What is a U.S. Customs bond for importers?
A U.S. Customs bond is a crucial part of engaging in trade with the United States. Securing the right type of customs bond will help importers streamline operations and prevent financial and regulatory risks associated with cross-border shipments.
Companies from Canada and other U.S. trade partners need bonds to ensure compliance with the U.S. Customs and Border Protection (CBP). U.S. Customs bonds are intended to secure payments of various taxes and fees owed for imports, allowing for smoother compliance processes for both the CBP and importers.
What is a U.S. Customs bond?
A U.S. Customs Bond is a contract that helps to ensure that companies will comply with trade regulations and rules enforced by the CBP, including taxes, duties, or tariffs. The bond consists of a legal contract between the importing company, the U.S. CBP, and a surety provider.
Depending on the way your business works and the goods you move, you will select from one of two different types of U.S. Customs bonds:
Continuous bonds
A continuous customs bond will cover transactions and shipments over the course of a year. Typically, the bond covers repeat transactions and costs 10% of the taxes, duties, and tariffs that must be paid during the 12-month period.
Single entry bond
A single entry bond covers a single shipment of goods or transaction. Once the shipment or transaction is completed, the bond no longer applies. The value of this type of bond is “generally in an amount not less than the total entered value, plus any duties, taxes, and fees.” A single entry bond can’t be lower than $100, with some exceptions where allowed by law.
The U.S. CBP offers a public guide to how they calculate bond amounts. Importers and exporters can also work with customs brokers and agents that specialize in bonds and other types of import and export regulations.
Why do I need a Customs bond?
A customs bond plays a significant role in helping import activities stay compliant and efficient, while ensuring that the CBP secures the predictable payment of taxes, fees, penalties, tariffs, and other import-related payments owed to the United States.
Businesses importing goods valued over $2,500, or importing goods under other federal agency regulations, must procure a customs bond. Without a bond, your goods could be held at the border and subject to delays or even penalties. Bonds act as a type of financial guarantee, so getting a customs bond can result in the CBP clearing your goods with greater speed and efficiency because the agency knows that fees and taxes will be paid.
Importing involves potential risks, such as unforeseen delays, shipment discrepancies, and penalties due to non-compliance. Getting a customs bond helps to provide a layer of protection against unexpected expenses that arise at the border. Instead of worrying about payments to the CBP, the importer can feel confident that their shipments will cross the border and arrive at their destination on time.
How to get a U.S. Customs bond
The process of acquiring a U.S. Customs bond will change from one business to the next. Similarly, the costs of the bond will change depending on the value of the imported goods and the type of products imported. In general, the steps to secure a U.S. Customs bond includes the following:
Step 1 – Determine your bond requirements
Choose the type of bond that you need – single entry or continuous – and determine any specific requirements that could impact the process, such as industry-specific import regulations. Understanding your bond requirements will help to make the process more efficient.
Step 2 – Select a surety company
Surety companies underwrite U.S. Customs bonds and provide financial guarantees on behalf of your business. An authorized surety provider ensures that any financial and regulatory obligations to the CBP are fulfilled.
Step 3 – Collect the required documentation
Information and paperwork that you will need to submit for a customs bond include your Importer of Record (IoR) number, the goods imported, an estimate of import value, and contact details. Collecting necessary documentation before applying will save time and prevent delays.
Step 4 – Submit the application
After selecting a surety company and collecting required documentation, you will work alongside your surety provider to submit the bond application. This may involve a credit check and a financial evaluation of your business, depending on the surety company and the circumstances surrounding your application.
Step 5 – Pay the premium to secure your bond
When your application is approved, you will need to complete the process by paying the premium. Make sure to understand details such as any additional fees that may be involved. After you’ve paid the premium, you will receive your customs bond while the surety company will go ahead and file your bond with the CBP.
Keep your imports moving with U.S. Customs bonds
Complying with CBP regulations is a mission-critical aspect of conducting cross-border businesses in the U.S. Securing a U.S. Customs bond that meets the needs of your business will help to keep your imports moving at the border.
Custom brokers play a key role in helping importers achieve seamless trade compliance, including customs bonds. Cole has more than a half century of experience with companies operating across the U.S. and Canada. Reach out and connect with one of our customs leaders today.
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