With most of the tax reform provisions set to go ahead in the new year, it’s important that manufacturers review the planned changes and understand how tax reforms will impact their industry. To cope with increasing competition in the sector, it’s a good idea to consider investing in the future.
Although manufacturers are still hesitating to spend the money, the long-term benefits of investing can far exceed the short-term deficit on the balance sheet. Manufacturers can expect to enjoy lower tax rates, easier access to foreign cash and higher capital spending. As a result, with the right planning, manufacturers can look to modernize and expand their operations.
While the emphasis is slowly shifting from cost-cutting to growth, manufacturers can prepare for changes by implementing the steps given below.
Manufacturers Can Take These 5 Initial Steps to Tackle Tax Reform
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Assess the Impact
You may need to hire expert tax professionals to assess the impact of each tax provision with your organization’s circumstances. What’s more, they will also be able to advise you on the potential effects with regard to your bottom line.
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Deploy Additional Cash
This is a good time to deploy additional cash to digitalize systems, increase manufacturing capacity and improve back-office capabilities.
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Assemble a Reliable Team
More often times than not, you will need to assemble an efficient team of accountants and financial professionals. Moreover, hiring experienced management executives, for example, can help maximize opportunities for growth and investment.
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Establish Priorities
Manufacturers should also consider what to undertake before the new year and evaluate areas that could have the maximum impact on your organization.
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Invest in Growth
You should also consider assessing current markets against new ones – as well as weigh inorganic versus organic growth – to maximize returns on investment.
Investing Will Help Improve Efficiencies and Quality in Manufacturing
Manufacturers are set to benefit from the most significant tax reform in three decades. In addition, investing in new technologies, equipment and training can make manufacturing processes faster and more efficient. What’s more, waste reduction, improved efficiency and increased output will help you boost your bottom line. While tax reform may result in job redundancy (in that it may reduce the demand for unskilled labor), on the positive side, it will encourage employers to reskill workers to leverage their full potential.
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