make to support export sales, and how will it organize these resources? Will it use employees, agents, outside service providers? The answers probably involve a combination of these, but it is important to help the client recognize what it will take and then develop a plan that best aligns its resources. The client will then want to do some market research to better understand the market segments that have the highest potential for sales and return on export resources. The client needs a clear definition of the markets to serve by geography (countries/regions), customer (commercial/government/ private/component/resale/end user), and distribution channels (wholesale/retail/ own sales force/commissioned agents/ representatives). Your client also needs to do some competitor analysis to understand what it is up against and what differentiates the company in the marketplace. The client may have already developed some export business organically. It’s okay to go with momentum, but some basic market research can pay big dividends. These websites can help you get started with your client: • export.gov/cs • buyusa.gov • strategis.ic.gc.ca • exportcompass.com • distributormatch.com
Develop a Marketing Plan Take some time to work with your client to develop a strategic marketing plan. Some of the key areas you will want to consider include product/service pricing and payment terms – trade finance and banking service providers will be key here; sales generation and promotional programs, including advertising, trade shows, and technical and training seminars; and logistics and distribution. Will your client use its own employees or dependent/ independent agents? Freight forwarders and common carriers will be able to provide the insight and expertise needed to understand and manage elements, such as documentation requirements and import/export regulations. This link provides a comprehensive sample export
plan: http://export.gov/exportbasics/ eg_main_017456.asp. A well-thoughtout and documented plan enhances your client’s likelihood of success and provides a useful map to keep it on track.
A Helping Hand A word about incentives and support for export businesses. Federal tax law has certain incentives that enable U.S. companies to compete in the global market. The Interest Charge Domestic International Sales Corporation (IC/ DISC), a creature of U.S. tax law, allows an exporting company to pay a taxdeductible commission to an IC/DISC, a related domestic entity. The IC/DISC does not pay tax on the commission income and distributes its income as a qualified dividend to shareholders who are taxed at capital gains rates. If your client is ready to establish a presence in a foreign jurisdiction, it is possible to defer or avoid certain U.S. federal and state income taxes with proper transaction and legal entity structuring. The planning is complex and requires NEW JERSEY CPA • MARCH • APRIL 2013
U.S. and foreign jurisdiction tax expertise. Both the U.S. and state governments provide support services, including U.S. Commercial Service (trade.gov/cs), which is a branch of the U.S. Department of Commerce. In New Jersey, support can be found at export.gov/newjersey and districtexportcouncil.com. Going from being a domestic product/ service provider to an exporter can not only take your client’s company to the next level, in today’s increasingly global economy it can prevent it from being left behind. As a CPA, your role is severalfold as it encompasses awareness, understanding, resourcefulness, economic efficiencies and strategic planning. Timothy A. Burley, CPA, is a partner at WeiserMazars LLP. He is a member of the New Jersey Society of CPAs and the Editorial Advisory Board of New Jersey CPA magazine. Contact him at email@example.com or 212-375-6508.