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icon-industry-white-manufacturing-distributionMANUFACTURING & DISTRIBUTION

INNOVATIVE IDEAS FOR COMPETING -- AND WINNING!


As the foundation of the U.S. economy, manufacturers and distributors are essential in today’s business world. Our manufacturing experts understand the unique circumstances and dynamics impacting your business - the impact of automation, higher level technology service needs, shifting world markets, workforce challenges, complex new laws and regulations, and countless other issues that demand your attention. Today's business climate has changed dramatically from what it was twenty years ago - or even five years ago. You can't thrive by just producing a great product.

Our manufacturing team is led by CPAs who specialize in manufacturing accounting services and can help your business live up to its true potential. We take a hard look at all aspects of your business and identify new ways to navigate the ups and downs through a blend of detailed financial reporting, proactive tax planning and practical advice. We can also assist in tightening up internal controls to prevent fraud and control costs so more profits head towards your bottom line.

Tax planning occurs throughout the year, not just at tax time. SVA keeps you informed throughout the year on new tax laws and opportunities to minimize your taxes. Specific tax benefits exist for manufacturers and wholesalers who streamline operations, improve infrastructure, and invest in research and development.

Continuous process improvement and lean manufacturing principles are more than academic subjects to us. Our APICS-certified staff will walk through your facilities, learn about your operations, and recommend ways to improve the process and cut waste.

Keeping your eye on the horizon is difficult, especially when you’re busy putting out fires at your feet. It is more important than ever for companies to operate efficiently by controlling costs, managing inventory, and making wise decisions that mitigate the tax impact of their operations. Our experts are ready to roll up their sleeves to help you put out fires and plan for long-term success.

Download the 2018 National Manufacturing Outlook and Insights report

2018-National-Manufacturing-Survey 

Over 450 manufacturing industry execs took part in this survey and they share their positive outlook for 2018. Make sure you’re up to date with these market trends!

DOWNLOAD THIS REPORT
 

Impact of the Tax Cuts and Jobs Act on the Manufacturing Industry

SPECIALIZED INDUSTRY SERVICES


CFO by the Hour

This option is for businesses who can’t justify the cost of a full-time CFO. This is a flexible role for us as your needs change and your business grows. We’re available to guide you through financing plans, capital projects, financial projections, cash flow, day-to-day accounting operations, oversight of accounting staff and all the financial aspects of running a business. You have the flexibility to use SVA professionals as much or as little as you need, scaling up or down in real time as your business demands.

Depreciation Incentives

Section 179 enables manufacturers to write off qualifying fixed asset purchases in the year those purchases are made. The Section 179 deduction has been increased from $500,000 to $1 million with the phase-out limitation increasing from $2 million to $2.5 million for tax years beginning after December 31, 2017. These amounts are indexed for inflation for years beginning after 2018. The Section 179 deduction applies to tangible personal property such as machinery and equipment which is purchased for use in a trade or business. The new law increases the scope of Qualified Improvement Property (QIP) to include the following improvements to nonresidential property after the date the property was first placed in service: roofs, heating, ventilation, and air-conditioning property, fire protection, and alarm and security systems. 

Doubling of Bonus Depreciation to 100%. 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. For example, immediate expensing is limited to 80% in 2023, 60% in 2024 and so forth until it is fully phased out in 2027.

Our SVA Tax experts can meet with you and complete an individual tax plan for your business to make certain you are including all provisions that can improve your tax position.

Domestic Production Activities Deduction (DPAD), also called Manufacturing Deduction

The Domestic Production Activities Deduction is intended to provide tax relief for businesses that produce goods in the United States rather than producing it overseas. The deduction went into effect in 2005 and applies to both small and large businesses. The term "domestic production activity" cuts across a broad swath of businesses. The IRS has determined that businesses qualifying for the deduction must undertake work in one of the following categories:

  • Construction performed in the United States
  • Electricity, potable water or natural gas produced in the United States
  • Films and videos produced at least 50% in the United States
  • Architectural or engineering services performed in the United States for domestic construction projects
  • The disposition of tangible personal property, sound recordings or computer software created or developed, in whole or in part, in the United States

Calculating the Domestic Production Activities Deduction (of 9%) can be either ridiculously simple or enormously complex, depending on the nature of the business. Let the experts at SVA guide you through this process as this is the last year you can utilize this deduction, it has been repealed for 2018.

