To start an import-export business in the United States, you form a legal entity, obtain an Employer Identification Number, classify your products under the Harmonized System, put a customs bond in place, and build compliance procedures that satisfy Customs and Border Protection along with any other federal agency that regulates what you ship. Startup costs are modest. The regulatory learning curve is not, and traders who skip steps during setup routinely see cargo held, penalized, or seized at the port.
Form the Business Entity and Get an EIN
Register a legal entity before anything else. Most traders choose a limited liability company or a corporation because both shield personal assets and make it easier to sign contracts with foreign suppliers and freight carriers. State filing fees run roughly $40 to $500 depending on where you incorporate, and the paperwork goes to the state’s business filing office.
Once the entity exists, apply to the IRS for an Employer Identification Number using Form SS-4. The IRS issues a nine-digit number used for federal tax reporting, hiring employees, and opening commercial bank accounts.1Internal Revenue Service. About Form SS-4, Application for Employer Identification Number (EIN) Customs filings also require an EIN, so you cannot clear a shipment without one.
Pick a name that signals international commerce. Overseas suppliers and customs officials tend to take a company more seriously when the name reads as a trading entity, which is why so many include words like “Global,” “International,” or “Trading.” Keep the name distinct enough to trademark later if you plan to protect branded goods at the border.
Pick a Product and Market Where a Real Gap Exists
A profitable trade business starts with a product niche where a genuine price or availability gap exists between two markets. The best candidates tend to be goods with high value relative to shipping weight, or specialized items that buyers in the destination market cannot easily source locally. The U.S. Census Bureau’s USA Trade Online platform provides detailed export and import statistics broken down by commodity, country, and port.2United States Census Bureau. FTD – Products – Trade Data – USA Trade Online
Finding reliable suppliers takes more effort than browsing an online marketplace. B2B platforms and trade fairs help you meet manufacturers, but request physical samples before committing to bulk orders. Inspect materials, craftsmanship, and packaging. Check trade references and verify quality certifications. Confirming those credentials before containers are on the water prevents problems that are far more expensive to fix later.
On the market side, evaluate GDP growth, consumer spending power, and any trade agreements that lower tariff rates. Your landed cost after shipping, duties, and insurance has to leave room for a competitive margin at local prices. Currency fluctuations matter too; a sudden devaluation in the destination country can make your goods unaffordable overnight. Spreading sourcing and sales across multiple regions reduces the risk that one country’s political instability wrecks the whole supply chain.
Classify Your Products Under the Harmonized System
Every product moving across a border gets classified under the Harmonized System, a coding framework used by more than 200 countries. The World Customs Organization maintains the first six digits, which are the same worldwide.3World Customs Organization. What Is the Harmonized System (HS)? The United States adds four more digits for a 10-digit code. Exports use the Schedule B system administered by the Census Bureau. Imports use the Harmonized Tariff Schedule administered by the U.S. International Trade Commission.4International Trade Administration. Harmonized System (HS) Codes
Getting the code right matters. Your classification determines the tariff rate, whether special licenses are required, and which agencies review the shipment. Misclassification, whether careless or deliberate, triggers penalties under 19 U.S.C. § 1592. A negligent mistake can cost twice the duties shorted or 20 percent of the dutiable value. Fraud can cost the full domestic value of the merchandise, and CBP can seize the goods.5Office of the Law Revision Counsel. 19 USC 1592 – Penalties for Fraud, Gross Negligence, and Negligence On a $500,000 shipment, a fraud finding could mean a $500,000 penalty plus loss of the goods.
Prepare the Core Trade Documents
International shipments travel with a stack of documents that customs authorities, carriers, and banks all rely on. Missing or inaccurate paperwork is the single most common reason shipments get held at the port.
