Welcome to my series on how to become a seller on Amazon. In these posts you can follow my efforts and results in my attempt to become a successful seller on Amazon. As I live outside the USA this series may be of interest to both US residents and non-US residents. If this is the first time you have landed on my blog series on how to become a seller on Amazon, you might want to read the series from the beginning. You can find the collective posts under categories here.
Almost throwing in the towel part 2
Yo to y’all. I forgot to mention in my last post that applying for and obtaining a sales tax permit from a state will in most cases cost you money. How much it will cost you will differ from state to state. I am sure you understand that at first when I thought I had to apply in 25 states and paying in the area of between $5 -$20 in each state didn’t do anything good for my spirits and my budget.
But having the mentioned plan of registering in a few states to start with makes the mental and economical burden bearable.
I haven’t applied for any sales tax permit yet as I first have to know which warehouses I have to send my inventory to. Turns out there’s one more thing you need to do in order to apply for the permit. When you go to a given states application site (see TaxJars list here) most of them will as part of your info ask for your EIN.
So what is EIN. The letters stand for “Employer Identification Number”. Actually you do not need to have an EIN to sell on Amazon but to ease the process of applying for the tax permit you should start by getting an EIN. Read this great post by Sylvia F. Dion CPA on the subject.
US residents can apply for an EIN online. Non-US residents have to apply by phone. I don’t know why this is. See how to apply here. Aplying for my own EIN is actually next on my to do list. I have to pull myself together and get this done. It’s just – my english isn’t perfect and my experience with talking to public servants isn’t that great. Well – better get it over with soon.
Are we there soon?
All right. I have chosen my product. I have made a logo. I have ordered a sample from my china supplier. I have set up my Amazon account. I have a plan for the sales tax stuff. I have made a budget with estimates of all the mentioned posts.
This has to be it, right? Nothing else to consider, right?
Now it is time to figure out the intriguing subject of importing your product into the US. Getting it through customs. Great fun, I’m sure. Or NOT!
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How to clear customs when importing into the U.S.A.
I knew it in the back of my head – way back – you cannot just import something into a country such as the US without some kind of paperwork. You have to clear customs as it is called. When I started investigating this subject it quickly turned out to be, as I suspected, one of the most boring and energy draining things I had done in my Amazon seller project.
I will refrain from getting too technical on this one. You really need to read and understand this by yourself. I recommend starting with this great article/post that helped me understand the basics of custom clearance.
As I understand it you need two documents as a minimum to clear customs. An invoice from your (China) supplier and an official customs form that you need to fill out correctly and send to the customs authorities.
Now – in order to fill out this form correctly you need to know the 10-digit tariff classification number for your product. And what is that? Well, for the millions and millions of types of products that cross the borders of the world every day there is a harmonized system of classification numbers. You need to know your number in order for the customs officals to know exactly what it is that you are importing.
Once they know what you want to import they decide that you are allowed to import the product and what kind of import tax you have to pay on the product.
The import tax, as I understand it, varies a lot from product to product and will depend on which country you are imposing from. But it seems we are talking in the area of 0% – 10%. As I said, you really need to acquaint yourself with this subject in order to understand what it means for your specific product.
Pay for help
I have come to the conclusion, after taking the advice from other importers on the internet, that I have to hire a custom broker. A custom broker is a person or company that specialises in importing stuff into, in this case, the US. The custom broker knows exactly which forms and what kind of documentation is needed for your particular product. The broker will make sure that the import and custom clearance of your product runs smoothly.
For this service they will naturally ask to be paid. I have been recommended a custom brokers portal called Pacific Custom Brokers, where you can get a quotation for your particular delivery. You can find this portal here.
I got a quotation back that said $200 for a one-time import bond on my delivery or $500 for a bond that is valid for 1 year. OMG. The costs just keep piling up, don’t they? I have decided to go for the one-time bond. I of course expect to have to import the same product several times over the next year in order to replenish my inventory at Amazon – you know, when my sales sky-rocket – but untill I am sure about the sky-rocket thing I think I’ll start out with the one-time bond.
Good news. It seems that I don’t actually have to pay any import tax because the value of my delivery is under $800. I am not quite sure about this yet but reading this article made my fairly certain. I still have to pay the customs broker, though. Unless I will try to fill out the paperwork myself – well I won’t. I have to make sure my first product release runs as smoothly as possible – even if it will cost me more money.
At a later time – when I know how this customs thing works – I might want to try and do the paperwork myself. Just to fully understand how it works. And of course to save some dollars.
I will not lie to you people. Maintaining moral and keeping momentum at this point in my Amazon seller career is hard. I’ve been struggling with this for several month now and the finish line still feels far away. Am I going to give up?? Absolutely not! As I said earlier – if there is one thing you need plenty of when starting an Amazon seller business it’s perseverance. You never give up. Just keep pushing on – one foot in front of another – and you will get there. I believe this to be true. And so should you if you contemplate becoming an Amazon seller.
I am looking forward to receiving my product sample from China. It should arrive in about eight days. When I, hopefully, am happy about the quality I am ready to order my first larger shipment, 400 pieces, and get all this import and customs stuff over with – AND START SELLING – YEAH……..
Until next time, may the peace be with you,
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