I want to start importing clothing items and selling it on my current website. I will definitely be importing more than twice per year. I want to find out what are the legal requirements? Should I register as an importer? Should I register a company or will a sole proprietory suffice? How will the custom duties be calculated? On my cost price of the clothing items or the market price in South Africa? I will appreciate any information.
There are actually three questions that require answering:
- Should I register as an importer?
Yes, registration is a legal requirement. Registration forms are available on the SARS website under the ‘Documents’ section.
On registration, you will be issued with a unique customs code which you will be required to record on all customs-specific documentation, e.g. the SAD 500 customs declaration form.
- Should I register a company or will a sole proprietory suffice?
It is not necessary to register a company to register as an importer. An individual can register as an importer.
How will the customs duties be calculated? On my cost price of the clothing items or the market price in South Africa?
Ad valorem (i.e. %) customs duties in Schedule 1 Part 1 of the South African Customs Tariff are paid on the “customs” or “transaction” value” as defined in Section 65 of the Customs Act of 1964 (as amended from time to time).
With a few exceptions, the “Customs” value is the FOB (free on board) value of the goods at the port of exit in the country of export. The exceptions to the FOB value are listed in Section 65. Note that the existing SA Customs Act will soon be replaced by two new Acts: the Customs Control Act and the Customs Duty Act, intended to modernise the country’s existing customs system.
Want To Start An Import Business – Here Are The Importing Terms And Documents Involved
An informative guide to understanding the terms, tariffs and documents involved with importing.
The following sections will be able to assist you in setting up your importing business:
How do I know whether my product is export-ready?
Your product has to tick several boxes before you can consider exporting it.
I want to start exporting my product into Africa. I’ve made contact with some buyers in Nigeria and they’re interested in signing a contract. How do I make sure that my product is ready for export?
Whether or not your product is export ready depends on the buyer’s needs, your product’s ability to meet those needs, and how your product will shape up against international competition.
In order to determine export readiness, you need to research the following:
- Your target market
- Any potential competitors
- The buyers themselves.
Common factors that would affect the exportability of a product include:
Unless there is a market for it, your product won’t sell. Look at your domestic market for an indication. If you are meeting a need locally, you should be able to meet the same need internationally.
This, however, is not the only consideration. International markets are usually further away, meaning that you will have to add transport costs, and will most probably have to include the cost of import duties and taxes in the final delivery price.
2. Product adaptability
A key quality of an export product is its ability to adapt to suit an international market. Cultural differences between countries could affect the use or acceptability of a product in each country. A product name could have a totally different and possibly derogatory meaning in another language and might have to be changed for that market.
3. Cost structure
The cost structure of the product will obviously impact on its competitiveness. For example, depending on the cost of materials, and whether or not those materials can be locally sourced, international transport costs and customs duties in the importing country will collectively determine the final delivery price.
The more you know about your competitor’s product, the better your position when determining your own chances of succeeding. Price is an important factor in determining success, but not the only way to compete. You can also differentiate your product by highlighting some of its unique selling points.
5. Product complexity
The greater the complexity of your product, the more important the strength of your business. Products that need a high level of support or installation assistance will need a strong local network with trained staff to support them. The investment in setting up a sales and support structure in the importing country could be prohibitive, making it unviable to export the product.
For more information, read more here.
How do I verify foreign suppliers?
Do your homework to reduce the likelihood that you’ll end up out of pocket.
I run a small import business and want to find some new suppliers in the Far East. How do I establish their credibility from South Africa?
It’s essential to establish that any new suppliers that you intend to do business with are credible and reliable. Here are some ways that you can check up on their credentials:
- Use internet trading forums such as that on eBay to establish whether the supplier has a history of being trustworthy and dependable
- Do online research to find out more about the company, including how long it’s been in business for and how long it’s had the product line that you’re interested in.
- What does their website look like? Has it been professionally designed and kept up to date? Does it have proper contact details including a physical address and telephone number?
- If you can’t afford to visit the supplier, contact them by phone or email and discuss your requirements. Find out about delivery times, payment methods and ability to deliver what you need, when you need it. These discussions should give you a feeling for how professional the supplier is in conducting its business.
- Ask for references and check them.
- You can consider using the services of a reputable inspection agency to make absolutely certain that the supplier is trustworthy.
- Obviously a site visit is the number one way of establishing a supplier’s credibility.
See the full article here.
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