Be careful what you read in magazines

Entrepreneur magazine’s article “How to Start an Import-Export Business” was written for people hoping to break into the import-export industry.  Unfortunately the author waits until page 5 before talking about the nitty gritty of how to actually import something into the country.  If you’re somebody who has read this article and decided to follow its simple instructions for how to import merchandise, STOP.  If you follow their instructions you may end up with a fine of $5,000 or more per shipment!

From Entrepreneur.com:

OK, importer. You’ve found the merchandise you want to buy and then resell. You’re a player. You’re ready to roll. So now what do you do? Follow the import path:

Receive the pro forma invoice, the exporter’s quote on the merchandise; negotiate if necessary.
Open a letter of credit at your bank.
Verify that the merchandise has been shipped.
Receive documents from the exporter.
See merchandise through customs.
Collect your merchandise.

At CustomsHQ.com we also believe importing should be dead-simple.  However, Entrepreneur has done its readers an injustice by over-simplifying the process and making some key mistakes.  The most glaring problem with the sequence outlined above is that many key documents and forms must actually be filed with U.S. Customs before the goods ship.  The article states that the goods ship and then you collect the documents.  If you do not file certain data elements with U.S. Customs at least 24 hours before the goods are loaded for shipment to the U.S., you may face a fine up to $5000.

In addition, the author takes for granted that the importer will use a letter of credit from a bank.  Another option used by many importers is to make a deposit of 30% when the goods are ordered, and then pay the balance of 70% once the goods have been loaded for transport to the U.S.

If you’ve been thinking about breaking into the import-export game, give us a call at 1.866.807.8261.  CustomsHQ employees have been in the business for years and would love to help you get started.