food and cosmetics, and textile, consumer products, and precious metals are highly regulated and have specific labelling requirements – and rightly so, given the risk to consumers associated with consuming these products.
Tariffs and duties
You will need to research the 10-digit tariff classification number for each item to be imported and determine it’s value for the duty of the goods. To obtain tariff and duty information, visit Canada Tariff Finder or contact CBSA.
At the border
The dreaded border. This is where your frustrations may kick in with new terms like manifest, bill of lading, guaranteed line of credit, B13A document, and import declaration from being thrown at you. Save yourself the confusion and use an experienced Customs Broker or clearing agent. However, if you insist on a DIY approach, be sure to fill out all the required documents correctly, determine any duties and taxes owed, and ensure they are paid in order to have your goods released.
I bet you’re throwing your arms in the air at how complicated exporting and importing seems! Yes, it is complex, so let’s pause here. As much as this blog is an attempt to simplify things, it is by no means conclusive. My recommendation: familiarise yourself with the Canada Border Services Agency step-by-step guide to exporting and the step-by-step guide to importing. And if any of these is above your head, by all means, use the services of a customs broker and/or logistics/freight forwarder who has done this 1001 times and have the required expertise to help you.
Otherwise, come see us at Business Link and we will surely guide you on your next steps, whatever that is!