Also, don’t overlook federal incentives, such as the research and development (R&D) tax credit or the domestic production activities deduction, which help defray the costs of producing your goods or growing through innovation. Many states offer an R&D credit as well.
4 – MANAGING TAX DEPARTMENT RESOURCES
As your business grows, your internal tax capabilities have to grow with it. How you manage your fixed assets is one example. To manage organic growth tax efficiency in this area, consider the following:
• Are your current systems and processes scalable?
• If you need to add or upgrade your system, who needs access?
• Who will make entries? How will it interface with your general ledger?
• What about your capitalization policy? Will you set a floor beneath which items normally capitalized are expensed, and then elect annual de minimis audit protection from the IRS?
• Are your fixed asset and tax provisioning processes still manual or Excel-based?
These questions have many possible answers and next steps, depending on your growth situation. It might be time to upgrade to new tools and processes. You may want to investigate outsourcing options for certain tax work. In any case, if your tax capabilities don’t keep up with your business, you’ll end up losing out on planning opportunities and paying more in fees and penalties as your compliance efforts fall behind.
These are just four broad examples of the tax issues enterprises face as expanding sales drive their growth. Ensuring that your tax strategies and resources keep pace with your growth will help you maximize the benefits and minimize the costs of your success.
Dean Joaquin is West Region Tax Leader at RSM US LLP. For more information, contact Dean Joaquin, at email@example.com or (213) 330 4671.
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