6 tips for Canadian import/export businesses

How to take your business global (and save a whole lot of money along the way).

Here are six opportunities to upgrade the way you trade across borders. Let’s get down to business.

This guide is sponsored by CIBC Global Money Transfers for Business. The best way to purchase products for import, pay international workers, or wire transfer money. Make cross-border money transfers or payments for your business. Learn more.

This guide is sponsored by CIBC Global Money Transfers – Make cross-border money transfers or payments for your business anywhere, any time.

1. Open an import-export program account with the CRA

To import goods into Canada, you’ll need to open a CRA import-export program account. Upon registration, your business will be assigned a unique, nine-digit Business Number (BN) with an additional two letters and four numbers representing your import-export account. If your business already has a BN, it will be used to generate your new program account number.

Among other things, you’ll have to provide basic information about your business (name, location, mailing address etc.) and clarify whether your business will be importing goods, exporting goods or both.

Your import-export account number can be used to identify your business on invoices, customs forms and similar documents. It’s required if you run a business that involves bringing goods in or out of Canada. Your BN can also be used to deduct CPP, EI and other taxes from your payroll as well as file corporate income tax returns and register to collect GST/HST from clients or customers.

2. Find a reliable way to make global payments

One of the biggest challenges you’ll face when setting up an import/export business is finding the most cost-effective way to make international payments. There are a variety of ways to make payments globally – electronic funds transfers (EFTs), cheques, wire transfers or through dedicated money transfer services.

Dedicated money transfer services can be quick, but your bank may offer a wider range of transfer options all under one roof. For example, business account holders with CIBC have three options for transferring money overseas: Global Money Transfers for Business, CIBC Wire Payments and FX Online CIBC. Global Money Transfers for Business come with $0 transfer fees and lets you send to over 120 countries, while FX Online can help with electronic trading solutions. CIBC Wire Payments is useful for sending large amounts of money.

Depending on your financial institution, you may even be able to save money on fees by bundling accounts and services with the same bank. It’s also wise to leverage special offers wherever possible. For example, if you hold an eligible CIBC business bank account, you can get between $75-150 cash back on your first CIBC Global Money Transfer.

By taking advantage of zero fee transfers, preferred exchange rates and special deals, you can keep more of your hard-earned revenue and put it towards growing your business.

3. Find out about taxes, regulations and restrictions

You need to know the requirements for getting your goods through customs safely and legally. Exact requirements can vary depending on the goods being shipped and whether you’re importing or exporting goods, but the following are some important considerations:

• Tariffs, taxes and duties

  Every commodity that passes through customs is classified according to the Harmonized Commodity Description and Coding System (HS) created by the World Customs Organization (WCO), an independent organization with around 180 member countries including Canada.

  If you’re importing, the duties you’ll have to pay the Canadian government are based on how your goods are classified under the HS. A federal GST tax of 5% is charged on most goods imported into Canada. Many exported goods and services are considered “zero rated” and are exempt from GST/HST. Check the Government of Canada’s website to find out what taxes apply to the goods you’re shipping.

  If you’re exporting, you’ll likely have to pay duties as determined by the government of the destination country.

• Labelling and product safety requirements

  Competition Bureau Canada has very precise rules on how to label products so that consumers know about any possible hazards and can handle products safely. Requirements are outlined in the Consumer Packaging and Labelling Act, which has details on label placement, typeface, height, language and more.

• Declaration and reporting requirements

  In general, you must report goods that are exported from Canada. Exceptions are made for goods exported to the US, goods that don’t require a permit and are valued at less than CAD$2,000, and personal effects that aren’t for resale.

  You’ll need a valid business number to report exported goods, and your report must be submitted within a very specific time frame, which varies depending on how your goods are being transported (air, marine, rail, highway etc.) Certain regulated and hazardous goods may require additional documentation.

• Restricted, regulated and prohibited goods

  Every country has a list of goods to which restrictions apply or that are prohibited from entering the country. The lists can vary but may include such items as weapons, drugs, certain chemicals, some medications, animals and insects, alcohol, dairy, currency, plants and seeds. You can learn more on the Canada Post website.

  The Canadian government also has lists of specific types of products that cannot be imported or sold in Canada due to safety concerns. This includes baby walkers, yo-yos with cords at or above a certain length and even balloon-blowing kits. Other products, such as car seats, hockey helmets and lighters, can be sold but must adhere to strict safety regulations.

• Goods that require a licence or permit to sell

  Sellers must often obtain a licence or permit to sell hazardous or potentially dangerous goods like firearms, pathogens, toxins and cannabis. The licensing process can take time, and you must apply to the regulatory organization in charge of managing the sector in which your business deals.

• Government sanctions

  The Government of Canada imposes sanctions on certain countries in response to political tensions, evidence of criminal leadership or other reasons. Types of sanctions vary but may impact trade to and from sanctioned countries.

  Remember, Canadian laws aren’t your only concern. Each country has its own import/export regulations, so if you’re sending goods internationally, find out what rules that country has in place for goods brought into its borders.

  Visit the Canada Border Services Agency to learn more about import and export regulations. There’s a lot to wrap your head around, so take time to read through your obligations to make sure you get it right.

4. Get help with shipping logistics

Shipping items overseas is a complex business. Not only must the goods be safely packed, correctly labelled and accompanied by relevant documentation, but they also need to be sent using an efficient, cost-effective shipping method.

Most import/export businesses use licensed customs brokers and freight forwarders. Licensed customs brokers are authorized by the government to gather and report all required data on your shipment and to remit all the necessary taxes and fees. Required data can include a list of suppliers, applicable tariffs and duties, the classification of your goods, the intended use of your goods, routing information and more.

Freight forwarders are experts in the logistics of shipping goods internationally. They understand which transportation methods are the safest and the most efficient and can oversee the complexities of getting your goods where they need to go.

When choosing a freight forwarder or licensed customs broker, look for an established firm with ample experience in your industry. Visit the Canadian Border Services Agency website to see a list of licensed customs brokers. Or check out the Canadian International Freight Forwarders Association (CIFFA) website to look for a member near you.

5. Calculate costs

There are lots of costs you’ll need to consider when developing your import/export strategy. As well as shipping charges, costs can include the following:

The list of expenses varies depending on the goods involved and the countries you’re exporting to or importing from, so research is key. Once you understand the costs involved, it’s time to develop a detailed financial plan and business model.

6. Get expert help and advice

Expanding into the import/export world can be complicated and daunting, but you don’t have to do it alone. There’s plenty of help available – you just need to know where to find it. Here are some guides to help you get the information you need.

• Canada Border Services Agency guide to exporting commercial goods from Canada
• Canada Border Services Agency guide to importing commercial goods from Canada
• Government of Canada import-export program accounts
• Canada Border Services Agency guide to warehousing or storing your shipment
• Canada Post list of prohibited and restricted items for each country
• Reach out to CIBC’s experts to see how they can help you move money across borders

You can also find grants and business loans offered by the federal government and provincial/territorial governments. The Canada Small Business Financing Program (CSBFP) is one example of this.