4Thought Blog

The Consolidated Appropriations Act (CAA) — the massive spending package passed in December 2020 — includes many provisions designed to help small businesses that have been struggling during the COVID-19 pandemic.

Specifically, the new law contains the following seven tax-related provisions that may be of particular interest to manufacturers.

The manufacturing industry's dependence on foreign suppliers, especially those in China, has caused concerns for many years. But the COVID-19 pandemic has put a spotlight on this issue, forcing some manufacturers to rethink their offshore business arrangements.

Would your business be better off switching to U.S. supply chain partners? Here's some important information to consider.

Manufacturers that adopted an effective pivot strategy or are recovering from a COVID-19-related slowdown may need to acquire additional equipment or machinery.

Here's some important information to help you decide whether it makes more sense to buy or lease these assets — and why it could be a tax-smart move for some manufacturers to act before year end.

When fraud strikes manufacturers, the effects can be devastating.

The median fraud loss in the manufacturing sector, one of the industries most affected by fraud, was $198,000, according to the 2020 Report to the Nations published by the Association of Certified Fraud Examiners (ACFE). That's significantly higher than the median fraud loss for all industries ($150,000).

Here are some other key findings from the latest biennial ACFE report:

From February to August, U.S. manufacturing employment declined by 720,000 due to adverse conditions caused by the COVID-19 pandemic. But the industry has been slowly recovering. The U.S. Bureau of Labor Statistics estimates that the sector's employment grew by roughly 403,000 jobs over the summer.

If your business has plans to rehire workers or expand its workforce, there's a valuable tax credit that you should consider: the Work Opportunity Tax Credit (WOTC). This tax break may be a limited time opportunity, however, unless Congress acts to extend it beyond 2020.

Using sophisticated inventory management software is supposed to solve the problem of inaccurate counts for manufacturers, but that's not always the case.

Delays in order fulfillment and angry customers are inevitable if your warehouse is plagued by erroneous inventory counts.

If your inventory data doesn't match what you physically have in your warehouse, it's time to take corrective action.

Due to the COVID-19 pandemic, many small and mid-sized manufacturers expect to have significant net operating losses in 2020. What makes this prospect more discouraging is that some companies are still recovering from NOLs suffered in recent years.

The Coronavirus Aid, Relief and Economic Security Act provides some relief. It has revamped the NOL rules, undoing some of the effects of the Tax Cuts and Jobs Act passed in 2017. This means your company may be in line for a refund if you amend previous tax returns.

However, the CARES Act rules are complex. It's essential to consult recently released IRS guidance that covers some of the mechanics of requesting a refund — and talk with your CPA — before filing an amended return.

The COVID-19 crisis has probably changed your business operations. For example, in response to the crisis, you might need to alter your company's production line, cleaning and scheduling practices, supply chain partners, distribution methods and even product offerings.

Whether these changes are temporary or you're using recent product and operational shifts as blueprints for the future, you'll likely need to retrain or "reskill" workers.

Even before the pandemic, rapid technological advances made retraining workers necessary for many manufacturers. Perhaps you've already invested considerable time and money ensuring employees are proficient using the most innovative equipment. But if your business model is changing and you want it to be successful, you'll likely need to send workers back to "school."

As businesses continue to struggle under the weight of the novel coronavirus (COVID-19) pandemic, astute manufacturing owners and managers are looking for ways to adapt to the new normal.

One way to do this is to pivot from standard product lines into new niches. Although pivoting may enable your company to sustain operations during this time of crisis, changing gears can also raise other long-term strategic questions that you'll need to consider.

The coronavirus pandemic has forced American businesses to adapt quickly to a radically new economic and operating landscape. If your company sells, manufactures, delivers, distributes or otherwise facilitates goods considered "essential" you may need to operate at full (or overtime) capacity.

On the other hand, manufacturers whose goods aren't deemed essential may be forced to idle their machines and close their doors indefinitely. (In many cases, state guidelines specify which businesses are essential and which ones aren't.)

Both situations are challenging. But if you're up and operating, here are four considerations to help you do so safely and productively: