After a couple all-nighters in Washington and some premature atta boys, we’re right back where we were a couple of weeks ago, after Lehman Brothers declared bankruptcy and the government lent AIG $85 billion.

But there are still strategies to help businesses pay less tax and get more cash.

1. Inventory accounting:
FIFO, LIFO – does it make a difference? You bet it does, but this is especially true in inflationary times. Impossible as this may sound, inflation in material, labor, and other costs can actually boost a company’s cash flow. All it takes is changing a business’s method of accounting for its inventory costs. Inventory accounting – and the key question of whether a company recognizes inflation when accounting for costs – has an immediate impact on a company’s reported profits, tax payments, and ultimately, its all-important cash flow. In an inflationary economy such as ours, this issue is vital for growing businesses to examine, since most rely on an accounting method that ignores inflation entirely and thus exposes them to unnecessary costs. Last-in, first-out (LIFO) is an accounting approach that assumes that the most recently acquired items are the first ones sold. Therefore, the inventory that remains is always the oldest inventory. During economic periods in which prices are rising, this inventory accounting method yields a lower ending inventory, a higher cost of goods sold, a lower gross profit, and a lower taxable income. Many companies prefer the LIFO method because it has the effect of reducing a company’s taxes, thus increasing cash flow.

Click here for a no-cost, no-obligation LIFO analysis

2. R&D tax credit:
The research tax credit isn’t new (in fact, it dates back to the 1981 tax reform), but it can save you a bundle if you’ve spent heavily developing new technology or improving your product. The R&D Tax Credit may be a substantial and immediate source of cash for many businesses.

Click here for a no-cost, no-obligation R&D Tax Credit analysis

3. Cost segregation:
With cost segregation, instead of simply depreciating your holdings in one big lump sum over 39 years (as required for commercial real estate), you divide the property into pieces, some of which (specialized plumbing or electrical systems, for example) can be depreciated much more rapidly. The result is a lower tax bill and improved cash flow today. A Cost Segregation Study can uncover substantial tax savings and improve cash flow, reduce current tax liability, defer taxes, and by reclaiming “missed” depreciation deductions from prior years (without having to amend tax returns).

Click here for a no-cost, no-obligation Cost Segregation analysis

4. Commercial buildings that go green:
Section 179D(a) is a deduction for commercial building owners whose buildings meet certain energy standards. The deduction is as much as $1.80 per square foot for buildings that achieve a 50 percent energy savings target. Before claiming the deduction, the owner must obtain written certification from a professional engineer not related to the company using approved software that the required energy savings will be achieved.

Click here for a no-cost, no-obligation Green Building Tax Deduction analysis

About Us:
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.