In order to spread your business, it is necessary to widen the scope of your products by introducing it globally. When it comes to international market, one of the most potential marketplace for an E-commerce business is the USA with a whopping 326 million (approx) of a potential customer base. With a significant population of Indians residing in the USA along with the native population, makes the USA a number one choice for expanding your business.
With plenty of opportunities out there, one of the biggest questions which cross the mind is how to sell my products in the USA while based in India. This article gives you concise information on how a foreigner can import products and sell products in the USA. Let us walk through this one by one -
How do I ship products from India to the USA?
In order to start importing your products to the USA or Amazon FBA, you need to either ship your products through courier companies or freight forwarders who can deliver it to the USA.
To Import into the United States do I need an EIN (or W-EIN)?
It all depends on the value of products you are shipping to the USA. If your shipments value is below $2500 you need not have any of this. If your shipments value is over $2500 then you will have a go through a customs broker. Customs broker is an authorized agent who will guide you through the laws and regulations of the USA and also help you with these documents. Majority of the freight forwarders include this in their service which avoids complexities in shipping*
Which all taxes will I be imposed if I sell in the USA?
Since you are not physically present and not working in the USA, you will be exempted from paying income tax*. But if you are selling a huge volume of goods, then you will have to fill IRS tax form along with form 1120-F, which states that you have sold some goods in the USA and you are not paying tax because you are a foreigner. Since you are involved in selling products which are held in the inventory of a particular state in the USA, you will have to pay sales taxes*. It is simple a process of paying tax with local sales authorities. It gets complicated if you have your goods in multiple states and if residents purchase your products in different states. In such cases, you can consult a tax advisor who can help you to walk you through the procedures.
How do I Ship goods to Fulfillment Center?
If you are shipping your products to the fulfillment center then make sure you are clearing all the duties in order to avoid rejection of the goods transported to the warehouse/Amazon FBA. If the value of your goods is below $800 then shipment can be imported to the USA, free of duties and taxes. For the value of goods between $800-$2500 customs duties are levied, but will not require any formal entry. If your shipment is above $2500 then along with duties, formal entry is also required. Customs broker can help you with the procedures involved in formal entry.
If you are importing to the USA though sea, then you will need a customs broker who can help you in clearing all the taxes and duties on your shipments. He will help you in the process of clearing the customs and will solve all the issues which may arise if warehouse doesn't accept your goods.
In case of shipping through air/sea mode to Amazon FBA make sure that your shipment is Delivery Duty Paid (DDP). All major courier companies cover it. If your package gets evaluated below $800 then duty will not be charged, but DDP will be charged.
While declaring to the customs there are two things that need to be taken care of irrespective of your mode of transport. First one being,” Importers of Record” (IOR) and the other “Ultimate Consignee”.
Importer of Record (IOR) is an individual who bears a legal responsibility to make sure that your shipment meets the expectations of local legal requirements. IOR may be the sender, consignee or a customs broker.
Note: if you are shipping to Amazon FBA then do not mention Amazon as IOR as they don't accept your goods if you have mentioned so.
Ultimate Consignee is the warehouse to which you are shipping your consignment, which could be either Amazon FBA or any other warehouse. You can mention ultimate consignee name and location of that of the warehouse along with their tax id.
Do I need a bank account in the USA?
It is great to have a US bank account for transactions, but in order to do that, you need to be physically present in the USA. Thanks to technology, transferring money is easier now and can be done in just a few clicks. Some of the international payment gateways which can be used for international money transactions are PayUbiz, Payoneer, EBS, CCAvenue, PayPal etc. If you are selling your products via Amazon then, you don't have to worry as Amazon has its own mode of payment known as Amazon Currency Converter for Sellers (ACCS). With this, it is easier for your customers to credit money into your local bank account.
International market can pour in a lot of opportunities, especially in the USA. Importing and selling goods can be easier if you are well prepared in advance with all the rules & regulations, do’s & don'ts of shipping goods to the USA, so that your shipment doesn’t end up getting held in the customs.
* Disclaimer: Information related to US Customs & Local Tax are subject to changes and shared only as business insights. Consulting Relevant Tax Experts before shipping is advised.