The country came very close to a complete financial meltdown last week. We’re not out of the woods yet.
So, what does this mean for you and your business or if you are a CPA, your clients if you need cash to buy inventory, finance payables, or fund payroll?
Focus On Opportunities:
Here are four proven ways businesses can increase cash flow.
With inflation on the rise, LIFO is your best choice. LIFO has been used by companies for almost 70 years. In addition to manufacturers, a wide range of businesses use the LIFO method including energy producers, retailers, wholesalers and mining companies.
Last In First Out (LIFO) accounting is a tool businesses with inventory are using to turn inflation into a positive and to realize additional funds. As year-end approaches, businesses and CPAs are turning to SourceCorp to determine the potential LIFO benefit from a year-end LIFO implementation.
2. R&D Tax Credit:
To remain competitive in today’s economy, many companies commit significant resources to developing new technologies, processes, or products. Historically, research and development costs are expensed in the ordinary course of business. However, some of these expenditures may be eligible for the Research and Development credit as well. Therefore, in addition to expensing certain R&D costs, a taxpayer may be eligible for the credit on the same expenditures that results in a dollar-for-dollar reduction in tax. Additionally, to the extent the taxpayer is unable to utilize all of the credit against tax in any one year, the R&D credit will carry forward.
3. Cost Segregation:
Cost Segregation is the practice of identifying assets and their costs, and classifying those assets for federal tax purposes. In a cost segregation study, certain costs previously classified as subject to 39-year depreciable life, can instead be classified as personal property or land improvements, with a 5, 7, or 15-year rate of depreciation using accelerated methods. An “engineering-based” study allows a building owner to depreciate a new or existing structure in the shortest amount of time permissible under current tax laws.
The benefits of a cost segregation study include:
• An immediate increase in cash flow
• A reduction in current tax liability
• The deferral of taxes
• The ability to reclaim “missed” depreciation deductions from prior years (without having to amend tax returns
4. Green Building Tax Deductions:
If your clients own, or are lessees of, a commercial building and install property as part of the commercial building’s interior lighting systems, heating, cooling, ventilation, and hot water systems, or building envelope, they may benefit from the availability of substantial energy efficient commercial tax deductions.
Section 179D(a) allows a deduction to a taxpayer for part or all of the cost of energy efficient commercial building property that the taxpayer places in service after December 31, 2005, and before January 1, 2009. Sections 179D(d)(1) and 179D(f) allow a deduction to a taxpayer for part or all of the cost of certain partially qualifying commercial building property that the taxpayer places in service after December 31, 2005, and before January 1, 2009 so it is important to take advantage of this deduction before its expiration.
SourceCorp is the nation’s leading consulting firm specializing in LIFO Accounting, R&D Tax Credit Studies, Cost Segregation Studies, and Green Building Tax Deductions. Our strength is in understanding the complexities of taxation and construction engineering – we help clients pay less tax and save more money.
Since 1983, SourceCorp has worked closely with CPA firms, manufacturers, wholesalers, building owners, architects, and auto dealerships to realize their vision to increase cash flow, reduce taxes, and build lasting value, while striving to maintain the highest level of customer service, communication and overall satisfaction. SourceCorp is owned by Apollo Management, Inc., a private equity firm based in New York.