CPA services for manufacturing and distribution

The first step to prevent fraud in your business is to evaluate the five components of internal controls: control environment, risk assessment, control activities, information and communication and monitoring activities. We at Boyum Barenscheer can assist you with implementing fraud prevention best practices. Our internal control services are built specifically to your business to analyze the culture and structure, evaluate current processes and procedures within your business and implement ongoing monitoring procedures. We aim to eliminate the opportunity to commit fraud within your company by helping owners and management access opportunities to strengthen internal control process and procedures. The overall objective is to help the company and its employees reduce risk of errors or fraud and safeguard company resources and assets.

Three things can make a huge difference on a team working together:
1) Leadership training and emphasis
2) Strong business operating system
3) Openness and vulnerability

Leaders are usually made, not born.  Providing leadership opportunities, proper investment in training, and proactive feedback can have a significant impact on your business.  A business operating system standardizes procedures – this is foundational to getting things done.  Many companies develop their own processes, but increasingly, companies are adopting EOS (Entrepreneurial Operating Systems) or similar systems to help with the day to day decisions and processes they need to become successful.  Lastly, being open with each other and even being vulnerable can help bring teams together and improve performance.  We all have strengths and weaknesses.  Those who admit to needing help and are willing to discuss not only what excites them, but also what scares them, can make a significant impact on the whole team.

In general, inventory under the accounting and tax rules includes materials, direct labor and labor burden (labor burden: payroll taxes, benefits, retirement, and insurance) an allocation manufacturing overhead expenses. Manufacturing overhead includes: depreciation, utilities, indirect labor, cost of quality, rent, etc, it doesn’t include general and administrative and selling expenses. The tax rules are slightly different on how manufacturing overhead is handled. Often many of the manufacturing overhead items are largely fixed or semi-variable in nature and from a management accounting and pricing of product we like it when companies can determine the direct variable cost of inventory from the indirect fixed and semi-variable costs. This can be a confusing topic because of the various terms used for factory overhead.

You may be surprised to hear that some and often many of your activities can qualify for a research and development credit for your business. For example, Tooling and equipment design and development, new products, prototyping, maximizing the manufacturing process and various design and engineering processes are all potential qualifying activities along with a long list of other potential activities. If you haven’t considered this incentive, we can help figure out which part of your business activities qualifies. This remains one of the top tax incentives for manufacturers and increasingly value add distributors may qualify also.