from the Texas Comptroller website.įor local property tax purposes, Texas law requires a motor vehicle dealer’s inventory to be appraised based on the total sales of motor vehicles in the prior year. For example, Texas assesses vehicles held by a dealership uniquely. Some states may not assess all inventory balances the same. In the case of claiming a decline in the fair market value of inventory items, a taxpayer should be prepared to have current market data and research to back up any requested reduction from 100% of the cost of the inventory items. This helps a business’s bottom line in a couple of ways: 1) the cost of housing larger inventories is reduced as the space needed to store and house the inventory is less, and 2) if the business is located in a state that taxes inventory, the reported inventory balances will be less resulting in lower personal property taxes.Īdditionally, some states allow for the reduction in the taxable base of inventory based on a taxpayer’s estimate of the fair market value of the year-end inventory figure. JIT in time inventory management usually results in lower year-end inventory balances. They inform each other and are mutually dependent on generating successful outcomes. In JIT, all parts of any production or service system, particularly people, are interconnected. JIT is what’s known as a lean management process. Since the main objective is often quality and not the lowest price, JIT requires long-term contracts with reliable suppliers. The goal is to eliminate waste and increase the efficiency of your operations. JIT inventory management ensures that stock arrives as needed for production or to meet consumer demand, but no sooner. Sourced from an article for Oracle Netsuite. Because of this, just-in-time (JIT) inventory management can be an effective way to reduce property taxes on inventory. This is different from assessing other personal property (equipment, machinery, computers and furniture), which usually receives some form of depreciation allowance when calculating a fair market value. Some states require a taxpayer to report an average of the current year-end and prior year-end inventory balances, while some states require that an average of each prior month-end balance be listed.įor the most part, states that tax inventory assess balances reported by a taxpayer on their property tax return at 100%, so this component of a business’ property tax burden can often be a large percentage of the total property tax liability. In states that tax inventory as personal property, most request a year-end balance to be reported. Inventories are typically defined as personal property held for sale, but some states require that balances of raw materials and work in progress be included in the reported figure. On the other hand, supplies are recorded as expenses and appear on a business’s income statement. Many business owners don’t realize that some states include the taxation of inventory and supplies under the umbrella of property tax.įrom a financial statement perspective, inventory assets are recorded as assets and are represented on a business’s balance sheet. Property taxes make up the largest component of state and local taxes paid by a business. This is in addition to property taxes assessed on their land and buildings, also known as real property taxes or real estate taxes. Currently, 38 states have some form of BPP taxation system. Who can I call to help me? Call Peter 97 for a confidential assessment and see how we can help you.Many business owners understand that equipment, machinery and furniture are subject to business personal property (BPP) taxes. Be pro-active.Īm I properly insured? It costs nothing to ask your broker, show them your appraisal.ĭ o I have a certified appraisal of my collections, antiques or personal property? Insurance companies need proof of value. We can also give written (USPAP standard) reports.Īsk yourself : Do I value my possessions? If you care about them, have an inventory and appraisal done. We are the only company that includes a certified valuation with an inventory. Home Inventories & Professional Appraisals:Īntiques, Household items, Art, Fine Art, Paintings, sculptures, crystal, silver, glass, Collections & Memorabilia, Americana, Sports memorabilia, Furniture, toys, high value itemsīusiness assets - machinery, equipment, tools, specialized equipment and more. Pro-Active services to SafeGuard your possessions and assets in case of a disaster
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