How can I determine if my manufacturing company is eligible for the R&D Tax Credit based on IRS guidelines?
If your manufacturing company is developing new or improved products and/or production processes, then it is likely eligible for the R&D Tax Credit. Even companies that are not developing their products, such as original equipment manufacturers (OEMs), but are developing or improving manufacturing processes for their customers may qualify for the R&D credit. An experienced Schneider Downs R&D tax credit professional can help you identify eligible activities and expenses.
What strategies can manufacturing companies employ to maximize their R&D Tax Credit benefits?
Although there is no specific documentation requirement to claim the R&D credit, companies that are knowledgeable about what types of activities qualify are better positioned to maximize their credit. Some companies utilize time-tracking or job-costing systems, or they track R&D-eligible expenses in dedicated general ledger accounts. When Schneider Downs works with a taxpayer, the first step is understanding their business and identifying qualified activities and expenses. With this knowledge, we can also offer recommendations and suggestions on how to track eligible costs moving forward to improve efficiency, ensure that all activities and expenses are captured, and maximize your R&D Tax Credit.
Can R&D Tax Credit consulting firms provide customized solutions tailored to the specific needs of manufacturing companies?
Yes, but not all firms do! At Schneider Downs, we tailor our approach to each client and industry. With an extensive knowledge of your industry, we develop a customized strategy to calculate and maximize the R&D credit with an eye towards efficiency and accuracy. Additionally, we prepare documentation to substantiate the claim that is tailored to the client and outlines the specific methodology used for their credit calculation. Be careful–many firms out there prepare R&D Tax Credit claims, but are not public accounting firms, and that comes with risk. With Schneider Downs, your company will receive the “Big Thinking. Personal Focus.” that will enable it to maximize its R&D Tax Credit!
How do I determine if my manufacturing business qualifies for state tax credits, and what are the application procedures?
There are specific tax credit programs offered by various states, depending on which state your business operates. Each state has its criteria, which can include factors such as the type of manufacturing activities, job creation or retention, investment in equipment or property and other economic impacts. A consultation with one of our tax professionals can help you review your eligibility criteria and understand the specific application procedures, including the relevant agency forms and instructions, pre-application stages and due diligence during the application review process.
What state tax incentives are available specifically for manufacturers and how can my company benefit?
States offer a variety of tax incentives for manufacturers. Some of these incentives include: withholding tax rebates to new labor-intensive manufacturers, investment tax credits that can offset corporate tax liabilities and encourage investment in equipment, facilities, and technology, property tax abatements, and sales and use tax exemptions for manufacturing equipment, raw materials and other eligible items.
Are there any state tax breaks or incentives for manufacturers who implement environmentally friendly practices or energy-efficient technologies?
Several states encourage manufacturers to adopt environmentally friendly practices. Some states offer tax incentives specifically targeting energy efficiency, while others offer renewable energy tax credits. Our tax professionals can help you to determine which incentives may be available in your state.
What steps does your firm take to tailor accounting and auditing services to meet international manufacturing companies’ specific needs and challenges?
Your services will be tailored to your entity’s unique needs and situation. While we have substantial experience with international manufacturers, we understand that every business is unique and will take the time to truly understand the needs of your organization and the ultimate users of your financial statements.
What specialized expertise does your team possess in navigating the accounting challenges associated with international manufacturing, including cross-border transactions?
Schneider Downs maintains a deep understanding of international organizations’ challenges and has experience providing assurance, tax, and advisory services to these organizations. We work with numerous international clients throughout the world. We have experience as the service provider at both the group level and as the service provider for U.S. component entities of foreign companies. We perform assurance services under U.S. GAAP and International Financial Reporting Standards (IFRS). Schneider Downs also has experience providing tax services, including transfer pricing, for international entities and understands the complexities of filing in multiple jurisdictions. We also have experience providing advisory services to entities including accounting method conversions and valuations under both U.S. GAAP and IFRS.
As a company manufacturing and distributing products internationally, what are some of the key tax issues to consider to ensure compliance and optimize tax strategy?
Key areas to consider include Transfer Pricing, Permanent Establishment (PE), Value Added Tax (VAT) and Goods and Services Tax (GST), customs duties and tariffs, tax treaties, withholding taxes, Controlled Foreign Corporation (CFC) Rules, foreign tax credits, tax compliance and local tax incentives and subsidies. Navigating these complex tax issues requires a coordinated approach involving tax planning, compliance and risk management to optimize your tax position and ensure compliance.
What are the compliance standards and GAAP rules that manufacturing organizations should follow for accurate inventory reporting and valuation?
Cost of inventory can be determined using several methods such as first-in, first-out (FIFO), average cost, or last-in, first-out (LIFO). Regardless of the cost method selected, the cost captured and applied to inventory should include both direct expenditures as well as indirect charges that are incurred to bring an item to its current condition. This should include acquisition, labor, production and other overhead charges. These overhead charges should be allocated to individual items based on the normal capacity of the production facility. Normal capacity is an assumption that requires estimation by management based on a review of facts and circumstances. Costs outside that normal capacity range should be recognized as a current period charge rather than capitalized into inventory. Total inventory cost should also be reviewed to ensure that it is not higher than the net realizable value upon the ultimate sale of the inventory.
What technology solutions are right for my company?
Each company is unique, and the solutions available would depend on the people, processes and technology that are already in place. Implementing technology is a valuable tool that can transform your business but ensuring that the right-fit technology is implemented with the right processes in place is essential to successful transformation. SD Digital helps organizations evaluate the purpose, efficiency and effectiveness of existing processes and technology to develop strategic, transformative solutions. Please reach out to a member of the SD Digital Team and let them help you transform your business. Explore the Digital Transformation FAQ.
What are common Intelligent Automation (IA) solutions implemented for manufacturers?
IA involves the integration of robotic process automation, artificial intelligence and business process management to automate tasks and streamline processes using human-centric interfaces. While an IA solution will be unique to your company, here are some common areas where automation has been implemented within the manufacturing industry: supply chain management, order fulfillment, inventory management, and back-office processes. Automation can significantly contribute to the operational excellence of a company by providing cost savings, employee engagement, reduced risk, scalability and speed. Learn more about Intelligent Automation.
How can Schneider Downs assist with technology implementation?
SD Digital helps organizations translate technology to transformative change and realize the best version of themselves. We work with you to understand your business and identify roadblocks to efficiency and scalability. Our team is made up of the following core solutions:
By identifying the right-fit technology for your company, you can expect benefits such as:
Schneider Downs understands the manufacturing industry from a regional, national and international perspective. Our experience in engineering-based cost segregation studies, state and local tax services, including nexus studies, as well as research and development tax credits, provides manufacturers the expertise needed to run their businesses more effectively.
To learn more, visit our Manufacturing Industry Group page or contact us at [email protected].
Schneider Downs recognizes that every industry is different, often presenting unique challenges that require individualized insight, innovation and experience. Our experience in these industries is enhanced through participation in focus groups, which address the characteristics that make these industries unique.
For more information on additional industries we serve please visit Industries or contact us at [email protected].
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Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and business advisory services to public and private companies, not-for-profit organizations and global companies. We also offer Internal Audit; Technology Consulting; Software Solutions; Personal Financial Services; Retirement Plan Solutions and Corporate Finance Services. Schneider Downs is the 13th largest accounting firm in the Mid-Atlantic region and serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH, and McLean, VA.
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