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What International Companies Need to Know about Choosing a US Fulfillment Company

Looking for a way to sell products to customers in the United States, but don’t have a US-based company? The answer is to work with a US fulfillment company – one that can get your products to your customers in good time. However, there are quite a few things that you’ll need to know here.

Do You Need to Have a US Corporation Set Up to Sell in the US?

No, you do not need to set up a US corporation, although that advice is commonly given. It’s actually relatively simple to sell products and accept payments online without an EIN, and then use a fulfillment company to store the products you sell and fill orders to your customers. You’ll even find that the right fulfillment company can provide you with help in getting products through customs and dealing with import documents. With that being said, if you intend to open a physical location in the United States, then you will have to set up as a US corporation.

Do You Pay US Taxes?

If you do not set up a US corporation, you do not have to worry about federal taxes in most cases. However, there may be some taxes incurred, such as gross transportation income taxes, corporate income tax, and more. It’s highly recommended that you work with an experienced tax attorney with good knowledge of international business and taxation matters.

However, you will need to worry about collecting and then paying sales tax. This is state-based, and will depend on the state in which the fulfillment center you choose is based (where their nexus is located). You’ll need to collect sales taxes for sales made in that state and pay them to the state government. Note that you do not need to collect sales taxes on products sold in other states.

Importing Products into the US

As an international business attempting to sell products to US-based customers, you are technically an importer. Importing is generally handled by freight forwarding companies, and they come in all sorts of sizes and capacities. Essentially, freight forwarders do exactly what it sounds like – they take products from one geographic area and transport them to a port in another geographic area.

You’ll need to do your research when choosing a freight forwarding company to ensure that they are on the up and up, that they have a reputation for timely deliveries, and that they are insured to protect your cargo. As a note, some fulfillment centers can help here. The fulfillment partner you choose may have relationships with established, well-respected freight forwarders. In some instances, the fulfillment center itself might have a freight forwarding division itself.

Know Your Product Regulation Companies

The United States has several agencies responsible for ensuring product safety when it comes to items imported from overseas (as well as products manufactured within the country). It’s your responsibility to know these agencies, how they work, what the process and timeframe for approval might be, the testing methods used, acceptable certification types, and more.

For instance, the FDA handles all pharmaceuticals that are imported into the country. The FDA is responsible for most everything else, from foods and beverages to cosmetics and everything in between. In addition to regulating agencies, you’ll need to be familiar with laws governing imported products, such as the Federal Food, Drug and Cosmetic Act (FD&C Act), as well as the Fair Packaging and Labeling Act (FPLA).

Finally, you will need to understand the broad range of substances, materials, and products that are banned in the US, as they relate to the goods you are attempting to import. Some of these are well known, such as lead and asbestos, but some are more obscure including specific types of cheeses, prepared foods containing meat products, cigars, and a great many others.

Identifying the Best Fulfillment Center Location

When partnering with a US-based fulfillment center, it’s vital that you make a smart, informed decision, and that you’re able to choose the best possible location for the center. While there is no such thing as a one-size-fits-all solution here, there are some best practices that you should bear in mind.

Import Nation – One thing to consider is where you’ll be importing from. For instance, if you’re importing from China, many companies choose to bring products in through Southern California, rather than paying more to reach another port.  However, with the expansion of the Panama Canal the East Coast of the US is now relatively cost effective to reach.  Particularly when you consider that the highest unit cost in the supply chain is the last leg (to the end consumer) which leads us to reviewing where your demand is.

Sales and Demand – You might choose your fulfillment center location based on the anticipated sales and demand. Will it be nationwide? If so, you might do best with a eastern-located fulfillment center, rather than one on the West Coast.  This due to the majority of the US population living on the Eastern side of the US. However, if you’ll be focusing sales in a specific region of the country, then you would do best with a fulfillment center located in or near that area.

Sales Tax – As mentioned previously, you will have to pay state sales tax based on the rate of the state in question. However, some US states do not have sales taxes, and you can save a significant amount of money by locating your fulfillment center in one of those. Currently, the only states without a statewide sales tax are Alaska, Delaware, Montana, New Hampshire and Oregon.

How to Assess a Fulfillment Center from Overseas

Again, it’s essential that you make an informed decision when choosing a fulfillment service and getting the best pricing. How do you do that, though? The best option is to pay a visit to the fulfillment center in person if possible. However, that may not be possible in all instances. If not, check into the company’s financial standings through a D&B report. In some instances, you might be able to request video footage of the company’s warehouse, stock and distribution system. Always check reviews from current and previous customers, and if possible, speak with those individuals about their experience with the fulfillment center.

With the tips and tricks listed here, it should be simpler to choose the right fulfillment center for your needs. Take your time when making a decision of this import, and never rush into a relationship that might not be the right fit for you.

Posted in: Blog, Business |

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