Accountant for Windsor manufacturers

Job costing: what the tool actually cost

A mould or a progressive die is quoted months before it is finished, and the quote is only as good as the shop’s knowledge of what the last one cost. That means material, machine hours, design time, outside services such as heat treating, and the overhead that keeps the lights on, all attributed to the job rather than dumped into general expense. When costing is loose, a busy year can still produce a thin result, because the jobs that lost money are hidden behind the ones that made it. We set up job-level costing in the ledger so each completed tool shows its margin against its quote. That serves the tax return and the next quote at the same time, which is rare in accounting and worth using. Pricing review takes it further.

Work in progress on long builds

A large tool can take months from order to tryout, and at any year-end a Windsor shop has value sitting part-built: steel cut, hours spent, nothing yet invoiced in full. That value belongs on the balance sheet as work in progress rather than being expensed as it is spent. Customers often pay in stages, a deposit on order, another at tryout, the balance on approval, and those payments have to be matched to the work they relate to, so the income is not recognised early or late. Shops that expense everything and book revenue on the final invoice get a profit figure that jumps from year to year for no operational reason. Setting a consistent work-in-progress method in the first year is one of the more valuable things a new accountant can do.

Inventory and the year-end count

Raw steel, purchased components, tooling inserts and finished parts waiting to ship are all inventory. The closing figure sets the cost of goods sold, so an overstated count overstates profit and an understated one draws questions. The count has to happen at or near year-end, with a clear rule for what is included and how it is valued, and it has to be done the same way each year. For suppliers that hold consignment stock or ship parts against blanket orders, ownership at year-end is not always obvious and has to be settled before the count. The year-end inventory count sets out a practical method.

US customers and US dollars

Much of what Essex County makes goes to Michigan, Ohio and beyond, invoiced in US dollars. Each sale is recorded at a consistent exchange rate, the payment at the rate when it clears, and the difference is a foreign exchange gain or loss in income. Open US receivables are revalued at year-end. On the HST side, goods exported to a customer outside Canada are generally zero-rated: no 13% HST is charged, yet the shop still claims input tax credits on its steel, tooling and power. HST paid on goods imported from the US at the border is also recoverable as an input tax credit. The records that prove export, bills of lading and customs documents, should sit beside the invoice. HST on exports covers the requirements.

Machinery, CCA and the timing of a purchase

CNC machining centres, EDM machines, presses, cranes and inspection equipment are capital assets deducted through capital cost allowance at the rate for their class, with manufacturing and processing equipment in its own classes. An asset has to be available for use before it can be claimed, and the half-year rule generally halves the first-year claim. A machine delivered in the last week of the year but not installed may give no deduction until the following one. When an old machine is sold or traded in for more than its remaining undepreciated cost, the difference comes back as recapture. We keep a CCA schedule by asset and review major purchases with you before year-end. CCA classes lists the common ones.

SR&ED on process improvement

Windsor shops solve technical problems daily: a steel that cracks under a new geometry, a cycle time a customer wants cut, a conformal cooling layout nobody has tried on that part. Where the outcome was genuinely uncertain and the shop worked through it systematically, the work can qualify as scientific research and experimental development. The claim is filed on Form T661 with the T2, and a Canadian-controlled private corporation can earn an enhanced refundable credit, which pays out even in a year with no tax owing. The claim depends on records made at the time: the problem, the hypotheses, the trials and who spent how long on them. Routine tool building does not qualify; the uncertain part of a program might. We help you separate the two before a claim is prepared.

Shop payroll, EHT and WSIB

Skilled trades are the largest cost in most tool and mould shops, and payroll brings three separate accounts: source deductions to the CRA, Ontario Employer Health Tax once annual payroll passes the exemption, and WSIB premiums on insurable earnings. Overtime and shift premiums during a program launch, and layoffs when one ends, both run through the same system. Apprentices and co-op students add their own paperwork. Payroll services in Windsor covers the full cycle, and the monthly ledger work is described on the Windsor bookkeeping page.

Remote accounting for manufacturers from Abbotsford

EverStone is a one-CPA firm in Abbotsford, British Columbia, serving Windsor manufacturers remotely. There is no Windsor office and no local staff. Meetings are held by video or phone, job cost reports and statements come in through a secure upload link, and nobody has to leave the shop. The fee is fixed before work starts; see what it costs.