The Perils of Selling Overseas
If your business has an online store, then you may think that you're ready to enter the world of international sales. Chances are you're not.
Whether you're working with importers or individual customers, selling overseas is a whole new beast. Not only are there tax implications, but you'll have to navigate the world of export law. That means customs and tariffs.
The entire process involves a lot of work.
For one, before you even calculate tariffs, you'll have to learn the Harmonized Commodity Description and Coding System. You need to properly identify each product you plan on selling overseas and then find a corresponding code. Then you'll need to determine the product's actual country of origin. This is how governments determine the appropriate tariff rate.
With this process comes paperwork. You'll need to obtain Certificates of Origin and fill out any customs forms when shipping. Chances are you will have to upgrade your systems and/or hire a new employee.
Once you've calculated tariffs and import taxes, the next step is to decide how they get paid. Will they be included in the price? Or will buyers owe at the time of delivery? And for that matter, how are you even going to ensure that you get paid?
International sales are often plagued with fraud, according to the U.S. Department of Commerce. For this reason, it's imperative that payment be verified before an item ships.
If you remain undeterred and selling overseas still seems like an attractive option, then go ahead and jump in. But please, do your research and consult with the experts first.
Related Resources:
- How to Sell Overseas (Bloomberg)
- Small Business Should Look to Exporting (FindLaw's Free Enterprise)
- Small Business Export Financing on the Rise (FindLaw's Free Enterprise)