There are billions of dollars to be made when importing and exporting goods from around the world. If your business ventures are successful in the U.S or China you will be set up for life if you have a product that is in demand. If you want to try to get your cut from this multi-billion dollar industry you will need to first work out all the costs. This includes getting quotes for shipping and finding out what the tax along with duty implications are for the countries you wish to exploit. Fear not, here are some basic tips to help out.
There is a vast array of different products that you can make money from by exporting. You need to carefully research each one before spending your cash buying wholesale products to export. A number of items will require that you to get a license before you are able to sell them on the open market. Once you find out the legal implications it is then time to calculate the tax and duty charges for the countries you wish to export to. You will then be able to work out your profit margin to see if it is a viable option or not. To find out these costs you will need to understand Harmonized Systems (HS). Each product has its own individual code and once it is correctly categorized you will know the exact fees for the taxation rates of the country.
HS And HTS Codes
The World Customs Organization is in charge of all the different HS and HTS codes. Exporters are legally obliged to correctly allocate the six digit HS code to the product of export so that customs authorities. It is so they can quickly work out the fees they need to charge for the duty and tax. In total, there are more than 200 different countries that use the WCO codes for export identification.
For the export of products to the United States, an HTS-US code must be used. These help the authorities in the U.S to work out the total due in import tax duty. The codes are broken up into different sections along with chapters that exporters need to use to correctly classify their products or face a huge fine, possible legal action or the products been seized.
If products being exported are mistakenly classified with the wrong codes it could put you in great financial difficulty which may result in the closure of your business. Getting it right from the start is vital or you could find yourself in disarray before you have even begun. Your business reputation will be damaged, it may result in a hefty fine and you will pay out a great deal in tax/duty which may make it unprofitable.
Before you place your first products on the ship ready to export a great deal of work is required to make sure you follow the legal system, pay the associated tax/duty rates and use the correct HT and HTS codes. If you are new to this type of business you should consider hiring a shipping broker and they will be able to guide you to make sure you do not make any costly errors.
I hope you enjoyed this article about how to use HTS Codes when exporting materials and products in your business.
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Published by Michael James Schiemer
Owner of Bootstrap Business
Small Business Consultant
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