IC-DISC (Interest Charge Domestic International Sales Corporation)

IC-DISC is a powerful tax saving opportunity for U.S. exporters who export a minimum of $1 million in goods annually. 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. In previous years, this benefit resulted in a tax savings of approximately 15.8%, which was the difference between the marginal rate of 39.6% and the qualified dividend rate of 23.8% (20% plus the 3.8% net investment income tax).

Based on the Tax Cuts and Jobs Act, starting in 2018 the top marginal rate is reduced to 37% and pass-through entities can now deduct 20% of its combined qualified business income.  In effect, the lower marginal rate combined with the 20% deduction will shrink the effective arbitrage to be around 10.56%.  Although the IC-DISC benefit will reduce for pass-through entities as compared to previous years, there is still great potential for companies to benefit from this tax-planning tool.

International Tax Strategies

In today’s business environment, conducting business around the globe is as common as doing business across town. Our professionals are dedicated to ensuring your business will benefit from the most tax-efficient structuring of cross-border business activities.

Businesses and individuals have certain 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.

Through our network of specialists and international affiliates, our professionals can assist you in meeting these obligations and in international tax planning.

Aliens and Expatriates
We have staff trained in preparing individual tax returns for both U.S. residents working abroad as well as foreign expatriates working in the U.S. We prepare these returns according to current IRS rules and ensure that all credits and deductions that are available to our clients are correctly reported in their return. In addition, we advise clients making payments to such individuals as to their withholding requirements for foreign residents working in the United States.

Choice of Entity
We evaluate and discuss the best type of entity to use when clients begin to do business internationally. This planning can allow the use of the international losses in the United States or minimize the U.S. tax on the international business.

Structuring of Transactions
We develop and evaluate ideas and planning for the structure of international transactions to minimize taxes. This can involve research, analysis and preparation. We also have contacts in many countries to assist on the foreign side of the transaction.

Transfer Pricing
The IRS has power to reallocate income, deductions and other tax items among commonly controlled businesses in order to prevent evasion of taxes. The IRS is especially alert to situations where income is being shifted outside the United States. The transfer pricing rules are extremely complicated and it can be difficult to determine when and how they apply to specific transactions. We advise our clients of issues to consider when examining and determining their inter-company pricing policies in order to minimize the risk of challenge. We can also assist clients in arranging for a transfer pricing study to be done by a third party, which can further reduce the risk of challenge.

Multistate/Nexus Tax Planning

Many companies do business in states other than where they are located – it’s part of growing your company, competing in a larger marketplace and making smarter business decisions.

How do you know when you have reporting requirements in other states for state income tax? Nexus, also known as sufficient physical presence, is the determining factor of 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 activities in the state 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

Operations Consulting

With over 30 years of experience, our manufacturing experts can consult in a variety of areas to keep your plant running smoothly and profitably.

  • Operational Reviews and Assessments
  • Supply Chain Management
  • Inventory Management/Cycle Counting
  • Product Costing
  • 5S Educational Programs
  • Continuous Improvement Kaizen
  • Lean Educations & Implementation

Research and Development Tax Credits

Even today, many manufacturing companies are not taking advantage of the federal and state Research and Development (R&D) tax credits available to them. In a time when demand for manufacturers to deliver the "next big thing" is at an all-time high, the R&D tax credit can be the positive boost needed to make innovation possible.

