Accountant for London, Ontario manufacturers

Inventory and work in progress move taxable income

Cost of goods sold is opening inventory plus purchases, less closing inventory. Every dollar added to the closing figure is a dollar of profit, and every dollar missed is a dollar of expense claimed too early. For a parts shop that means coil and bar stock, parts partway through the line and finished goods waiting on a release. For a food processor it means ingredients, packaging and product in the cooler. Each is valued at the lower of cost and fair market value, on a basis that stays the same from year to year. The count at year-end is the evidence the CRA will ask for, so it is planned, done on the day, and kept. The year-end inventory count explains what has to be recorded.

Job costing that shows which parts make money

A supplier to the auto sector often runs long part programs where the customer expects the price to hold, or fall, over the life of the contract. Knowing the real cost per part is the only defence. That means materials at what they actually cost, direct labour by the hour, a burden rate that recovers the building, the power and the supervisors, and scrap tracked rather than ignored. A food processor works the same problem through yield and batch costs. When the books are set up with those splits, the monthly numbers answer the question you are asked at every quote: can we make this part at this price? Pricing review goes further.

Machinery, CCA and the replacement decision

Presses, CNC machines, robots and packaging lines are written off through capital cost allowance, with manufacturing and processing machinery in its own class. A machine has to be available for use before any claim starts, so equipment delivered in the last week of the year but not yet commissioned may not produce the deduction you expected. When an old machine is sold or traded, the proceeds reduce the class, and if they exceed what is left the difference comes back as recapture. Leasing and buying produce different deductions for the same machine, and the reduced first-year claim is explained in the half-year rule. All of this is worth a conversation before the purchase order is signed. CCA classes sets out the structure.

SR&ED on process improvement

Much of the development work in a London plant happens on the floor rather than in a lab: a fixture redesigned to hold a tighter tolerance, a weld process that kept failing, a line change to extend shelf life. Where the work tried to resolve a genuine technical uncertainty through systematic trial, it may qualify for scientific research and experimental development credits. The claim is made on Form T661 with the corporate return, and a Canadian-controlled private corporation can earn an enhanced refundable credit, which means cash even in a year without tax to pay. Routine production, quality control and ordinary troubleshooting do not qualify. Notes and test results made at the time are what carry a claim through review. See the SR&ED expenditure limit update.

Payroll, Employer Health Tax and the second shift

Adding a shift is often what pushes a London manufacturer past the Employer Health Tax exemption. The rate is then picked from a graduated table using total Ontario payroll before the exemption, and related companies share a single exemption between them. WSIB premiums depend on the rate group attached to the account, which is worth confirming for a shop that has changed what it makes. Shift premiums, overtime and taxable benefits all have to reach the T4. Payroll in London covers the detail.

HST on inputs, and on what crosses the border

The 13% HST paid on steel, tooling, power and freight comes back as input tax credits, so a manufacturer’s HST is mostly about capturing every credit. Goods exported to customers in Michigan or elsewhere in the United States are generally zero-rated, which can put a shop in a refund position each period. US dollar receivables and bank accounts need a consistent conversion method so exchange gains and losses land in the right year. HST on exports covers the conditions.

What EverStone handles for you

One CPA and one fixed fee, agreed in writing before work starts. See what it costs.

• T2 corporate return and year-end financial statements
• Inventory and WIP valuation set once and applied consistently
• Job costing built into the chart of accounts
• CCA schedules, disposals, recapture and lease-or-buy analysis
• SR&ED records reviewed through the year and the T661 prepared
• Payroll, Employer Health Tax and WSIB reporting
• HST returns, including zero-rated export sales

Remote accounting for manufacturers from Abbotsford

EverStone is a sole practitioner CPA firm at 32615 South Fraser Way in Abbotsford, serving London, Ontario manufacturers entirely online. There is no London office and no local staff. Meetings are held by video or phone, count sheets and purchase files come through a secure upload link, and nobody has to leave the floor for an appointment. Inventory and equipment schedules are kept current through the year rather than rebuilt at year-end.