Running a manufacturing or distribution business requires an understanding of the unique circumstances and dynamics of the industry. The impact of automation, higher-level technology service needs, shifting world markets, workforce challenges, complex new laws and regulations, and countless other issues demand your attention.
Today's business climate has changed dramatically from what it was twenty years ago - or even five years ago. You cannot thrive by just producing an excellent product.
What Should You Be Focused On?
Tax Credits
Staying abreast of the newest tax laws and opportunities will help you minimize your tax liability. Here are just a few of the tax credits available:
IC-DISC (Interest Charge Domestic International Sales Corporation)
Research and Development (R&D)
Wisconsin Manufacturing Tax Credit
Depreciation Incentives
There are a couple of depreciation incentives that manufacturers should take advantage of. These include:
Product costing helps you define all the expenses including direct materials, direct labor, and overhead for a product. Having accurate costs allows you to determine where to control expenses, set appropriate pricing, and improve profit margins.
Operational Efficiencies
Keeping your business running efficiently, with a focus on profitability, will ensure you are making the most of your daily operations. This should include regular operational assessments of your supply chain management, inventory management, product costing, and continuous process improvement plans.
Specialized Industry Services
Business professionals need easy access to information to make timely decisions. SVA has what you need, when you need it. Choose a topic below or just contact us directly. Our expertise is ready anytime you need it.
Section 179 enables manufacturers to write off qualifying fixed asset purchases in the year those purchases are made. The Section 179 deduction applies to tangible personal property (such as machinery, equipment, and office furniture) which is purchased for use in a trade or business.
Recent legislation increased the scope of Qualified Improvement Property (QIP) to include the following improvements to non-residential property after the date the property was first placed in service: roofs, heating, ventilation, air-conditioning, fire protection, and alarm and security systems.
Bonus Depreciation to 100% became available with the Tax Cuts and Jobs Act (TCJA). Effective for assets acquired and placed in service after September 27, 2017, the provision applies to both new and used property. As such, this provision heightens the importance of cost segregation studies.
Costs identified as tangible personal property and land improvements are eligible for immediate expensing whether the property is new construction or acquired property. The 100% expensing is available through 2022, after which it begins phasing out by 20% per year.
Businesses and individuals have specific foreign reporting requirements and, in some cases, U.S. withholding is required on payments made to a foreign entity or person. Significant penalties can apply if you are not aware of these requirements and fail to meet these reporting and withholding obligations.
Our professionals can assist you in meeting these obligations and in international tax planning through our network of specialists and international affiliates. Here are a few of the areas we can evaluate for your business:
Aliens and Expatriates IRS Rules
Entity Selection for International Businesses
Transfer Pricing Rules
Structuring of Transactions
The Research and Development (R&D) Tax Credit is calculated as a percentage of the expenses related to R&D activities. These activities could include:
Improving a current process
Creating a new production process
Developing a new technology or improved product
SVA can help you through the complex calculations and documentation needed to benefit from this often underused tax credit.
SVA's Supply Chain Management education and consulting services focus on your specific organization, the challenges you face, and the objectives you are working towards. Together, we strategize and instruct in the following areas:
Nexus, also known as sufficient physical presence, determines whether an out-of-state business selling products into a state is liable for collecting sales and use tax on sales into the state.
Nexus is required before a taxing jurisdiction can impose its taxes on an entity. Congress enacted Public Law 86-272 which protects companies with only minimal state activities from being taxed.
Our professionals can assist you in determining your company's multistate tax situation, take steps to insulate your activities from overzealous states, and minimize your overall state tax liability.
Handling all your payroll, tax preparation, and bookkeeping needs in-house requires staff who are experienced in these functions, as well as the continual updating of your accounting software. These are time-consuming tasks which can be easily outsourced to an experienced provider.
You can outsource as much or as little of the work and ensure there are adequate internal controls to avoid any risk of having the same people perform multiple duties.
Understanding your break-even point is key to making confident business decisions. We can help you calculate how much you need to sell—daily, weekly, monthly, or annually—to cover your costs. You can use this analysis to better understand how to generate profits in your business. Whether you’re launching a new product or simply reevaluating operations, our break-even analysis provides a granular look at the sales targets needed to keep your business on track.
We help companies design executive compensation plans that support strategic goals. From increasing profit margins to boosting sales performance, we work with leadership teams to build incentive programs that align with business objectives. We also create easy-to-use templates that track performance metrics and compensation earned, providing a structured approach to rewarding results.
IC-DISC is a powerful tax-savings opportunity for U.S. businesses who export a minimum of $1 million in goods annually. Companies who export less than $1 million may also benefit from this tax-savings opportunity with a review of costs vs. benefits to determine the best options.
It is available to manufacturers and distributors and it offers them permanent tax savings primarily resulting from a reduction in the tax rate on qualified dividends.
Through 2025, taxpayers can deduct up to 20% of their QBI from a pass-through entity (sole proprietorship, LLC, partnership, or S corporation).
Phaseouts begin when taxable income exceeds $164,900 for single taxpayers or $329,800 for married couples (other limitations also apply).
Everyone is familiar with sales tax and the role it plays as a consumer. However, understanding the complexities and laws involved with sales and use tax as it applies to business is another story.
Reduce the impact of sales tax on not only your business but your customers by proactively planning for the tax consequences of your business-related activities.
The Wisconsin Manufacturing Tax Credit applies to those businesses that own or rent and use real and personal manufacturing or agriculture property in Wisconsin. If the company is a partnership, LLC, or an S corporation, the credit will pass through to its owners.
The credit is 7.5% of "eligible qualified production activities income." With a maximum Wisconsin tax rate of 7.65% for individuals, this credit will virtually eliminate the Wisconsin tax on manufacturing and agriculture income.
If you hire individuals from a specified disadvantaged targeted group, you could be eligible for a credit worth 25-40% of their wages. Find more information on the tax credit extension.
ProfitCents is a powerful tool we use to generate projections and perform various “what-if” scenarios. Whether you're budgeting for growth, preparing projections for a loan, or acquiring a business, we use ProfitCents to generate detailed financial forecasts as well as benchmark your company’s performance against industry peers.
Thinking of purchasing new equipment or expanding operations? Our ROI analysis helps you evaluate whether the investment makes financial sense. We’ll help you understand the profitability of your investment and provide clear picture of your potential return and the timeline for reaching it.
Resources
A Guide for Manufacturers: Tax Tips, Growth Strategies, and More
This eGuide provides tips for manufacturing companies to save money, increase profitability, and insights into tax savings, credits, and deductions.
The Definitive Guide to Business Tax Credits and Tax Deductions
This eguide covers different tax credits and deductions available to businesses, as well as what to look for in a tax advisor, choosing a tax-advantaged business entity and more!
