As a manufacturer, trusting someone outside your company with your finances is a big deal. You and your employees worked hard to make a profit, and you want to keep as much of it as possible come tax time. Throw in the complexities of manufacturing processes and terminology, and it's even more important to be thoughtful when selecting a CPA to handle your finances.
The right CPA should have the skills and qualifications to help your manufacturing company grow faster, be more competitive, and become more profitable. Here is our list of things to consider before choosing your manufacturing CPA.
Industry experience is vital when choosing a CPA. A CPA who specializes in manufacturing can more easily work through the intricate tax or financial laws of your industry, provide financial analysis, and recommend business strategies.
Here are some questions you can ask to start vetting a CPA’s industry experience:
- How many businesses do you work with that are like mine?
- What difference have you made for other manufacturers?
- Can you provide examples of the impact of your work (before vs. after)?
Manufacturers have specific accounting needs, so your CPA will need some specific industry knowledge. Do they understand manufacturing terminology, particularly any terms that are specific to your industry? Does the CPA have experience with customer profitability analysis and optimization? Do they have experience with manufacturing process optimization experience, from sales to shipping?
Check out the video below as Dan Digre of MISCO Speakers discusses the importance of industry knowledge in relation to the R&D tax credit specifically.
Breadth and Depth of Firm
A CPA firm is likely to offer a wide range of financial services and provide CPAs who specialize in financial areas specific to your business operation. What is the full range of manufacturing expertise and services available? Here are some key areas manufacturers should consider:
Strategy and management
- Strategic planning
- Mergers and acquisitions
- Business plans
- State and Federal economic incentives
Profitability and productivity
- Performance measurement
- Operational assessments
- Inventory costing
Tax consulting services
- Sales and use tax
- Property tax
- Minimizing multi-state tax burden
- Has partnership(s) with respected R&D tax specialists
- International taxation
General consulting services
- Benefits, compensation, and recruitment
- Business systems and technology
- Internal control assessments
- Forecasting and budgeting
- Constraints management
- Financial planning and investment management
Local CPA firms allow you to build a valuable business partnership with face-to-face interaction and more seamless communication, as compared to a firm in another city or state. Although technology makes it possible to work remotely, nothing surpasses in-person communication.
When interviewing a CPA firm, be certain you understand how and when they charge for their services. Some firms bill by the hour or minute, while others may require a retainer upfront or invoice upon completion of a service. Does your company’s cash flow dictate which billing method will work best for you? Negotiate the terms for billing, fees, and payment methods.
References and Recommendations
Ask your prospective CPA firm to provide a list of clients you can contact for references before making your decision. A brief telephone conversation can give you a firsthand report of the client and CPA relationship, the industry knowledge, and the quality of service they receive. You should also check your network. Are fellow manufacturers familiar with the CPA’s work? If not, who do they use? In a tight-knit industry, there are few things more important than a good reference.
Above all else, take your time and trust your gut. A good CPA will be with you for years, and they'll have your best interest in mind. So, it's not a decision you want to rush.