Importing to the US is when an Importer of Record files their customs documentation, pays duties, and clears their goods. Many aspiring small business owners jump feet first into the world of international trade without first building a firm foundational knowledge of the processes involved in clearing imported goods for sale in the US. We’ve broken down the basics of getting started as an importer in 10 easy steps.

Key Takeaways

• An important first step to start importing is registering as an Importer of Record with US Customs and Border Protection (CBP).
• Commercial importers will also need a continuous customs bond, which is required for shipments valued at $2,500 or more and shipments of heavily regulated goods.
• Determining your product’s correct Harmonized Tariff Schedule (HTS) is vital in making sure you pay the correct duties to CBP for your imported goods.
• Failure to adequately prepare prior to purchasing goods from outside the US can lead to holds, delays, and rejected merchandise during customs clearance.
• If you haven’t imported before, working with a Licensed Customs Broker will help you avoid the pitfalls that plague first-time importers.

Don’t start importing until you’ve built up knowledge of the process with our easy-to-follow, 10-step guide for new importers.

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Importer of Record: What It Is

In a given import transaction, the Importer of Record (IOR) is the party responsible for submitting accurate information to CBP and paying duties & other customs fees. 

The IOR isn’t to be confused with the consignee, who is responsible for taking possession of the goods once they arrive at the final destination. While the IOR can be the same as a consignee in some transactions, their responsibilities are distinctly different. To register as an IOR, you’ll need to fill out CBP Form 5106 (Create/Update Importer Identity). 

Successful submission of this form requires you to fill in several key pieces of information, including but not limited to your:

• Import/business/private party name
• Employer Identification Number (EIN) or Social Security Number (SSN), unless requesting a CBP-assigned number under specific circumstances
• Company type such as corporation, partnership, or LLC
• Estimated entry filings within a 12-month period
• Contact information including physical address and phone number

These are just a few of the many fields found on the IOR registration form. Part of our service offerings include submitting this form on your behalf: in this way, you stand a better chance of getting your 5106 submitted quickly and successfully.

Get an Importer ID (EIN vs SSN)

Your importer ID will be based on one of three other possible forms of identification:

• EIN: If you have an EIN assigned by the Internal Revenue Service (IRS), this is most likely the ID you’ll fill out on the 5106 form.
• SSN: This is the ID used by most personal importers who are US citizens.
• Customs Assigned Importer Number (CAIN): Aspiring importers without an SSN or EIN may request a CBP-assigned number. This option is often used by non-US residents.

Once you receive confirmation of your successful IOR registration with your importer ID, you’re prepared to move on to the next step.

Do You Need a Customs Bond?

Formal entries and goods regulated by a Partner Government Agency (PGA) must be accompanied with a customs bond. A formal entry is an import with a value of $2,500, while a PGA is a government agency that assists CBP in regulating imported goods. 

You can obtain a single transaction bond (STB), also known as a single entry bond, if you plan to import once. Obtain a continuous bond if you plan on importing multiple times in a single year. 

Customs bonds act as a kind of insurance, and is an agreement between three parties:

• The IOR to whom the bond is issued
• The surety that underwrites and issues the bond
• CBP

While sureties are responsible for underwriting bonds, the vast majority of small and even medium-sized businesses will need to purchase theirs from a customs brokerage.

CBP requires this bond to be in place so they’re guaranteed payment of duties and other customs fees even if the IOR fails to pay these fees. Under this circumstance, the surety pays the fees and seeks reimbursement from the importer.

The stated requirements for purchasing a customs bond are:

• Shipments valued at $2,500 or more
• Merchandise that is heavily regulated by a PGA of CBP

In practice, however, we have found that there are other factors that require importers to have a bond on file. According to Ayla Hurst, a certified customs specialist with USA Customs Clearance:

“...it is also required for anything requiring a trade remedy (think quota, Section 201/301/232, IEEPA reciprocal, anti-dumping, countervailing, etc), which is almost all imports under the current administration.”

