How To Start Your Business (Import and Export)

If you're thinking about starting an import-export business, be aware that there is a lot of preparation involved. The import-export business is a potentially lucrative business. Its success depends on your ability to properly set up the business keeping within the trade guidelines of your country and the countries that you plan to import or export goods for profit. Read on to learn how to start an import and export business.

1. Contact the consulates or embassies in the foreign countries where you will be importing and exporting goods. These offices provide you with industry directories, manufacturer lists and much more to help your business thrive.

2. Communicate regularly with your country's consulate to prepare for importing your goods from other countries.

3. Obtain a registration number from the taxation department in your country.

4. Ask about the licensing requirements of operating an import-export business in your country. Many countries do not require a license to operate an import-export business unless you are planning to import or export products recognized as "high-risk" like liquor, certain food items or pharmaceuticals. It is a good idea to stick with low-risk items when establishing your business in the beginning so that you will not have to deal with quotas or restrictions.

5. Make sure that there are no embargoes, or trade barriers, set up against any of the countries that you plan to import or export goods. First contact your own government to find out if there are any embargoes in place for the countries you are considering. Then contact the consulate/embassy to see if there are restrictions against goods from your country.

6. Check with your bank about getting a Letter of Credit for trading internationally. This will significantly reduce your risk when trading because banks will make sure the goods are delivered before any money is ever exchanged.

Just a few words: there is far more to import/export than the poster has outlined and the risks are substantial. The risks can be mitigated but be wary and do your homework. Most of all: ask professionals for advise. And ask more than one professional. Compare answers. Ask for explanations of discrepancies. I cannot emphasize this enough. You'd be shocked how much free advice you can get from professionals. Their motivation is to get your business if you start up.

Nothing is black and white:
Example: a bank does not ensure that you get your goods. They withold "control documents" until payment is issued. The control documents can be circumvented. Of course this would be fraud but I have personally seen this happen more than once. The result is a lawsuit and no merchandise.
The winner will be the attorneys on both sides.

Be wary of hidden/unforeseen costs:
Letters of credit carry substantial costs, not just in fees, but in non-use of funds.
There are usually fees assessed in addition to duties, in the US add 1/3% to the duty to cover these fees. In Canada there is a 7% GST tax in addition to the duty however it is refundable.
In the US inspection fees can run as high as $ 1000 for a 40' container.

The list goes on. I am not trying to be discouraging here but one must do their homework (due diligence) prior to the goods landing at the destination port.