Home e-Commerce Guide to Importing Commercial Goods into Canada as a First-Timer

Guide to Importing Commercial Goods into Canada as a First-Timer

When goods are shipped, the supplier sends the shipping documents to the importer’s bank. They include instructions to release the document for payment. The importer then pays the bank in exchange for those documents.

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Importing commercial goods into Canada for the first time
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If you have ever wondered what it takes to start importing commercial goods into Canada, worry no more. I have deliberately written a step-by-step guide on how to import into Canada. 

To most people importing into Canada is pretty simple, and to others, it’s a complex process. Let’s find out.

Every business venture has an element of risk, which can be minimized by extensive research. Getting help and guidance from successful service providers can also help reduce these risks.

Importation is one of the many ways to ensure a successful entrepreneurial journey. It’s a sustainable business idea. 

Let us dive into what it takes to start an importation business in Canada.

1. Register your business

To start importing into Canada, you need to register your business. 

Also, you need to know the type of business structure you want to operate. It’s either sole proprietorship, partnership, or corporation.

If you intend to incorporate your business, it involves name registration within your chosen field of operation. This means incorporating your business federally, provincially, or territorially. 

The benefit of incorporating your business is that a corporation has the same rights as a person in Canada.

Federal Corporation benefits include:

  • Exclusive use of your business name in Canada 
  • Better access to grants and capital
  • Lower corporate taxes 
  • Limited liability

If you incorporate your business name in your province or territory, you will also have an exclusive right to use your business name there. 

It is important to note that there is a difference between your business legal name and your trade name. 

Your business legal name appears on all government official documents and forms. While your trade name is what you show to the market.

To avoid fines and legal actions against your business, register your trade name. To register your trade name visit the registry of the city where you intend to do business.

Also Read:

2. Obtain a Canadian Business Number

Before you start importing goods into Canada, you must obtain a Canadian Business Number (BN). You need it for an import/export account.

This business number is issued by the Canadian Revenue Agency (CRA). The process is completely free and you can get it in a few minutes. 

If you want to start importing into Canada you may have to register your business now. This is because, by May 13th, 2024, the Canadian Revenue Agency (CRA) will stop registering import and export accounts. By May 2024, you are required to register with CBSA Assessment and Revenue Management (CARM).

This initiative will seriously change the process your business assesses and pays for imported goods.

The government uses the Canadian business number for various revenue programs such as:

  • GST (Goods and Services Tax)
  • HST (Harmonized Sales Tax)
  • Corporate income tax
  • Payroll deductions

3. Identify the type of products you want to import

Gather as much information as possible about the products you intend to import. There are regulations covering special types of goods, such as African food products and health products. You can use an e-commerce product research tool like Niche Scraper to find hot-selling that are in high demand in Canada.

In addition, obtain adequate details about the product, and the composition. When necessary, get product samples. 

This information is important. It will play a key role in determining the tariff classification of the goods you desire to import. The tariff classification number will be utilized to determine the rate of duty that will be applied to your goods. 

4. Know the origin of the commercial goods you are importing from Canada

Identify the country where your product originates from.

This means knowing where the individual parts of the product are from and where the final product was assembled. 

Considering the origin of the goods you import into Canada is important. Cheaper goods may be outweighed by additional expenses. These include tariffs, shipping costs, export taxes, and currency exchange rates in the source country. 

5. Employing the services of a licensed custom broker

You may feel comfortable clearing your goods or you can hire a Canadian Customs Broker.

Canadian customs brokers are licensed by the Canada Border Services Agency (CBSA). They act as your agent to carry out customs tasks for their client companies. 

A good Customs Broker speeds up clearing imports into Canada. This is because most brokers have online systems to submit paperwork ahead of time. 

Lastly, you are responsible for the accounting paperwork, tax payments and duties, and corrections that will be done later. These include re-determination of classification, origin, and value. You must do this even if you employ the services of a broker. 

Duties of a Custom Broker 

  • Advise clients on import and export restrictions.
  • Monitor the status of shipments.
  • Securing the release of imported goods.
  • Process import and export documents.
  • Respond to CBSA (Canada Border Services Agency) concerns after payment.
  • Assist clients in complying with custom rules and regulations.
  • Updating and maintaining records and advising the client on custom regulation changes.

Brokers do not work for the federal government. They are private agents licensed by the CBSA. You will be charged a fee for their services based on the value of the goods or as set by the brokerage firm. 

6. Mistakes to avoid

Canadian customs can be very complex and strict. Mistakes in your documentation can lead to penalties, fines, and even a seizure of your goods. Here are a few mistakes to avoid when importing into Canada, especially for the first time: 

  • Incorrect documentation or late accounting may lead to penalties. You may owe interest on late payment of duties.
  • Avoid delays in releasing your goods at the border. Open an import and export account with the Canada Revenue Agency before you try to import goods into Canada. Delays at the border and penalties can be avoided by accurately declaring your goods. 
  • Failure to understand duty and tax rules will lead to legal issues. Follow the Canadian rules and regulations on imports, it will save you time, money, and hassle.

Also Read:

7. How to pay your suppliers if you plan importing commercial goods into Canada

There are primarily 5 methods you can choose from to pay the foreign suppliers for the goods you import from them. 

1. Cash-in-advance 

With this payment method, the supplier ships goods only when the importer pays for the goods. This is also known as “advance payment”

2. Letters of credit (LC)

Letters of credit are very secure payment methods. They are secure for both the supplier and importer. This is because they rely on the supplier’s bank and the importer’s bank. The banks receive and check shipping documents and guarantee payment. 

The importer’s bank guarantees to pay. They must be presented with a set of specified documents by the supplier’s bank.

3. Open account

The supplier ships goods to the importer without payment and the importer must pay within an agreed period. The payment is made in 30, 60, 90 days, or even longer. 

4. Consignment

The supplier ships goods to the importer and only gets paid when the goods are sold to the end customer. This method is usually based on a contractual agreement.

5. Documentary collection

When goods are shipped, the supplier sends the shipping documents to the importer’s bank. They include instructions to release the document for payment. The importer then pays the bank in exchange for those documents.

8. Summary

Before you start importing commercial goods into Canada here is a checklist:

  • Acquire your business number from the import and export account.
  • Know the type of goods you want to import.
  • Identify the origin of the goods, the individual parts of the goods, and where the final product was assembled.
  • Determine if the goods require permits or certificates from other government agencies. 
  • Determine the 10-digit tariff number and the applicable duty rate for your goods from the Canadian customs tariff. 
  • Determine whether the goods are subject to any other taxes and duties.
  • Determine if you are using the services of a broker and its associated costs.
  • Choose your preferred shipping method. Then, discuss with your transportation company about any cross-border requirements. 
  • Ensure that your goods are marked and labeled as required.
  • Ensure you obtain certificates of origin, invoices, and other important documents.
  • Await notification that your shipment has arrived.
  • Submit CSBA-required documents. Then pay any duties and taxes to have your goods released. 

Please note the following:

  • Shipments arriving by mail or courier valued at CAN $2,500 and below may be assessed and cleared by the CBSA or the courier company. 
  • Government officials will examine your shipment before you can import any goods into Canada.
  • You must make corrections on your CBSA documents if there are any errors during the release process.
  • Keep records of your import documents for six years after the year you import the goods.
  • The Administrative Monetary Penalty System (AMPS) enforces compliance with the CBSA legislation.

I hope you found this article helpful. if you need more help, please visit the Canada Border Services Agency.

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Stephanie Simon is an SEO content writer and contributor at EntrepreneurBusinessBlog.com. You can connect with her via [email protected].

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