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Importers and Exporters

Top 10 Differences between Importers and Exporters

Table of content

Introduction

Four different types of businesses

  • Sole Proprietorship
  • Partnership
  • Limited liability companies
  • Corporation

An Import Export business

Top ten differences between Importers and Exporters

Introduction

Starting any business requires a big leap of faith, along with a great business plan. A business is essentially an organization or a company which engages in various commercial activities, professional activities or industrial activities. There are many things a company needs to do for a successful business. It can be a bit overwhelming and at times you may not know how to proceed. If you find yourself in a similar situation, then you can visit our page P.L Global Impex Pte Ltd. Here, you can find professional services for your business. We understand how much your business means to you and follow our three values of Simple, Attainable and Realistic to the core.

There are different types of businesses underneath this general overview of a business.  For example, there exist businesses for both profit and non-profit organizations.

Non Profit Organizations

Non Profit organizations (NPO) just like the name suggests is an organizations whose main goal is not earning profit. Driven by dedication towards a given cause is NPOs. The target of NPO is all income above what it takes to run the organization. Due to this, the Government exempts taxes for NPOs ( which means they will not have to pay the taxes). Some people confuse NGOs and NPOs. But there is a difference between an NPO and an NGO. NGO is also a non-profit organization. The difference is that an NGO has no ties with the government. However, they do depend on the Government for funding (Government Grants). Some well-known NPOs are APJ Abdul Kalam Centre, Adhya Educational Society, Aeronautical Society of India, and Agastya International Foundation among many others. 

Profit Organizations

The exact opposite aim of a Non Profit organization is a Profit organization main aim is to earn profit i.e. make maximum money. Non-profit organizations have goals like helping the community. Most businesses are for profit organizations. Prominent examples of Profit organizations include airlines, construction companies, restaurants, retail stores etc. Some well-known organizations are Google, Apple, Microsoft, and BMW among many others.

Four Different Types of Businesses Structures

Any new business will have to select a business structure. A business structure is actually a kind of a legal organization of any business. Selecting this is very important because they would have both the tax and the legal implications. Aside from this, selecting a business structure is also extremely important because it can have an effect on the liability, ongoing costs. It won’t affect the daily affairs of your business. But it is necessary for defining ownership, business taxes, limiting personal liability and laying the groundwork for future growth. If you are looking to start an import export business, you will have to have a business structure. 

So, the four types of Business Structures are Sole Proprietorship, Partnership, Limited liability company and Corporation. 

Sole Proprietorship

One of the most common business structures is Sole proprietorship. A sole proprietor is a person who solely has ownership of an unincorporated business. There are pros and cons of a sole proprietorship. But the main advantage lies in the simplicity of being a sole proprietor. All the profits that the business generates belong to the owner.

Partnership

In a partnership business, there is no sole owner. Two or more people come together to execute a trade or business. There are three kinds of partnerships which are general partnership, limited partnership and limited liability partnership. A general partnership is where there are two or more partners but they share all the responsibilities, liabilities and profits equally. The partners in this type of business structure are General Partners. In a limited partnership, there has to be at least one general partner and the other will be the limited partner. The general partner will assume ownership of the business-related operations and will have unlimited liability.

The limited partner invests the capital in the business but does not get involved in the day-to-day operations of the business. They don’t get a voting right which is why they have limited liability. A limited liability partnership is where all the partners won’t be held accountable for any negligence or malpractices they display. All the partners under this may or may not be involved with the management of the business. 

Limited liability Company

Limited Liability Company (LLC) is a little complicated. LLC is formed under the state laws and regulations which will vary from state to state. It is a type of hybrid legal business. This is because it contains traits of various other business structures. The owners conduct elections. This election states the traits of the business structure. This gives LLC business structure more flexibility and protections compared to the other business structure . The LLC is an entity, formed by the state statute. Hence, receives flexibility in regard to federal tax treatment. The con is that if you don’t opt for S corp taxation the tax preparation process can become difficult.

Corporation

Corporation is a group of people or a company which is given the authorization to act like a sole legal entity. This means that the company will be considered separate from its owners. This corporation is eligible for many of the rights that an individual possesses. Hence, sometimes it is called a  legal person. Perpetual existence is allowed for corporations making it the only business structure with this allowance.

An Import and Export business

Every business is different and the steps taken to start the business also differ. But there are some mandatory steps which are there in every business. In the case of starting an import and export logistics business, the first step is to conduct thorough market research. For example, you want to start the business of importing coffee. But the location of the market you have chosen doesn’t favour the business. Hence, it’s important to take that into consideration. Secondly, having a business plan is very necessary. You need to know the direction your business should be heading, the profits you desire etc. For more help on this, you can check out “import export near me” to help bring in more clarity.

