What do I need to import items from USA and abroad for the purpose of reselling

May 27, 2009 3:18 PM

I just got a new job in a retail store in Toronto, Canada. We want to import items from the USA and Europe in order to resell them. I am concerned about getting hit with customs/duty/taxes/broker fees/etc. What fees am I able to avoid and how can I avoid them. Who do I need to contact in order to get this stuff across the border as quickly and cheaply as possible.

Note that I am primarily buying from small companies in small quantities, with total order costs in the $200 to $1000 range per shipment.

I have had some packages come in (mostly shipped via USPS) with absolutely no charges or delays. I've had others (via UPS, mostly) hit with significant fees which basically eliminated my profit.

Please write your answers as if you're talking to a child. I'm new to this job (second week) and no one at this store has ever had this job before (they have never imported previously).

The items, if it's relevant, are all entertainment (mostly music (cds/vinyl) and dvds on small independent labels).

posted by You Should See the Other Guy to work & money (15 comments total)

USPS: Cheap, paid up-front, no surprises

UPS, FedEx, etc.: Ridiculously exorbitant surprise brokerage bill shows up a month after the fact.
posted by Sys Rq at 3:25 PM on May 27

Yeah, brokerage charges from the private guys are crazy. I always tried to get stuff shipped USPS from the US as it was much simpler. Unfortunately, some commercial shippers don't deal with them.
posted by GuyZero at 3:31 PM on May 27

Thanks, but I should also mention that I have sometimes have no control over the shipper's choice of shipping choice. That is, some only ship how they ship and that way is via courier.
posted by You Should See the Other Guy at 3:32 PM on May 27

I would be a bit worried about avoiding "customs, duties, taxes"... those are a legal obligation, any business that plans to be around for a while should think twice about defrauding the government.
posted by HuronBob at 3:34 PM on May 27

If you have to go with UPS, go for there more expensive options which cover the brokerage fees. UPS's cheapest option (ground shipping) hammers goods coming into Canada from the US.
posted by maxpower at 3:36 PM on May 27

Assuming you don't intend to avoid taxes/duties that are rightfully due, and you are worried about carrier fees. One option is to have a fedex account and give shippers your number, they are cheaper than UPS on customs duties, but not by a ton.

Also, you can fill out the US declaration forms and fax or e-mail them to the sender. I have had shipments held up in customs while I filled out a form that was supposed to be with the package in the first place and sent it to customs (now DHS I think.) The sellers either don't fill out the forms right, or just skip it half the time. (its been so long [2004] since I imported something I don't have any idea what form it was, or in what circumstances it is needed. I know on more than one occasion my item got stuck in customs until I faxed in a missing declaration of some sort.)

Basically, control the shipper, and if you can't do that, make sure the customs forms are all in order, if any are required. At least you only have to worry about US customs. Shipping things from the US to foreign countries you have to deal with customs in every country you ship to, and be up on US technology export restrictions.
posted by Antidisestablishmentarianist at 3:44 PM on May 27

Okay, I thought it was obvious by mentioning this was a business that we are interested in doing this legally.

Here's my question reworded: If you run a business that imports product from other countries in order to resell, what steps did you take to do this? What should be done prior to placing orders with exporters and how did you go about doing them?

For instance:

1. do you recommend I get my own custom's broker? If so, how does one choose a good one? What is the difference between a good one and a bad one?

2. What is a freight forwarder and do I need one? (One of my exporters just emailed and asked me if I had one).

3. Are there ways to minimize the amounts of fees of any kind that I'll be hit with at the border?

4. How is it possible to predict what these fees will be? (For instance, does the gov't have a set rule such as "record albums incur a 3% fee; dvds incur a 4% fee... " etc. Or is this just a crap shoot (which is what it seems to be so far). Do these figures vary depending on the country of export?

5. Are there any tricks of the trade that I can employ in order to legally minimize the fees and wait times? (For instance, is there a dollar figure at which fees are minimized (the first $X of your order is subject to such and such fees and every $ above that is subject to a lower fee) or vice versa? Or, the opposite: is there a value below which no fees are incurred?)

Basically, any tips, advice, etc, that is involved in properly/legally importing items for resale would be appreciated.
posted by You Should See the Other Guy at 3:46 PM on May 27

You need to price the fees in always, when deciding what to purchase for resale, and be pleasantly surprised if they're not always there. In other words, charge more for imported items as a general rule.

When it comes to customs, duty and "handling" fees (I hate that... isn't their whole JOB "handling"?), the Post Office(s) has always been best for me in shipping between Canada and USA in either direction, FedEx is second best... and UPS and DHL are two different kinds of thieving criminal bastards who I hope burn in hell. Ahem.

Almost nobody ships ONLY by UPS, so you can usually choose a different carrier. You may also get some mileage by offering to use your OWN existing FedEx account (no shipping costs to the seller at all, and you get a regular monthly bill) and in that you have a bit of a paperwork advantage, too.

Because you are in Toronto, another trick is to refuse the fees when it arrives. Simply say "No, I'm not paying this brokerage fee because I didn't ask you to broker it. I'll do the paperwork myself." And then they take it back to their warehouse and wait for a "Customs Release". You drive to the Customs office, fill out a form, pay some taxes or whatever (no brokerage fee), and then send the paperwork over to the courier. Seeing that it's been "cleared", they'll now deliver it without collecting anything else. Basically, you have the right to resolve the customs paperwork yourself, if you don't mind the extra work, rather than hire a broker. This is only really practical if you're in the same city as the customs office, though... and in Toronto, you are.

