My experience as a Houston manufacturing CPA began in 2012 with one of the Big 4 firms. I was on a team that was engaged to perform an “accounting methods” review for Igloo. It was that time that I began to learn the unique challenges that manufacturing companies face from a tax compliance standpoint. This article will provide you with information in a checklist form to assist you in finding a CPA for your manufacturing company.
When finding a CPA for your manufacturing company, industry experience should be mandatory. Manufacturing companies comprise unique tax compliance issues around inventory accounting methods that are not necessarily applicable to across other industries.
Manufacturing companies are heavy capital intensive. In addition to federal tax compliance requirements, a manufacturing company will have local compliance issues such as filing property renditions and potential sales and use tax if there is a retail aspect to your manufacturing business.
UNICAP and Inventory Methods Expertise
Some unique challenges related to large manufacturing companies include inventory accounting methods such as UNICAP and accounting for the tax cost of your inventory using FIFO or LIFO methods. Tax opportunities for manufacturing companies are found at assessing the tax balance sheet of a manufacturing company. Specifically, to the extent we can lower your tax basis, we can accelerate tax deductions and free up cash flow.
Repair Regulations Expertise
Repairs, betterments, and a capital expenditure program require knowledge of the Repair Regulations and accelerated depreciation methods. As both of these can result in significant tax savings by electing.
In my experience, growth in a manufacturing company can cause serious financial strain on cash reserve due to the capital requirements necessary to increase inventory production. Financial forecasting is potentially a must-have skill when looking for a CPA with manufacturing experience.
In this article, I’ve provided a checklist (The “Big 5”) to guide you in choosing the right CPA for your manufacturing business:
- Industry Experience: It’s vital to have someone who understands the specific tax compliance issues in manufacturing, especially around inventory accounting methods, which aren’t prevalent in all sectors.
- Local Knowledge: I’ve observed that manufacturing firms are capital-heavy. Beyond just federal tax rules, there are local obligations to consider, such as property renditions and, if there’s a retail side to the business, sales and use tax.
- UNICAP and Inventory Methods Expertise: In my experience with large manufacturers, understanding inventory accounting methods like UNICAP and FIFO or LIFO for tax cost accounting is crucial. Properly evaluating the tax balance sheet can lead to faster tax deductions and better cash flow.
- Repair Regulations Expertise: I’ve found that a deep understanding of Repair Regulations and accelerated depreciation methods can result in significant tax savings.
- Comprehensive Knowledge: Growth in the manufacturing sector can strain finances due to the capital needed for increased production. Therefore, a CPA skilled in financial forecasting is a must.
In short, when you’re looking for a CPA for your manufacturing company, ensure they have a blend of industry-specific experience, local insights, and a broad understanding of both general and specialized tax regulations.
Are you ready to navigate the complex world of manufacturing tax compliance with confidence? Don’t leave your business’s financial health to chance. Choose a CPA with the right expertise and industry knowledge. Reach out today and let’s ensure your manufacturing company thrives in this competitive landscape
About The Author
Joe is s a Certified Public Accountant (C.P.A.) and a Certified Valuation Analyst (C.V.A.). Joe’s professional career in public accounting began in 2012 with one of the “Big 4” internationalaccounting firms. Since 2012, the focus of his professional engagements has been primarily in the area of business tax planning, cash flow planning and management, business valuations, and small business financial consulting.