Purchasing a customs bond is a fundamental aspect of starting an import business that many new entrepreneurs overlook. Once you have registered as an IOR and bought a customs bond, you’re ready to start looking into sourcing goods you wish to import.

Related: Types of Customs Bonds

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Is Your Product Allowed? (FDA/USDA/EPA)

One question you should ask before you finalize any purchase of imported commodities is this: “Is this product allowed to be imported into the USA?”

Some imported goods are banned or heavily restricted from entering the United States. Banned goods include products made from cat and dog hair, while items such as drug paraphernalia are so heavily regulated as to effectively make it off-limits to commercial importers.

The type of commodity in question isn’t the only factor that can lead it being banned from importation into the US. You should check with the Office of Foreign Assets Control (OFAC) for countries that are sanctioned by the US. Some countries are sanctioned to the point that trade is nearly impossible. Even in countries that aren’t sanctioned, some business entities may be banned from exporting goods to the US.

There are goods that can be imported legally only with authorization from a PGA. A common example comes from food regulated by the Food and Drug Administration (FDA). 

Importers in the US can only import food from facilities that have been approved by the FDA. The United States Department of Agriculture (USDA) and Environmental Protection Agency (EPA) have unique requirements as well. 

Lastly, you may need to acquire a permit or license from a PGA to import your chosen merchandise. For instance, if you plan to resell imported alcohol, you’ll need to apply for a permit from the Alcohol and Tobacco Tax and Trade Bureau (TTB).

There is plenty of room for novice importers to make mistakes here. Consider consulting with one of our Licensed Customs Brokers while determining from where you should source goods: doing so will set you up to avoid complications from banned or regulated merchandise.

Find Your HTS Code

Speaking of merchandise, classifying your imported goods with the correct Harmonized Tariff System (HTS) codes is an important aspect of compliant importing. These codes don’t just identify what you’re importing: they’re also used to calculate the duties due on your shipment. Failure to estimate and pay the correct amount of duties can result in fines and other punitive actions from CBP.

Even the most experienced importers can easily misclassify their goods: the HTS is an expansive series of documents, describing almost any conceivable commodity that can be grown, mined, or manufactured. 

It also contains codes that modify duty rates according to:

If you’re looking for assistance finding the correct HTS code, consider subscribing to our Landed Cost Calculator tool. It includes an HTS lookup tool that takes many of the important factors in correctly estimating duty payments into account in a simple, easy-to-use format. Our Customs Brokers also offer consultation services that include up to three HTS code lookups.

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Related: How Do I Find My HTS Code?: Determining Harmonized Tariff Codes

Estimate Landed Cost (Duties and Fees)

On the subject of calculating landed costs, this is an important business expense for any business to determine on a given shipment. It incorporates the following costs associated with importing:

Some businesses incorporate overhead into landed cost determinations, but this is usually considered an element of fulfillment costs. 

Pre-Shipment Checklist

You’re registered, bonded, and ready to place an order. Before you do, however, it’s a good idea to review a few key pieces of data. Doing so could prevent issues during the customs clearance process.

• HTS Codes: Ensure your classification codes are correct, preferably with assistance from a broker and research from CBP rulings that apply to your commodities.
• Country of Origin: Information that’s incorrect on this document will trigger a lengthy hold process.
• PGA Involvement: For goods regulated by PGAs, double check that yours meet the necessary qualifications and that you’ve received any necessary licenses or permits.
• Trade Agreement Eligibility: You can take advantage of trade agreements using a country of origin to reduce your import costs. Make sure you’re not underestimating (or overestimating) your duties prior to the shipping process.
• Confirm Bond Sufficiency: This has been an ongoing issue under the current administration, as increased tariffs have led to many cases of bond insufficiency. Make sure you have enough coverage for the estimated duties on your shipment.

Once you’re satisfied that all of your information and documentation is in order, it’s time to get your freight moving.

