Manufacturing/Distribution Articles

A business continuity plan is essential for manufacturing companies to minimize disruptions and ensure rapid recovery during crises such as natural disasters, supply chain disruptions, or IT failures. Key steps include forming an interdisciplinary team, assessing risks, developing contingency strategies, and regularly testing and updating the plan. Proactive planning can safeguard operations and enhance resilience in the face of unexpected events.

Manufacturers can control labor-related costs, such as workers’ compensation and unemployment insurance, by implementing safety programs and strategically managing hiring practices. Accurate employee classification, return-to-work programs, and challenging invalid unemployment claims are key strategies to reduce premiums and tax rates. Taking these steps can lead to better financial stability and increased profitability.

AI is transforming manufacturing by improving efficiency, product development, and decision-making. Key applications include predictive maintenance, quality control, and supply chain management. While AI offers significant benefits, it requires careful planning, investment, and a phased implementation approach to ensure success.

Manufacturers operating across state lines must understand their multistate tax liabilities, determined by whether their activities establish a nexus in each state. The U.S. Supreme Court's Wayfair decision and updated Multistate Tax Commission (MTC) guidelines have broadened the definition of nexus, making it essential for businesses to evaluate their tax obligations in each jurisdiction through a nexus study.

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.

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.

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 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.