The R&D credit is available to manufacturers who are developing new or making improvements to their products and processes. For most companies, there are development efforts for both products and manufacturing processes. The development of new products or the improvement of existing products determines whether a manufacturer will remain competitive in marketplace. Likewise, companies need to continuously improve upon their manufacturing processes to ensure efficiency.

The R&D tax credit has been around since the early 1980s, but many companies are not taking advantage of the credit simply because they do not believe that they qualify for the credit.

As a manufacturer, if you are designing, developing or improving your design of existing products, improving the production process, developing special tooling and equipment used in the manufacturing process, or developing new software applications to use internally or to interact with customers or vendors, just to name a few of the qualifying activities, you may find yourself in the position to have some cash to reinvest into your business.

The actual percentages are best determined by the SVA team of experts who know these credits inside and out, but you could qualify for anywhere between a 6-20% tax credit.  Also if you have not claimed the credit in the past or believe that you have not claimed the appropriate amount of credit, you can gain additional value by having SVA complete a multi-year R&D study and amend previously filed tax returns to claim the benefit. Schedule a meeting with an SVA Manufacturing team member to determine if you are participating in activities that qualify for R&D tax credits.

Sales and Use Tax Strategies

Almost everyone is familiar with sales taxes and the role they play as a consumer. However, understanding the complexities and laws involved with sales and use taxes as they apply 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.

Supply Chain Management

Often employees are taught how to use business process transactions without knowing how or why they fit into the bigger picture within an organization. Our Supply Chain education is designed to provide a basic understanding of the fundamentals of the supply chain to anyone, at any level, in the manufacturing organization.

SVA’s Supply Chain Management education and consulting services focus on your specific organization, the challenges you face and the objectives you’re working towards. Together, we strategize and instruct in the following areas:

  • Supply Chain Planning Process
  • Inventory Management
  • Logistics

Wisconsin Manufacturing Tax Credit

Tired of paying Wisconsin tax on your manufacturing and agriculture income? Well Wisconsin has a credit for that!

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 business 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.

 
Measurable Results.
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Measurable Results.

"Our bank recommended SVA and we have never looked back. SVA doesn’t always tell us what we want to hear, they provide the advice we need to grow our business."

Fred Manske, Owner

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"SVA recommended and installed Intacct Financial Reporting Software. With training and customized reporting, we easily transitioned and continuously benefit from the depth of the reporting available."

Christopher Fait and Dr. Bob Fait, Owners

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"SVA provided financial statement stress testing scenarios including how interest rate fluctuations and federal subsidy changes might affect our bottom line. Our board now has the information they need to make informed decisions."

Mary Wright, President

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"SVA streamlined our largest and most complicated fundraising effort by developing an effective method of tracking inventory and sales."

Deborah J. Gilpin, President & CEO

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"SVA has a reputation in the dental community that is second-to-none. They have exceeded our expectations and truly have been a catalyst for our business."

Dr. Lisa Teel, DDS, MS, Owner

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"I would recommend SVA because no question is too small. They have the same core values as BC Adhesives and we trust their opinions and recommendations."

Melissa Shibilski, Finance Manager

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"SVA was our first phone call. They have been with us since Day 1 and without them I [Mark Nolen] don't know where we would be."

Mark Nolen, President & CEO

Wisconsin Brewing

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Measurable Results.

"We are a highly diversified company and SVA’s ability to understand all the nuances of each business and provide strategic direction has been instrumental in our success."

Sally Kraemer, Administrative Assistant

Hillsboro Equipment

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"SVA’s in-depth analysis was very straight forward, giving the financial institution a higher comfort level and the confidence needed to offer us a better interest rate."

Dave Guagliardo, CFO

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Measurable Results.

"Not only did SVA help us save money, they assisted us in changing our culture to one of continuous improvement."

Tom Urbancheck, VP of Sales

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Measurable Results.

"We hire professionals who bring knowledge to the table that we don’t have. SVA continuously delivers a well-informed, objective perspective we value which makes us continuously evaluate our path."

Lincoln Fowler, Co-Founder

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