Related: De Minimis and Duty-Free Imports

Book Freight + File ISF

If you’re working with a customs brokerage, it’s likely that they partner with freight brokers and forwarders who can set up shipping on your behalf. This arrangement is favored by importers since the worlds of customs clearance and international shipping are closely connected, and merging those services under one provider simplifies both of these complicated processes. 

Customs Brokers can also file your Importer Security Filing (ISF) after shipping arrangements have been made. The ISF  is a document you must submit in the customs clearance process for imports transported by ocean vessel, and failure to submit it on time can result in thousands of dollars in fines from CBP.

Entry, Holds and Release Timeline

Before your freight even gets loaded onto its vessel, a sort of timer starts counting down toward the process of clearance and release. The following timeline will give you an idea of some of your responsibilities during this process, and what you can expect from other involved parties:

Prior to the Vessel Leaving Port

• Your ISF should be filed no later than 24 hours before the vessel is loaded
• The carrier will also submit their ISF data points during this time

While the Shipment Is in Transit

• CBP will receive data regarding the ship’s manifest
• The agency will use a risk assessment program to evaluate shipments, potentially flagging some for holds and inspections

Within Five Days of the Vessel’s Arrival

• Your broker will file your CBP Form 7501, also known as the Entry Summary, in CBP’s Automated Commercial Environment (ACE)
• Estimated duties and customs fees will be transmitted to CBP
• Validation of your customs bond
• Admissibility review from CBP
• Possibility of holds based on factors like country of origin, suspicious paperwork, or suspected forced labor practices

On The Day Your Shipment Arrives in its Port of Entry

• The carrier will file arrival notice with CBP
• Cargo aboard the vessel will be made available for inspection
• CBP will match the ship’s manifest to its entry filing and review entry documentation

At this point, one of several possibilities can occur based on CBP’s assessment of your shipment:

• Assuming no holds are required, the cargo could be released in a matter of hours
• CBP may decide to inspect the cargo, releasing it later if no violations are detected
• If your goods are subject to review by a PGA, it will take place at this point

If your cargo isn’t held by CBP, they will issue the release order electronically in ACE, which will authorize the carrier to make shipments available for drayage or other delivery methods. Within ten days of release, your Entry Summary will be finalized and you’ll need to submit payment for duties and other customs fees.

Post-Delivery Compliance (Records, Corrections)

The work doesn’t end once your shipment arrives in its final destination. CBP conducts audits of customs paperwork from time to time, and may request documents about past shipments from you if they have reason to suspect a submission contained errors. This is especially true if those errors led to an underpayment of duties.

For this reason, part of your business plan should be auditing your imported transactions on a set schedule. It’s best practice to find your own mistakes before CBP has the chance. 

If your shipment hasn’t been liquidated, you may be able to correct errors on your Entry Summary form using a process called post summary correction (PSC). This is much easier if you had a Customs Broker file the initial summary on your behalf, as they’ll usually be able to submit the corresponding PSC should the need arise. 

If you discover that you have underpaid your duties, another process you may need to use is prior disclosure. When doing so, you should also submit payment for the difference in duties that is owed to CBP. Doing so is far more preferable to having CBP find the mistake on their own and launch a formal investigation.

Start Your Importing Journey With USA Customs Clearance

If you plan to get started as an importer, working with a Licensed Customs Broker from USA Customs Clearance will give you an edge in the complicated (but lucrative) world of international trade. Call us at (855) 912-0406 or fill out a contact form online to start importing the right way today!

FAQ:

How do I start importing goods to the US?

To start importing goods, you’ll need to register as an IOR, get an importer ID, purchase a customs bond, find your HTS code, calculate your estimated landed costs, and complete a pre shipment checklist

Can you make money importing products?

Yes, once your goods have been successfully imported into the country for consumption, you can resell them to make a profit. 

What happens if my ISF is late?

You can face a fine up to $5,000 for a late ISF filing.

What’s the difference between a Customs Broker and a freight forwarder? 

A Customs Broker assists importers with regulatory compliance. Freight brokers are intermediaries that facilitate the transportation of freight. 

Legal Disclaimer: All content provided is purely informational and should not be taken as legal advice.