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April 27, 2017

On Thursday April 20th the CBIZ MHM, LLC Kansas City Manufacturing Practice co-hosted the 2017 Manufacturing Summit at TopGolf with co-hosts UMB Bank and Spencer Fane. Guests were invited to sit in various presentations surrounding industry hot topics. Bill Smith, Esq., managing director CBIZ National joined Chris Gutierrez, president of KC SmartPort to shed light on President Trump’s upcoming tax reform and the current state of Kansas City development.

Other sessions included Andre’ Trudell, managing director, UMB Bank joined by Special Agent Christopher Lamb, FBI discussing Corporate Security and Accessing Capital Markets. Kansas City Law Firm, Spencer Fane took the stage with partners Patrick McInerey, Pat Whalen and Attorney Jaspal Hare to discuss software development contracts, cyber security and internal and government investigations. After the seminar more than 40 guests were invited to join the speakers for golf and networking featuring a southern buffet and open bar at one of Kansas City’s best entertainment spots, TopGolf. 

For more information about the event or our Manufacturing distribution list please contact Melanie Clark.

 





December 14, 2016
The “Taxman” cometh in April; but it is wise to be prepared in December. The dreaded April 15th, when all those hard-earned dollars are due to Uncle Sam, is right around the corner. Manufacturing companies and their owners can and should take steps in December to minimize their tax burden in April. As we explore some of these year-end tax planning opportunities, it is important not to let the tax tail wag the dog; businesses should not spend a dollar to save 40 cents in taxes unless that dollar brings economic value to the company.

Before we delve deeper into tax planning opportunities, there are two underlying considerations: 

  • Coordinate business tax planning with individual tax planning: Most small to mid-market businesses are structured as pass-through entities (S-Corps/Partnerships /LLCs). Under these structures, the business does not pay income tax. The taxable income/loss of the business is reported on the owner’s individual tax return and the tax is paid at that level. As a result, it is critical to coordinate tax planning for a business with ownership tax planning.
  • Assess whether your income brackets are likely to change: As a general rule of thumb, businesses should accelerate deductions and defer income when tax brackets remain consistent year to year, or if the current year is in a higher tax bracket. If 2016 was a strong year, it is likely that you will want to accelerate deductions into 2016 and defer income into 2017. Conversely, if 2016 was a down year, the company would take the opposite approach.

Now let’s examine some of the various tax planning opportunities:

  • Timing of payments: Determine when to make related-party payments. Most related-party transactions (owner’s interest related-party rent, ownership bonuses, etc.) are treated on a cash basis. Companies should make these payments depending on if they want to accelerate or defer deductions.
  • Have your fixed asset ledger up to date: Due to Section 179 deductions and Bonus Depreciation, fixed asset additions create a tremendous opportunity to manage taxable income for assets purchased and placed in service before year-end. Although these determinations do not need to be made until after year-end, a company needs to know what impact tax depreciation will have on their taxable income while making other time-sensitive decisions.
  •  Managing your capital gains and losses: Capital gains and losses offset. If a pass-through business has generated any capital gains or losses, there should be coordination with the ownership’s investment advisors to explore opportunities to harvest capital gains or losses in the ownership’s personal investment portfolio.
  • Obsolete inventory: In general, manufacturers cannot take a deduction for obsolete inventory until it is physically disposed. If you have obsolete inventory that you have reserved for, dispose of it before the year-end to get the deduction.
  • Research and Development Tax Credits: The R&D credit provides significant tax savings to a significant number of manufacturers. If your manufacturing company does not take the R&D credit, double check to see if you qualify. If you are already
    taking advantage of the R&D credit, be sure to coordinate with your R&D expert regarding any changes in the laws and in your operations to maximize the credit.
  •  Explore creating an IC-DISC (Interest-Charge, Domestic International Sales Corporation): Manufacturers may be missing this lucrative U.S. tax incentive. Manufacturers that export (directly or indirectly) U.S. made goods may qualify for reduced tax rates on export profits. Because of the complexity involved with this tax strategy, many manufacturers are not taking advantage of this opportunity.
  • Don’t forget the bank: These tax planning strategies, along with others, can’t be considered in a tax planning vacuum. As always, manufacturers need to consider any impact that these decisions would have on their debt covenants with their lenders. Tax planning time is the perfect time to also review your compliance with bank covenants since many financial covenants are measured at year-end. There can be opportunities to coordinate tax planning and covenant compliance decisions. One example is the timing of tax distributions. If a company is planning on a significant tax distributions to ownership in early 2017 to cover 2016 tax liability, and the company could make those distributions in 2016 while still being in compliance with their bank covenants, consideration should be given to accelerating those distributions into 2016.

These are just a few of the various tax opportunities out there. The key to keeping taxes low in April is to make sure your ducks are in a row by December. Be sure to coordinate with your financial and tax advisors to minimize your tax obligations.

By Brian Barsi

BRIAN BARSI, CPA, is a Managing Director at CBIZ MHM and a Shareholder of Mayer Hoffman McCann P.C., an independent CPA firm. Brian has extensive experience serving mid-market clients primarily in the manufacturing and distribution industries, and leads the CBIZ MHM Minneapolis Manufacturing group. He can be reached at 612-376-1237 or bbarsi@cbiz.com.





November 14, 2016

Learn more about exact ways CBIZ MHM can help companies in the manufacturing industry from Brian Barsi on Today's Business Radio. 