Commercial Invoice
The commercial invoice is the primary transaction record. It must include the buyer’s and seller’s full names and addresses, a detailed description of the goods, quantities, unit prices, total value, country of origin, and currency. Customs uses this document to calculate duties, so the declared value must be accurate. Federal law sets a specific hierarchy of valuation methods, starting with the actual transaction price paid.6Office of the Law Revision Counsel. 19 USC 1401a – Value Deliberately under-reporting value to reduce duties is a federal crime under 18 U.S.C. § 542, punishable by up to two years in prison per offense.7Office of the Law Revision Counsel. 18 USC 542 – Entry of Goods by Means of False Statements
Packing List
The packing list details the physical contents of every package: what’s in each box, net and gross weight, and dimensions. Freight forwarders use it to allocate cargo space; customs officers use it to verify contents against declared paperwork. Any discrepancy invites an inspection that delays the entire shipment.
Bill of Lading
The bill of lading is a receipt confirming the carrier took possession of the cargo, a contract for transporting it, and a title document proving ownership. You must present the original at the destination to claim your goods. Errors cause port delays and trigger daily demurrage charges until the container is picked up.
Certificate of Origin
Certificates of origin prove where goods were manufactured and can qualify a shipment for reduced tariff rates under trade agreements. They are typically certified by a local chamber of commerce. A fraudulent certificate can result in duty penalties and criminal prosecution.
Handle Federal Export Controls and Screening
Beyond classification and documentation, an import-export business faces licensing and screening requirements imposed by several federal agencies. Penalties in this area are among the harshest in trade law.
Bureau of Industry and Security Licensing
The Bureau of Industry and Security controls the export of items that could threaten national security, including advanced electronics, certain chemicals, specialized software, and dual-use technologies with both civilian and military applications. Before shipping any controlled item, determine whether a license is required based on the product’s classification under the Export Administration Regulations, the destination country, and the end use.8Bureau of Industry and Security. Licensing Exporting a controlled item without the proper license can result in criminal prosecution.
OFAC Sanctions Screening
The Office of Foreign Assets Control at the Treasury Department maintains sanctions programs prohibiting transactions with certain countries, organizations, and individuals. Screen every customer, supplier, intermediary, and financial institution against OFAC’s lists before completing a transaction. OFAC expects a written compliance program with screening procedures calibrated to your risk profile and updated as the lists change.9Office of Foreign Assets Control. A Framework for OFAC Compliance Commitments Violations carry severe civil and criminal penalties. OFAC has historically pursued enforcement actions against small businesses that failed to screen.
Denied Party Screening
Separately from OFAC, the International Trade Administration maintains the Consolidated Screening List, which aggregates restricted-party lists from multiple federal agencies into a single searchable tool. If a potential buyer, supplier, or intermediary appears on the list, you must conduct additional due diligence, apply for a specific license, or walk away.10International Trade Administration. Consolidated Screening List Experienced traders screen every new relationship as a matter of routine.
Partner Government Agency Requirements
Customs clearance is not just a CBP process. Depending on what you’re importing, the FDA, USDA, EPA, or Consumer Product Safety Commission may need to review and approve the shipment before it enters the country. These Partner Government Agency requirements add data filing obligations on top of standard customs entries.
- FDA jurisdiction covers food, drugs, medical devices, cosmetics, tobacco, and radiation-emitting electronics. Medical device importers must register their establishment with the FDA within 30 days of beginning import operations and may need premarket clearance before commercial distribution.11eCFR. 21 CFR Part 807 – Establishment Registration and Device Listing for Manufacturers and Initial Importers of Devices
- USDA/APHIS review applies to fresh fruits, vegetables, plants, seeds, live animals, meat, wood products, and soil. Many of these commodities need import permits with requirements that vary by product and country of origin. The APHIS Agricultural Commodity Import Requirements database is the starting point.12Animal and Plant Health Inspection Service. What Plant Material Requires a Permit
- EPA documentation is required at entry for vehicles, engines, pesticides, chemical substances, and hydrofluorocarbons.
- CPSC-regulated consumer products subject to safety standards must have certificates of compliance filed electronically through ACE at the time of entry.
All PGA data flows through the Automated Commercial Environment, the same electronic system used for customs entry filings. If your product triggers PGA requirements and you don’t submit the required data elements, the shipment will not be released.
