Accountant for Oshawa manufacturers

Inventory is a tax number, not just a count

For a shop that holds raw material, parts and finished goods, closing inventory is one of the largest numbers on the tax return. Every dollar of it overstated is a dollar of profit reported early; every dollar understated is a deduction taken before it was earned. Inventory is generally valued at the lower of cost and net realisable value. That means obsolete parts, overruns and material for a cancelled program have to be written down to what they will actually sell for, not carried at what they cost.

For a supplier to larger manufacturers, that last point matters. When a program ends or a part number changes, stock built for it can lose most of its value overnight. We review slow-moving and single-customer inventory at year-end with you, and record the write-down in the year it happened. The year-end count covers what the count needs to capture.

Work in progress, and costing a job before you quote it

At any year-end a job shop has parts half machined, assemblies waiting on a component, and orders shipped but not yet invoiced. Work in progress carries the material, labour and a fair share of shop overhead already put into those jobs. Get it wrong and one year’s profit slides into the next.

The same numbers drive quoting. A job cost that includes only material and direct labour makes every quote look profitable; one that also carries machine time, setup, scrap and the overhead of keeping the lights on shows which work actually pays. We set up the ledger so labour and material are coded to jobs where that is practical, then compare what each job earned against what it was quoted. The pricing and margin analysis service takes that further for shops ready to reprice.

Selling to larger manufacturers also shapes cash. Long payment terms, chargebacks for rejected parts and price-downs negotiated into annual contracts all land in receivables, and a shop can be profitable on paper while its bank balance shrinks. A monthly aged receivables review, set against what the material suppliers expect to be paid, shows the squeeze before it arrives. See cash flow management and collecting receivables.

Machinery, capital cost allowance and the replacement cycle

CNC machines, presses, welders, forklifts and tooling are claimed through capital cost allowance, not expensed on purchase. Manufacturing and processing machinery has its own favourable treatment, and the rules have changed in recent years, so the class and timing of each purchase deserve a check before the order is placed rather than after. An asset has to be available for use before year-end to be claimed that year.

When a machine is sold or traded in, the proceeds come off the class, which can produce recapture or, if the class empties, a terminal loss. We keep the CCA schedule tied to the actual equipment list so the return matches what is on the floor. See CCA classes and expensing for manufacturing buildings.

SR&ED on process improvement

Scientific Research and Experimental Development credits are not only for laboratories. A shop that works through technological uncertainty to make something it did not know how to make may have qualifying work. Examples are a new process for a tighter tolerance, a fixture that cuts cycle time in a way that was not obvious, or a material substitution that needed real testing. The claim is made on Form T661 with the T2, and a Canadian-controlled private corporation can earn an enhanced refundable credit, which can mean cash back even in a year with no tax owing.

What decides a claim is the record made at the time: what the uncertainty was, what was tried, and what was learned. We help you see whether work is likely to qualify and keep the time and material records that support it. The SR&ED expenditure limit update covers the recent federal changes.

HST on exports, and Employer Health Tax on a bigger crew

Many Durham shops ship across the border. Goods exported from Canada are generally zero-rated, so no HST is charged, but the HST paid on inputs is still recoverable, which often leaves an exporter in a refund position every period. Documentation of the export is what supports the zero rating; see HST on exports. Domestic sales carry the 13% HST in the ordinary way.

Manufacturing payrolls also run larger than most small businesses, with shifts and overtime pushing total Ontario remuneration past the Employer Health Tax exemption. The rate is chosen from payroll before the exemption, and associated companies share one exemption. Figures are on the Ontario tax facts page, and payroll services in Oshawa covers the rest of the payroll side.

What EverStone handles for you

One CPA, one fixed fee agreed up front:

• T2 corporate return and year-end financial statements
• Inventory and work in progress reviewed at the cut-off
• Job cost reporting from the monthly books
• Machinery and equipment CCA schedules
• SR&ED eligibility review and Form T661 support
• HST filing, including zero-rated exports
• Employer Health Tax and WSIB alongside payroll

Fixed fees, fully online

EverStone is an Abbotsford CPA firm, and Oshawa runs ahead of us on Eastern time, so a question sent at the end of your shift is often answered before the next one. Everything runs by video, phone and secure upload, and the monthly books stay in cloud software you own. For a manufacturer that has outgrown its bookkeeping, a fractional controller from $1,500 a month adds job-cost and margin reporting. The fee is fixed and agreed before work starts. See what it costs.

Remote accounting for manufacturers from Abbotsford

Accounting for Oshawa manufacturers is delivered remotely from Abbotsford, British Columbia. There is no Oshawa office and no local team. Meetings are virtual, documents are signed electronically, and you deal with the CPA directly. Inventory, job costs and equipment are tracked through the year rather than reconstructed at year end.