Listen to the full interview.




March 16, 2016

Manufacturers face pressure to be efficient. As global competition in the manufacturing space continues to accelerate, many in the industry are looking for every opportunity to streamline cost.  Mark Baricos, Managing Director at CBIZ & MHM Memphis, wrote an article discussing three key elements that should be considered in evaluating a well-defined tax strategy.

Recent changes to tax provisions now offer additional opportunities to minimize tax burden. Passed in December 2015, the Protecting Americans against Tax Hikes (PATH) Act makes permanent several tax deductions that previously had to be renewed each year and includes longer-term extensions of others.

In the article, Mark outlines three ways manufacturers can take advantage of these PATH act changes.  Manufacturers that operate internationally should take particular note of the Act’s extension of several tax reduction opportunities for conducting business abroad.  The legislation could mean the chance to lower a company’s overall effective tax rate, bringing significant benefits to operations.

For the full article on our CBIZ Insights & Resources, click here.

To discuss what the PATH Act means to your business, contact Mark at 901.685.5575 or mbaricos@cbiz.com.




November 5, 2015

Together, with Husch Blackwell and UMB Bank, CBIZ MHM, LLC proudly sponsored a seminar dedicated to the Manufacturing and Distribution industry on October 29th. Held at Boulevard Brewery, the seminar focused on the cybersecurity threats facing the manufacturing and distribution industry. Attendees heard from accounting, financial and legal professionals as they discussed the industry economic forecast, data breach threats to companies in the Kansas City area, vendor security and risk management.

To wrap up the seminar, special guests Chris Lamb, FBI - Cyber Investigations, and John Cowles, Assistant US Attorney – USAO, Western District of MO, focused on the current trends in cyber investigations (locally and nationally) and prevention tips.   

The Manufacturing industry is important to CBIZ MHM and we are very pleased to have had several clients and guests attend the event to learn more about the security challenges facing this industry. Below, we have included the top ten takeaways from the seminar.  As an additional resource, the presentation is available for download here

  1. Understand the global threat – Threats to cybersecurity are increasing both in quantity and severity. From 2012 to 2013, data breaches doubled!
  2. Know the cost – From 2013 to 2014, the average cost of data breaches went up by more than 15%, making the average $3.5 million.
  3. Know your data - Know what data your company has, where it is stored and how it’s secured.
  4. Clean it out - Look for opportunities to eliminate old and unnecessary data.
  5. Use your resources – There are third party professionals who are experts in various aspects of cybersecurity, including the FBI, all of which are resources for you - use them! 
  6. Mitigate your risk - A formal risk assessment should be performed at least annually – whether done internally or by a third party specialist.
  7. Get covered – Companies should consider obtaining insurance to cover cybersecurity incidents and review policies with specialists to make sure they provide adequate coverage.
  8. Educate your employees – 93% of employees knowingly violate cyber security policies. People are the biggest cause of security breaches. Employees need to be trained and updated on cybersecurity issues.
  9. Size DOESN’T matter – In fact, the smaller the business is, the easier it is to hack!
  10. It could happen to you – The odds of a Manufacturing company being targeted for a cyber-attack are 1 in 3. No one is immune to an attack; assume you will be targeted at some point! It is important to be proactive and have a plan in place ahead of time!

Did you miss the seminar, but want to make sure you are added to future invitation lists? Contact aelliott@cbiz.com.




September 16, 2015

Threats to cybersecurity are increasing both in quantity and severity. From 2012 to 2013, data breaches doubled. From 2013 to 2014, the average cost of data breaches went up by more than 15% to $3.5 million.

On October 29th CBIZ and Mayer Hoffman McCann P.C., along with Husch Blackwell and UMB Bank, invite C-Suite executives and Owners to join  us for a free half day seminar focused on the cybersecurity threats facing the manufacturing and distribution industry. Hear from accounting, financial and legal professionals as they discuss the industry economic forecast, data breach threats to your company, vendor security and risk management.

Closing Presenter: John Cowles, Assistant U.S. Attorney, Western District of Missouri
Trends & Tips in Security Fraud

AGENDA
Economic Outlook
Poachers, Hackers & Spies: The Data Breach Gang
Vendor & Security Risk Management

Boulevard Brewery
2501 Southwest Blvd
Kansas City, Missouri

This seminar will be eligible for up to 3 CPE & CLE credits
Check in begins at 1:00PM
Seminar runs from 1:30 PM – 4:30 PM
Appetizers and cocktails immediately following

To register and for more information, click here.




June 2, 2015

The Minnesota Department of Revenue just announced that starting July 1, 2015, the capital equipment refund will become an up-front sales tax exemption. This announcement is favorable sales tax law change for all Minnesota manufacturers. 

To claim the exemption on eligible purchases, businesses must give the supplier a completed Form ST3, Certificate of Exemption. Use exemption reason code for “Capital equipment”. Businesses also must confirm that they have filed their refund claims for open periods. 

Before July 1, businesses were required to pay sales tax when purchasing eligible capital equipment and then file a refund request with the Department of Revenue.

Note: If you pay sales tax on purchases after June 30, 2015, you may still file a refund request for tax paid in error.

If you have any questions on the new sales tax law change, please reach out to our Tax Practice Leader, Ron Price, at rprice@cbiz.com or 612.376.1268. 


 




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