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Why Are HS Codes So Important for Cross-Border Trade?

International shipping can be an excellent opportunity for brands to increase their sales. As cross-border e-commerce continues to grow worldwide, it becomes easier to reach customers worldwide. Your online store must be ready to meet the demand you have.

So, what about all the requirements and documents you need to import your products into other countries? Preparing your products for shipping across borders can seem daunting and overwhelming. If you already offer international shipping, you must have come across the term “HS code” and how important it is to be compliant to avoid penalties and delays in delivering your products to your customers. If you don’t know about it… don’t worry, after reading this blog, you will learn and understand it.    

HS codes are a fundamental part of international shipping. These codes classify your products and make it easier to fill out any needed international documents. It is important to be aware of the requirements to comply with customs and tax authorities to find a solution that can save you from problems that can cost you money and dissatisfied customers.   

For this reason, we will explain what HS codes are, how customs use them, their relevance to your Shopify store, and how we can help your business remove all the complexity of international growth. 

What is an HS Code?  

Harmonized System (HS) code is a standardized numerical method to classify goods being traded internationally. They are commonly used across the world by customs authorities to identify products when assessing duties and taxes, and to record imported products.  

Each HS code is composed of six digits. The first two digits are chapters, the following two digit headings, and the last two sub-headings. There are 21 sections, 99 chapters, 1,244 headings, and 5,224 sub-headings.   

Summary: key features of HS codes:  

  • Six-digit code to classify the goods 
  • Defined rules that classify the goods 
  • Act as a uniform standard for the classification of goods worldwide 
  • Covers 98% of goods in international trade and over 5000 commodities

How do Customs use HS Codes?  

Imagine everyday countries receive a large amount of goods from other parts of the world, and categories vary, as well as name, appearance and size of each product. So, it would take a long time for customs authorities to identify each product manually. Therefore, HS codes are used to identify imported goods more accurately and faster and charge the right amount of taxes and duties.   

It is vital for merchants to classify the imported goods and include this information correctly in the documents presented to customs. If not done correctly, you run the risk of customs opening your parcels and checking the content inside. If the HS codes declared do not match the product, your business might encounter the following issues:   

  • Considered non-compliant   
  • Extra charges to be paid   
  • Fines and charges as penalties   
  • Product rejections   
  • Delivery delays  
  • Unsatisfied customers  
  • Lower profit margins in case of paying a higher amount of tax or customer returns    

For these reasons and more, you need a partner and solution to help you with compliance. BorderGuru helps you avoid these risks by accurately mapping and automatically classifying all your products and assigning an HS code. We will be the importer of record and handle customs on your behalf. Once your products are shipped, we will ensure that they navigate customs safely and are seamlessly delivered to your end customers.   

 Why are HS Codes relevant for your Shopify Store, and how can BorderGuru help your business comply with customs?  

As already explained, HS codes are required to ship any product internationally. This can be complex for brands, as not only do products have to be accurately classified to be assigned an HS code, but also the information must be included in most international export documentation, like commercial invoices or certificates of origin.   

Failure to correctly assign HS codes or include all necessary information in customs documents can lead to delays, additional significant costs, and unsatisfied customers.   

It is important to consider all import requirements to offer international shipping in your Shopify store. Without HS codes and export documents, you will not be able to comply with customs, or deliver parcels to your international customers.   

BorderGuru can handle everything for you to correctly comply with all requirements, so that your business doesn’t encounter any issue when its parcels go through customs, and they can be easily dispatched and delivered to your customers around the world.    

We can also calculate and guarantee all landed costs at checkout to give you and your customers the best possible shipping experience.   

 

Click here to learn more about how BorderGuru can manage the entire process, from start to finish, to expand your business globally without complexities. 

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