• Understand Sales Tax Nexus – Economic nexus laws vary by state. If you hit or surpass any thresholds (they also vary by state) you’ll need to charge and pay sales tax too

• Download the Sales Tax Thresholds by State PDF here (Kansas now has a $100,000 threshold so tax isn’t payable immediately in this state anymore

• TaxJar is a great tool to plugin to your Shopify store to automate this process - https://www.taxjar.com/pricing 

Top Tips

You may not trigger the sales tax for a while to begin with whilst growing so you won’t need to do any tax returns at all. Once you make a sale in your ‘Home State’ you’ll then need to start filing your sales tax in that state. It is very easy and takes just a few minutes, this isn’t something you will need a tax advisor or accountant for

Once you trigger sales tax filing, you’ll need to complete them monthly (some states are quarterly) and again this is a very quick process and can be automated with TaxJar if you upgrade to the more expensive package

You will file your sales tax returns on the DOR. Simply set up your account with them and each month you can login in upload a CSV with the sales made within your ‘home state’ and it will calculate how much you owe. You can pay with a credit or debit card there and then online. In most cases it takes less than 10 minutes each month.

Top Tip – If you’re selling on Amazon.com and Etsy they usual collect and pay sales tax for you. Ordinarily this isn’t something you need to deal with at all. You will still need to track sales coming from Amazon.com and Etsy to ensure they don’t tip you over any thresholds once added to your website sales and any other platforms you’re selling on

• Labelling Requirements – if your labelling is legal and compliant in the UK/Europe it is likely it is legal and compliant in the US too. It’s important that your labels display the country of origin ‘Made in …’, a list of ingredients or materials/fabrics used, the net weight, allergens if applicable

• FDA Regulations (food supplements, cosmetics, health and beauty) – your products will fall into either cosmetic or drug/medicinal. If it’s cosmetic then FDA approval isn’t required. If you want to make claims such as ‘anti-aging or ‘heals skin’ for example this would require FDA approval and would be classed as a ‘drug’. If not and your product is ‘cosmetic’ you can make claims such as ‘moisturises’ or ‘improves appearance’.

 

Top Tip – The FDA has an amazing website with a wealth of information including exactly how the labelling should be displayed and claims you can and can’t make. Their customer service is completely free of charge for any additional advice/recommendations you need - https://www.fda.gov/cosmetics/cosmetics-labeling-regulations/cosmetics-labeling-guide 

• Textiles and Padding/Fillers including leather, wool and fur (fashion, plush toys, bedding) – additional testing maybe required depending on the materials your products contain. Labelling typically needs to be displayed on the product itself and sometimes the packaging 

Top Tip – The FTC has an amazing website with a wealth of information including exactly how the labelling should be displayed. Their customer service is completely free of charge for any additional advice/recommendations you need and they are brilliant - https://www.ftc.gov/business-guidance/resources/threading-your-way-through-labeling-requirements-under-textile-wool-acts 

• Toys, electronics or any products with batteries – Products that fall into these categories may need CPSC certification – https://www.cpsc.gov/

• Product Liability Insurance – We are able to help with product liability insurance from $1,200 per year to give you $4,000,000 cover per occurrence plus legal and attorney fees. This policy also covers any retailers you sell into as well. If you start selling B2B to retailers such as Nordstrom, Urban Outfitters, Bloomingdales, Walmart etc the highest requirement of cover we have seen requested is for Ulta.com who need $6,000,000 and this is available as cover through us too if needed

Top Tip – Even if you think you are covered, always check your policy as we’ve seen quite a lot of clients find that they aren’t covered if US sales go over a certain revenue and/or are dispatched from a US address.

We are able to get your insurance policy sorted even if you are not a client of ours.