Post a Customs Bond
Any commercial import valued over $2,500, or any import subject to another federal agency’s requirements regardless of value, must be backed by a customs bond. The bond guarantees payment of all duties, taxes, and fees to the government.13U.S. Customs and Border Protection. When Is a Customs Bond Required
A single-entry bond covers one shipment and is priced based on shipment value plus applicable duties. A continuous bond covers all shipments for a 12-month period. CBP sets the minimum continuous bond at $50,000 and can require higher amounts based on import volume and compliance history.14U.S. Customs and Border Protection. Monetary Guidelines for Setting Bond Amounts Annual premiums to a surety company start around $500 and scale with import volume. If a bond is terminated or found insufficient, CBP will not allow further import transactions until a replacement is filed.15eCFR. 19 CFR Part 113 – CBP Bonds
Choose Payment Terms and Cargo Insurance
The central tension in every international transaction is that the exporter wants payment before shipping and the importer wants the goods before paying. The payment method you choose signals how much trust exists in the relationship.
A letter of credit is the most secure option for both sides. The importer’s bank guarantees payment to the exporter once compliant shipping documents are presented, under the Uniform Customs and Practice for Documentary Credits (UCP 600) published by the International Chamber of Commerce. Bank fees typically run 0.75 to 1.5 percent of the transaction value. Letters of credit are standard for first-time relationships and high-value orders.
Documentary collections are cheaper but riskier. The exporter’s bank sends shipping documents to the importer’s bank, which releases them only when the importer pays or accepts a time draft. No bank guarantee backs the transaction, so if the importer refuses the shipment, the exporter is stuck with goods sitting in a foreign port. This method works better between parties with an established track record. For ongoing high-trust relationships, open account terms or advance payment may replace formal instruments altogether. Spell out payment terms in the sales contract before any goods move.
Carrier liability for lost or damaged cargo is capped by international conventions at amounts far below the actual value of most commercial shipments. Separate cargo insurance fills the gap. An all-risk policy covers every cause of loss except those specifically excluded, while a named-perils policy covers only listed risks such as fire, collision, or natural disaster. Ocean freight premiums generally run 0.1 to 0.5 percent of cargo value; air freight is slightly higher, around 0.3 to 1 percent. Whichever party arranges coverage under your Incoterm, make sure the amount equals at least 110 percent of invoice value, the standard minimum under most trade contracts.
Hire a Freight Forwarder, a Customs Broker, and Set Your Incoterms
Freight Forwarder
A freight forwarder coordinates the physical movement of goods across transportation modes: ocean, air, rail, and truck. They negotiate carrier rates, book cargo space, schedule pickups and deliveries, and handle the documentation for each leg. Choosing a forwarder with experience in your specific product type and trade lane reduces routing mistakes, missed connections, and unexpected surcharges.
Customs Broker
A customs broker is licensed by CBP to transact customs business on behalf of importers. Federal law requires anyone conducting customs business for others to hold a valid broker’s license.16Office of the Law Revision Counsel. 19 USC 1641 – Customs Brokers Brokers file entry documents, pay duties, and communicate with CBP through the Automated Commercial Environment, the electronic platform that processes all U.S. import and export data.17U.S. Customs and Border Protection. ACE – The Import and Export Processing System A good broker catches classification errors before CBP does.
Incoterms
Incoterms are standardized trade terms published by the International Chamber of Commerce that define exactly where responsibility for costs and risk transfers from seller to buyer.18International Chamber of Commerce. Incoterms 2020 The current version, Incoterms 2020, includes 11 terms. The three most common in ocean freight:
- FOB (Free on Board): the seller delivers goods onto the vessel at the port of shipment, and the buyer bears all costs and risk from that point.
- CIF (Cost, Insurance, and Freight): the seller pays transport and insurance to the destination port, but risk transfers to the buyer once goods are loaded at origin.
- EXW (Ex Works): the buyer assumes all costs and risk from the seller’s premises. Cheapest for the seller, most burdensome for the buyer.