That's all just processing fees. If you are receiving some goods with no taxes, on the other hand, it's almost certainly oversight or mistake by the Canadian customs people in your favor, because they don't inspect every single package. In theory you may still be required to submit them voluntarily, and I don't know how this might impact your year-end business books.

When I lived in Canada, about 1/2 of all packages I received from the US came with taxes due. The others simply passed through for "free". There was no real pattern with $-value or history.

As an individual, of course, I didn't need to balance books and submit a list of imports to the government at the end of the year, so there was no real harm (?) in not voluntarily paying.

Sorry for the rambling answer. My dinner is burning. :)
posted by rokusan at 3:48 PM on May 27

4. How is it possible to predict what these fees will be? (For instance, does the gov't have a set rule such as "record albums incur a 3% fee; dvds incur a 4% fee... " etc. Or is this just a crap shoot (which is what it seems to be so far).

There's tax, there's duty, and there's brokerage fees. These are three different things. Presumably you know how sales tax works, and brokerage fees are discussed above: they're whatever they feel like charging you, though you can refuse a service you didn't request, too.

The thing you seem to be asking about in (4) is duty. Yes, there is a big book at the customs office, and presumably a big list online somewhere (sorry, no idea where), and it works just as you say: a percentage per item, with most items duty-free ("free trade"). It's based on country of manufacture, though. So a Chinese-made DVD player sent to you from Texas is treated as a Chinese import, not an American one.
posted by rokusan at 3:52 PM on May 27

(I should add the caveat that my info is a few yrs out of date, since I haven't lived in Canada since the 1990's.)
posted by rokusan at 3:52 PM on May 27

Allow me to suggest, that if importing is an activity upon which you intend to build retail awareness, that you take some time to professionalize it. Begin by selecting and working with your own customs broker. In Toronto, there are literally hundreds of firms to choose from; I have worked with Kuehne & Nagel Ltd., who also handled U.S. import/export for me, although they are, historically, a German firm.

Working with a single broker has a number of advantages to you, the importer. First, you will get a professional, up-to-the minute source of information on shipping methods, customs regulations, and the constantly changing tariff situation for goods crossing international borders. You'll have a group of people who will quickly become familiar with your business, who can help you specify shipping methods to minimize your tariff costs to Revenue Canada, and yet keep you 100% legal. Your shippers and business partners will benefit, by having the fastest clearance of customs available, and reliable service in clearing customs, which expedites their accounts receivable. Over time, the volume of your orders will qualify you for volume discounts, even if you are "only" clearing 1 or 2 small shipments a week. Finally, should there be classification questions or more complex issues like revenue rebates on returned merchandise, you'll have a responsible agent, trusted by Revenue Canada, with whom to work on such issues.

Under very, very few circumstances should you allow a shipper to specify your shipping/customs methods; you are typically paying for shipping and customs clearance, in most commercial international transactions, and you generally have the right, and are expected, to specify shipping method and customs broker. Letting the shipper "choose" these important elements is no relief to the shipper; they generally expect you to know how best to clear customs in your shipping chain, and to be able to provide instructions that result in the least hassle and fastest clearance. Abdicating this responsibility is no help to the shipper, generally, and indeed, can result in additional time and effort on their part to find common carrier shippers, like Fed Ex or UPS that will also act as customs brokers.
posted by paulsc at 4:03 PM on May 27

Sorry I read the question very poorly and thus tailored my answers to a US person. Pretty much all of what I said isn't terribly country specific, as an importer you still only need to learn the workings of one countries customs.

Anyway, good luck! I might be a glutton for punishment, but i've always found sending and receiving items internationally to be frustrating but fun too, I think once you start learning the ropes you will enjoy what you are doing.
posted by Antidisestablishmentarianist at 5:56 PM on May 27

Thanks for the answers.
posted by You Should See the Other Guy at 7:35 PM on May 27

In my experience, hiring a customs broker just isn't worth the hassle and cost for a small business importing low-value shipments (Kuehne & Nagel, in particular, where painful to deal with). Ship via post whenever possible (in my experience in the same industry that you are in, even if a supplier didn't normally ship via post, they were often convinced when I explained the situation). For US shipments, opt for the courier services that include brokerage if you are forced to use courier (the small extra amount for UPS Express is always much less than the brokerage charges UPS would otherwise charge you). If you absolutely must import courier shipments from Europe, then you'll have to make the choice between clearing shipments yourself or hiring a broker. Note that if you import packages worth more than $1600 via post, you'll need to go through the same process.

Here is the Border Services page for small business (including the tariff listing, which tells you what the duty is on different classes of items).
posted by ssg at 8:13 PM on May 27

You might want to look into working with a customs broker (though I see not everyone agrees. Just throwing it out there). Their whole business is handling cross-border transactions and the fees associated. You pay for the broker, but you also pay for their knowledge of the ins and outs of cross-border shipping and the costs thereof.
I don't know if this applies to all of them, but I temped for one once and they specialized in one main form of transport (by ship), but then this is a town with a major port so dunno.

Don't use UPS - they are their own customs brokerage, which means they handle the fees on your behalf but then charge you for the pleasure, and the additional fees they levy for this service are well into the range of extortionate. As for example charging me $110 in border fees on a laptop declared as a gift with a $50 value.
posted by Billegible at 10:14 PM on May 27