You don’t need your own warehouse or US staff, partner with a 3PL who:

• Stores your stock
• Ships orders same/next day
• Handles returns

Top Tip - A lot of US 3PL’s are able to help with FBA prep, B2B and DTC, dropship, kitting/bundling and more to cover all your needs so you don’t have to have the expense and stress of having your own US ‘base’ and staff

• Work with a reputable company – they’ll ensure your goods are classified correctly and clear faster. We can help with a smooth shipment door to door including clearance

• Required Documents

1. Commercial Invoice – here is a commercial invoice template you can use to ensure you have all information stated –  Download Here. On your commercial invoice you’ll typically list 2 addresses. The first is the consignee which is your address (not the delivery address) and the second is the shippers address (the address the shipment is being sent from). You’ll also need to list your EORI number
2. Packing List
3. Bill of Lading
4. HS codes for classification

Top Tip - Importing into the US requires an importer of record (IOR) which you ideally want to you be/your company to retain ownership of goods. If you appoint an IOR within the states it could mean they then own your stock which can feel uncomfortable

• Ways to potentially reduce your tariffs and import duties

1. Negotiate with your manufacturer. It seems obvious but since the Trump tariff madness manufacturers (in China especially) are much more open to negotiation. Quite a few of our clients have done this and the largest reduction we’ve seen so far is a 16% discount per unit which not only reduced manufacturing costs but also helps reduce the duties as the total value of the shipment won’t be as high
2. Segment your manufacturing invoice out. If there is part of your manufacturing process that can be classed as ‘Finishing’, list that out separately so it isn’t classed as the manufacturing cost. For example, if you manufacture crockery, the painting and varnishing could be categorised as finishing and not contribute towards the actual cost of the product as it can be invoiced as a service. This will again reduce the cost per unit and in-turn total value of the shipment
3. Consider tariff engineering. Most HS/commodity codes cover multiple materials/products. It could be that a different HS code that still describes your product has a lower tariff rate. You can check your HS codes here - https://hts.usitc.gov/ 
4. Check to see if your product qualifies under a ‘free trade agreement’

Top Tip – Ensure the total cost/value you put against your products is enough to cover what you’d need back if your shipment got destroyed. Insurance will only pay out for the declared value stated on the commercial invoice. As much as it’s a benefit to state the value as low as possible to get the duties down it can be bad news if that value doesn’t cover the costs even nearly if you need to make a claim

If you want to calculate your landed costs into the US you can use this free duty calculator. You get 3 HS codes free of charge each day and it can help you calculate the total cost of what you’ll pay in duties and taxes when the shipment lands in the US - https://www.simplyduty.com/ 

Top Tip – When sending a shipment to the US always ALWAYS ensure the Importer Security Filings (ISF) is filed BEFORE the shipment leaves the country you’re shipping from. If this isn’t done before the shipment is loaded onto the vessel or plane there is a $5,000 fine. We always ensure this is done on time but if you use another freight forwarder always check it’s been done

Shopify Set Up – most eComm businesses are on Shopify. Shopify Marketplace can direct your customers to their ‘local’ website which is really helpful and can help increase conversion rates too as people like shopping knowing the product is being dispatched from the US. When setting up with Marketplace ensure you set the prices of your products and don’t rely on automation as it may take the price from the daily exchange rates which fluctuate meaning your customer may come onto your site and see a product they want for $18.95 one day and the next $18.92 which can cause confusion. The same applies with setting shipping rates too so they don’t fluctuate daily either.

When setting up Shopify payments as your payment gateway, Shopify will ask for your US incorporation certificate and various other US documents which you won’t have if you’re operating as an international seller. You simply need to push back with your account manager and send the UK/EU/Aus equivalent. They will then ask for you CP 575 which is your EIN (US tax number) certificate which the IRS will post to you once you’ve applied for your EIN over the phone

US Bank Account – You don’t need one! You don’t need a US based bank, you can operate using a US Dollar account. The best ones we’ve seen are AirWallex, Wise, Payoneer and Starling. Ideally don’t use a brick and mortar bank such as Barclays, Lloyds, HSBC etc as they charge fee’s on top of unfavourable exchange rate and it can get very expensive