Commercial Businesses Articles

Choosing the right inventory accounting method, such as FIFO or LIFO, is crucial for manufacturing businesses as it significantly affects taxes, net income, and financial reporting. Careful consideration of your company's specific needs and circumstances is essential when selecting the appropriate method.

The tax implications of real estate gains can vary based on factors like property type, ownership structure, and depreciation. While long-term capital gains are generally taxed at 15% or 20%, certain gains, particularly those involving depreciation, may be taxed at higher rates. Additionally, the 3.8% Net Investment Income Tax (NIIT) and state taxes could also apply.

Investing in automated equipment can enhance efficiency, quality, and brand image for manufacturers, while also addressing skilled labor shortages and improving employee morale. However, it involves significant initial costs, ongoing training, maintenance, and cybersecurity considerations.

As July marks the midyear point, manufacturers have a prime opportunity to reassess their tax strategies and implement measures to reduce their 2024 tax liabilities. Tailored to the unique circumstances of each business, the following seven tax-reduction strategies can help optimize financial outcomes and ensure compliance with current tax regulations.

Borrowing from a closely held corporation at lower rates than commercial lenders can be financially beneficial, but it is essential to establish a legitimate loan agreement with proper structuring and documentation to mitigate risks such as reclassification by the IRS as additional compensation or taxable dividends.

For sustained profitability in the manufacturing sector, management must emphasize the importance of profit enhancement over revenue expansion. The strategies include optimizing overhead costs, leveraging negotiation opportunities, investing in modern equipment, strengthening the workforce, reviewing business entities, and prioritizing operational efficiency. 

When manufacturers purchase, build, or improve their facilities, the associated expenses are substantial. There is an alternative approach that allows you to accelerate your tax depreciation deductions: a cost segregation study.

The IRS has announced the inflation-adjusted limits for Health Savings Accounts (HSAs) for 2025. The annual contribution limits will increase to $4,300 for individuals with self-only coverage and $8,550 for those with family coverage. These adjustments help business owners plan and offer valuable tax-advantaged benefits to employees.

The IRS has issued final rules for the Advanced Manufacturing Investment Credit, based on the 2022 law that encourages local semiconductor creation with big tax benefits. The final rules have some changes about choosing to use the credit as a federal tax payment.

When considering moving to cloud computing, it is essential to carefully evaluate possible service providers. Consult with reliable experts during the vendor selection process.