For individuals who are ready to begin an import program, one of the first questions is often “Do I want to import as an individual, or do I want to set up a business to act as the importer?”
For many people who expect to do only occasional imports, the easiest approach can be to import as an individual, without setting up a separate business entity. Since the legal requirements for importing into the U.S. are the same for individuals as for companies, import processes (and associated costs) are also generally the same for each.
However, there are some practical differences in other areas, including:
A business, such as a corporation, a partnership, or a Limited Liability Company (LLC) can easily limit its legal liability, especially in financial matters, but it is generally much more difficult for an individual to do so.
The treatment of some types of expenses, for tax purposes, may be different for a business than for an individual. Your tax advisor (such as an accountant or financial planner) should be able to help you identify whether setting up a business to handle exports or imports – instead of doing exports or imports as an individual – makes financial sense, for the type of transactions you expect to be involved in.
Depending on how its revenues and expenses are accounted for, the business may be able to legally reduce the amount of its net taxable income, and the amount of tax paid, in ways that an individual cannot.
In many U.S. states, the Secretary of State’s office is responsible for managing business registrations. Typically, that office will have a “Division of Corporations” or a similarly titled unit that handles functions such as:
officially incorporating or registering a business
officially closing a business
updating and maintaining information for the “registered agent” that serves as contact point for the business
receiving changes to the articles of incorporation, or other form of organization, for the business
receiving an annual report from each active business incorporated or registered in the state
Depending on the details of the individual state’s laws covering incorporation or registration of a business, some of the common types of business entities that can be formed or registered may include:
partnership (general or limited)
limited liability company (LLC)
limited liability partnership (LLP)
Most states post at least basic information on their Secretary of State’s corporations unit website, which allows public searches to verify whether a business is incorporated or registered in that state. Some states also post additional information and documents about businesses that are registered or incorporated in the state. Details vary substantially from state to state, but frequently include copies of documents such as:
articles of incorporation
annual reports received from each active business
changes of business name, or form of business organization
changes in corporate officers (of a corporation) or members (of an LLC)
Some businesses may be incorporated in one state (their “home state”) but are also doing business in one or more other states. Depending on the business registration requirements of each of those other states, a business may be registered as a “foreign corporation” (or other type of business entity) in one or more of those states.
In the state of Washington, the Secretary of State's website contains information on the procedures to start a business entity, and several types of business registration can be done very quickly, on-line. Many other states offer similar on-line registration procedures.
After a business has been incorporated or registered, the business will need to obtain an “Employer Identification Number” (EIN, also commonly referred to as an “IRS number”) from the U.S. Treasury Department’s Internal Revenue Service (IRS). The application for an EIN can also be done very quickly, on-line through the IRS website.
After the business has been incorporated or registered with the appropriate state, and has obtained an EIN from the IRS, the business can be registered with U.S. Customs as an importer. This is normally done electronically by the importer’s customs broker, acting under the authority of the Customs Power of Attorney (POA) that the importer has issued to the customs broker.
At this point, the business is ready to start importing, acting as the “importer of record” for its shipments. Transmark Customs Brokers gladly assists those valued clients who choose to set up a business entity to handle their import transactions, and we are happy to answer questions about each of the steps in the process.