The Incoterm shapes the entire financial structure of the deal, determining who pays for freight, who arranges insurance, and who handles export and import clearance. Negotiate the term before signing the sales contract.
Execute the Shipment
Export Filing
For goods leaving the United States, the exporter or their agent must file Electronic Export Information through the Automated Export System when the shipment value exceeds $2,500 per commodity classification, or when the goods require an export license regardless of value.19eCFR. 15 CFR 758.2 – Automated Export System (AES) Filing must generally be completed before the goods leave the country, though an approved postdeparture option exists for certified filers. AES generates an Internal Transaction Number that the carrier needs to release the cargo for loading.
Import Clearance
When the shipment arrives at a U.S. port, the customs broker files an Entry Summary using CBP Form 7501, which triggers duty assessment and any required inspections by CBP or partner government agencies.20U.S. Customs and Border Protection. CBP Form 7501 – Entry Summary If documentation is complete, classification is correct, and duties are covered by the customs bond, CBP releases the shipment for domestic delivery. Errors at this stage, whether a wrong HS code, a missing PGA filing, or a bond insufficiency, hold the cargo while daily storage fees accumulate.
Wood Packaging Compliance
If your shipment uses wooden pallets, crates, or dunnage, the wood must comply with ISPM 15, an international phytosanitary standard designed to prevent the spread of pests. Compliant wood must be heat-treated to a core temperature of at least 56°C for 30 continuous minutes, debarked, and stamped with the ISPM 15 mark showing country code, treatment method, and facility number.21International Plant Protection Convention. Explanatory Document for ISPM 15 – Regulation of Wood Packaging Material in International Trade Non-compliant packaging can result in the shipment being refused entry, fumigated at the importer’s expense, or destroyed. It catches first-time importers off guard often.
Watch Demurrage and Detention Fees
Two categories of port-related fees punish slow cargo pickup. Demurrage is charged by the terminal when a container sits at the port beyond its allotted free time, typically a few days after vessel discharge. Detention is charged by the shipping line when you hold the container itself beyond the allowed period after picking it up.
Demurrage at major U.S. ports currently runs roughly $285 to over $700 per container per day for standard dry containers, with refrigerated and specialty equipment higher. Rates escalate the longer the container sits, and charges on refrigerated containers exceed $900 per day after the first week at some terminals. These fees can erase the profit margin on an entire shipment. Building reliable inland transportation into your logistics plan is the best defense.
Keep Records for Five Years and Plan for Taxes
Federal law requires importers to retain all records related to a customs entry for five years from the date of entry.22eCFR. 19 CFR 163.4 – Record Retention Period That means entry summaries, commercial invoices, packing lists, bills of lading, payment records, correspondence with suppliers, and communications with customs brokers. Exporters have similar obligations for AES filings and export documentation.
CBP enforces recordkeeping through its Focused Assessment program, a comprehensive audit that evaluates an importer’s internal controls over customs compliance.23U.S. Customs and Border Protection. Focused Assessment (FA) Program The audit starts with a pre-assessment survey of your systems and procedures. If CBP finds weaknesses, it moves to compliance testing against your records. Importers who cannot produce requested records face penalties. Build a document management system from day one.
Import-export income is subject to standard U.S. federal income tax, with added complexity from cross-border activity. When you pay tax to a foreign government on income earned abroad, the foreign tax credit lets you offset those payments against your U.S. tax liability to avoid being taxed twice on the same income. The United States maintains tax treaties with dozens of countries that establish specific sourcing and crediting rules, and some treaties allow an additional credit for taxes imposed by the treaty partner on U.S.-source income.24Internal Revenue Service. Foreign Tax Credit – Special Issues
Import duties and tariffs are a separate cost. They cannot be claimed as a tax credit but can be treated as a cost of goods sold. If you sell to domestic customers, most states require a sales tax permit, and your obligation to collect and remit depends on where you have a physical or economic presence. Many states issue permits at no cost, though some charge nominal registration fees. Keep duty payments, broker invoices, and foreign tax documentation organized from the start. Reconstructing these records years later for an IRS audit or a customs review costs far more than maintaining them in real time.