Thirdly, you need to fund your business. But not always do you need a very large capital to start an import export business. There are ways to start an import-export logistics business with minimum funding too. Fourth is to select a business structure for your business. We have listed the four main Business structures above. For additional help to start or grow your business or for any other query regarding your business you can go to our page P.L Global Impex Pte Ltd and find amazing solutions for your business.

We tend to always join the words import and export together whenever we refer to the business. But there are differences between the importers and exporters and their duties also differ from each other. So below, we have listed the ten differences between import and export business

Top 10 differences between an Import and Export logistics

Basic difference

The basic difference between Import and Export is in the meaning of both the terms. Import means importing the goods from foreign lands with the goal of reselling the goods in the local market. Let’s take India for example. India imports oil the most. The importing cost of the oil is approximately 117.5 billion USD importers. Export on the other hand is selling goods or services from your own country or local market to foreign countries. For example, let’s look at India again. India is the largest exporter of Petroleum products. This is valued to be around 61.2 billion dollars. You can also check on google “import export near me” to see the different segments and differences.

The main goal

The main goal of importing products is to fulfill the demand of the product which is not available in your country. For example, India imports about 82% of its crude oil. The main reason is to meet the demands for oil for industrial and domestic usage. They are on the rise and increase every single day. The main goal of exporting products is to increase the global presence or market share. India exports refined petroleum. Refined petroleum exported by India ranks among the top two products. This is due to the presence of refineries, the country’s location which is taken advantage of  between the nations producing crude oil in the middle eastern regions. The consumers of this are in the rest of Asia.

The representation

If a country has a high level of imports, it is an indication of robust domestic demand. It also means that it is a growing economy. If the main products which are imported by a country are productive assets like equipment and machinery, it makes it twice as favourable for the country. This is because productive assets can help improve the country’s economic conditions over time. A surplus in trade is a contributor to the economic growth of a country. More exports from a country mean that the levels of output from that country’s factories, a high number of employment of people to help keep these factories operating well and the industrial facilities are also high.

The trade enquiries 

When starting an import business, one has to make a trade inquiry regarding how many countries/firms export the particular product. They will need to get all the details about the trade associations and directories. Further inquiry is done after the details are received. This enquiry is about the rates and terms of the delivery from the exporting companies. In case of an export, the potential purchaser of the products will send an enquiry to several exporting firms. This is along with requests for quotations of price, quality, quantity and terms and conditions of the firm. The firm will reply back with a proforma invoice to this with the exact set of details (size, weight, color, quantity, payment etc. 

Obtaining the import license

If you are importing, you need to check whether the products fall under the category where you need a license to import them. For this, the importer will have to know about the Export-Import policy. This policy will tell the importer whether the license for importing the particular product is required or not. 95% of the products exported in the States do not need a license for exporting. A very small percentage of the products exported in the US will need a license issued by the government. You can learn more about this by googling “ import export near me” and checking the import/ export license for your country.

Placing the order

The importer selects a particular firm which is exporting the product they require. Then the importer will place an order with this firm for supplying the products. The order invoice of the imported products contains all the details of the product. The order invoice details like the price, quality, quantity, etc. In the case of export, once the buyer agrees to the terms and conditions, price of the product and the quantity of the product, the exporter will place an order for the dispatching of the ordered goods. Ident is the order for the dispatching of the goods

Arranging the funds/ Production of goods

The importer of the goods will need to arrange its finances before the products will arrive at the port.  In case of the exporter, he will need to approach a bank or any institution for finance for acquiring the pre shipment finance. This is to help out with production activities. The exporter begins producing products on the arrival of the finance. This production will be in accordance with the specifications of the importer. In this way Importers and exporters are interrelated.

Packing and Forwarding of the goods

The exporter will ship the products according to the contractual requirements and terms of the importer. The ship which is in charge will inform the officer in charge at the dock when the products will arrive safely in the country. They will provide them with an important general manifest. In case of the exporter, they will complete all the legal formalities regarding the product and then will send an application for the shipping space. 

Receipt of the shipment advice/Freight charges

The products that are being imported are loaded on the ship. Then, the exporter will send shipment advice to the importer. The shipment advice will contain the details regarding the goods. The shipment advice includes the invoice number, the bill of the lading, the vessel name and also a brief description of the products dispatched. For the exporter, the ship’s captain will issue a receipt to the port superintendent. This is the mate’s receipt. When the goods are loaded, a mate’s receipt is issued. This mate’s receipt is given by the Clearing and Forwarding Agent to the shipping company. This determines the freight. The company receives these charges. The company will issue a bill of lading. This bill acts as a proof that the ship has the goods and will take it to the destination.

Arrival of goods/ Packing and Forwarding of the goods

The exporter will ship the products according to the contractual requirements and terms of the importer. The ship which is in charge will inform the officer in charge at the dock when the products will arrive safely in the country. They will provide them with an important general manifest. PL Global Impex Pte Ltd is an expert in the export and import logistics. Thus you can feel free to ask your queries and assistance from them.

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