An Easy Lesson for Clearing Customs: Leave It to the Pros

The steps to clearing customs can be mystifying. We suggest focusing on what you’re good at — sourcing and selling your products – and cut through the red tape by handing this step over to the pro: your customs broker.
 
A partnership with a customs broker is nearly a necessity in the importing business and will save you valuable time and trouble. After reviewing The Import Channel topic Customs Brokers — An Importer’s Best Friend and reading the guidelines below, you’ll find that the easiest thing to do is to leave the complexities to the professionals.

Clearing Customs

All goods entering the United States pass through an entry process governed by U.S. Customs and Border Protection (CBP). There are two key steps to entering merchandise:

1. Filing documents so that CBP can determine if goods may be released into the U.S.

2. Filing documents to permit assessment of duties and gathering statistical data.

There are two types of entries: formal and informal. Whether your shipment can be processed as a formal or an informal entry depends on the value of the invoice and the type of product you’re bringing in. The key difference is the type of documentation and amount of paperwork required to clear the shipment with customs.

Informal Entries

In general, an informal entry is a shipment that does not exceed US$2,000 in offshore invoice value. However, all textile products, including made-to-measure suits from Hong Kong, will be entered formally regardless of invoice amount. Also any item in a classification that’s subject to quotas will also be handled as a formal entry.

You can complete an informal entry yourself without the need for a customs broker. Here’s how it works: The carrier bringing your shipment to the U.S. will notify you that the goods have arrived. You go to the port of entry, let the staff know you are picking up an informal entry, and pay the required duties. That’s it!

If you are unable to do this step personally, a customs broker can act on your behalf to clear the goods. The carrier might also provide this service to you. A quick conversation with either will let you know if they’ll handle it.

Formal Entries

Formal entries are more involved, but working through a customs broker will make this an easy process. Here’s how it works: Approximately three weeks before the expected arrival of your shipment, contact your customs broker. The broker will ask about details of the shipment, such as country of origin, product description (including materials used in its manufacture), quantity, and invoice amount. Based on these details, the broker will complete the required documents. Fifteen days before the arrival date, your broker must contact the entry port and provide these details, which are then entered into a tracking system used by the CBP.

When your broker files the entry paperwork, a surety bond must be posted with CBP to cover any duties, taxes, and charges that will be assessed. A customs broker will often have a large surety bond already in place for his clientele to use. For a small fee, the broker will offer to enter your shipment under this bond as an added service and convenience.

Sample Goods and Avoiding Duties
 
If you are importing sample goods to use to pre-approve a design or to use to solicit orders, you may be able to enter the shipment without paying duty. Be aware that goods are not automatically exempt from duty because they have, for customs purposes, commercial value. For example, in order for samples of textiles to enter duty-free, they cannot be valued at over $1.00 each or must be marked “SAMPLE NOT FOR RESALE,” cut or torn, etc. Rules that determine when samples can enter duty-free are complex. Working with a broker to correctly classify samples can save you time and money when appropriate.

Keep It Simple

If the invoice amount is over $2,000 or the shipment contains any textiles (or other products covered by a quota), leave the formal entry details in the hands of a qualified customs broker. If the invoice is under $2,000 and you are a do-it-yourselfer, you can take care of this step fairly easily. For additional information, you can find an excellent FAQ tool on the U.S. Customs and Border Protection website.