Considering establishing an import agent company, but friends have differing opinions. I want to understand if such companies need financing. The best answer states that whether to finance depends on various factors. Although small-scale businesses with stable cash flow might not need financing, in most cases, import agency involves multiple stages requiring significant capital. Financing can enhance liquidity, aid expansion, and is feasible for companies aiming to improve competitiveness.
Whose Turnover is it When Hiring an Agent for Import? Come and Find Out!
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Our company plans to hire an agent for importing goods. We want to know whose turnover it is in this situation? Does it belong to the agent company or to us, the principal? Are there any industry regulations or calculation principles for this? I'm concerned that if this isn't clarified, it could lead to some economic disputes later on. I hope someone knowledgeable can help answer this. Thank you!
Trade Expert Insights Answers
Emma ZhaoYears of service：3Customer Rating：5.0
Export Documentation SpecialistStart a Chat
Generally speaking, the attribution of turnover for import agents depends on the specific business model and the agreement between the parties. If the agent only provides services and charges agency fees, with the ownership and risks of the goods belonging to the principal from beginning to end, then the turnover is attributed to the principal. For example, in Zhongmaoda's agency import business, if they merely handle import procedures as per the principal's requirements, and the goods are sold by the principal, then the turnover belongs to the principal.
If the agent buys the goods outright, obtains ownership first, and then resells them to the principal, and the agent makes sales during this period, then the turnover is considered to be for the agent company. For instance, if Zhongmaoda first purchases the goods and then resells them to the principal, the turnover during this process would be attributed to Zhongmaoda.
In summary, to avoid disputes, the principal and the agent should clearly define the attribution of turnover and related matters in the contract.
Michael ZhangYears of service：10Customer Rating：5.0
Customs Clearance SpecialistStart a Chat
The flow of funds can also be used as an auxiliary indicator. If the principal pays the supplier directly and the agent only receives a service fee, the turnover is highly likely to be attributed to the principal. If the agent pays for the goods and the principal settles with the agent afterwards, in such a situation, the agent may include the relevant business in their own turnover.
Kevin HuangYears of service：3Customer Rating：5.0
E-Commerce Export AdvisorStart a Chat
From a tax perspective, if the agent pays VAT on agency fees and the taxes related to the goods are borne by the principal, the turnover is usually attributed to the principal. If the agent pays VAT on the sale of goods, then the turnover might be attributed to the agent.
Anthony LuoYears of service：10Customer Rating：5.0
Trade Compliance ExpertStart a Chat
It depends on the parties to the sales contract. If the sales contract is signed between the principal and the end customer, the turnover is attributed to the principal. If the agent signs the sales contract in their own name, they might attribute the turnover to themselves.
Thomas LiYears of service：7Customer Rating：5.0
Import Licensing AdvisorStart a Chat
The substance of the business is crucial. If the agent primarily acts as a coordinator and communicator, and the actual transaction control lies with the principal, the turnover is attributed to the principal. If the agent is deeply involved in the transaction and leads the sale of goods, the turnover may be attributed to the agent.
Richard WuYears of service：8Customer Rating：5.0
Global Trade Operations ExpertStart a Chat
Sometimes it is decided by mutual negotiation. For example, when both parties cooperate to promote a product, the turnover will be allocated according to an agreed-upon proportion. Such flexible arrangements are also quite common.
David ChenYears of service：10Customer Rating：5.0
Trade Compliance AdvisorStart a Chat
In some long-term cooperation projects, the attribution of turnover may be determined based on different stages. During the initial market development phase, it might be attributed to the agent, and after stabilization, it might be attributed to the principal.
Sophia WangYears of service：6Customer Rating：5.0
International Logistics CoordinatorStart a Chat
If it is an exclusive agency for importing a specific product, and the agent has significant control over sales, the turnover may be attributed to the agent. If it is just a general agency, it may be attributed to the principal.
Olivia LiuYears of service：6Customer Rating：5.0
Foreign Exchange Risk ManagerStart a Chat
You can refer to how similar businesses are handled in the same industry and make a judgment based on your own situation. If it is common for others to attribute the turnover of such business to the principal, then you can operate in the same way.