Business Archives - Whalen & Company, CPAs

6 inventory management tips in an uncertain tariff landscape

Jacob Courtright on April 25, 2025

With new tariff structures looming and global trade relationships in flux, businesses face rising uncertainty in supply chain costs and inventory planning. As countries iron out the details of future U.S. trade agreements, companies must proactively manage their inventory to avoid margin erosion and supply disruptions. Here are six smart strategies to help safeguard your operations.

1. Analyze your supply chain

Start by identifying where your inventory items originate — not just your direct suppliers, but the true sources of raw materials and components. Many small businesses purchase through intermediaries, such as distributors or service centers, making it difficult to spot exposure to higher tariff zones. Also, review tariff codes for your imports to ensure correct classification and identify potential opportunities for reclassification or exemptions.

After determining where items originate, evaluate their criticality, cost, and lead times. This assessment reveals your level of risk and highlights where disruption would have the greatest financial impact. A detailed supply chain map gives you the data needed to make informed decisions, whether diversifying suppliers or adjusting stock levels for sensitive items.

2. Identify alternative vendors

If tariffs threaten your current sourcing strategy, explore alternative suppliers in different regions or even domestically. But don’t make changes solely based on cost; ensure new suppliers meet your standards for quality, reliability, and speed.

If you rely on one or two suppliers for critical items, identify a mix of potential suppliers in different geographical regions. Having multiple partners lined up provides flexibility if one region becomes economically unfavorable. For example, a contractor who relies on imported electrical components could benefit from developing relationships with U.S.-based distributors, even at a premium, to ensure business continuity. This dual-sourcing approach may add resilience and open the door to competitive pricing negotiations.

3. Strengthen supplier relationships

Solid supplier partnerships are more valuable than ever. Transparent communication helps you stay ahead of inventory delays or pricing shifts. Suppliers may also provide early warnings on tariff impacts or offer better terms to long-standing customers. Building trust now can give you access to more favorable pricing, priority fulfillment, or flexibility in challenging times.

Don’t just talk business — build strategic alliances. Offer forecasts, discuss contract extensions, and explore vendor-managed inventory models for shared efficiency gains.

4. Reevaluate purchase timing and inventory volume

Keep close tabs on your supply chain partners. If tariff increases appear imminent, consider purchasing key inventory before they take effect. While this ties up working capital, strategic stockpiling can save costs and protect against supply disruptions. Prioritize high-impact items with long lead times or few substitutes. However, consider increased storage costs and potential obsolescence when expanding inventory levels.

Another option is locking in long-term pricing contracts. This can be especially effective if you negotiate fixed rates or volume-based discounts.

5. Review pricing and cost control

With uncertainty swirling, many businesses hesitate to raise prices in the hope that the “trade wars” will cool off soon. But absorbing higher input costs indefinitely can strain your cash flow. Monitor competitor pricing strategies and be transparent with your customers if adjustments are needed. Consider tiered pricing models, pass-through clauses, or surcharges tied directly to tariff fluctuations to maintain trust.

Simultaneously, revisit your internal cost structure to help preserve margins. This could include streamlining packaging, reducing waste, optimizing warehouse layouts, and renegotiating freight contracts.

6. Embrace automation for resilience

Bringing more production or fulfillment in-house may insulate you from global risks, but labor shortages and costs are valid concerns. Automation and AI tools can offer a competitive edge by increasing output without a proportional rise in headcount. Even smaller-scale investments, such as automated inventory tracking or demand forecasting software, can reduce manual errors and improve agility.

Avoid knee-jerk reactions

Whatever course you take, ensure it’s guided by data and long-term business goals, not impulse. We can help you create financial models that forecast the impacts of different scenarios and guide you toward cost-effective, sustainable decisions. Contact us for more information.

Explore SEP and SIMPLE retirement plans for your small business

Jacob Courtright on April 22, 2025

Suppose you’re thinking about setting up a retirement plan for yourself and your employees. However, you’re concerned about the financial commitment and administrative burdens involved. There are a couple of options to consider. Let’s take a look at a Simplified Employee Pension (SEP) and a Savings Incentive Match Plan for Employees (SIMPLE).

SEPs offer easy implementation.

SEPs are intended to be an attractive alternative to “qualified” retirement plans, particularly for small businesses. The appealing features include the relative ease of administration and the discretion that you, as the employer, are permitted in deciding whether or not to make annual contributions.

If you don’t already have a qualified retirement plan, you can set up a SEP just by using the IRS model SEP, Form 5305-SEP. By adopting and implementing this model SEP, which doesn’t have to be filed with the IRS, you’ll have satisfied the SEP requirements. This means that as the employer, you’ll get a current income tax deduction for contributions you make on your employees’ behalf. Your employees won’t be taxed when the contributions are made, but will be taxed later when distributions are received, usually at retirement. Depending on your needs, an individually-designed SEP, instead of the model SEP, may be appropriate for you.

When you set up a SEP for yourself and your employees, you’ll make deductible contributions to each employee’s IRA, called a SEP-IRA, which must be IRS-approved. The maximum amount of deductible contributions you can make to an employee’s SEP-IRA in 2025, and that he or she can exclude from income, is the lesser of 25% of compensation or $70,000. The deduction for your contributions to employees’ SEP-IRAs isn’t limited by the deduction ceiling applicable to an individual’s contributions to a regular IRA. Your employees control their individual IRAs and IRA investments, the earnings on which are tax-free.

You’ll have to meet other requirements to be eligible to set up a SEP. Essentially, all regular employees must elect to participate in the program, and contributions can’t discriminate in favor of highly compensated employees. But these requirements are minor compared to the bookkeeping and other administrative burdens associated with traditional qualified pension and profit-sharing plans.

The detailed records that traditional plans must maintain to comply with the complex nondiscrimination rules aren’t required for SEPs. And employers aren’t required to file annual reports with the IRS, which, for a pension plan, could require the services of an actuary. The required recordkeeping can be done by a trustee of the SEP-IRAs, usually a bank or mutual fund.

SIMPLE plans meet IRS requirements

Another option for a business with 100 or fewer employees is a Savings Incentive Match Plan for Employees (SIMPLE). Under these plans, a SIMPLE IRA is established for each eligible employee, with the employer making matching contributions based on contributions elected by participating employees under a qualified salary reduction arrangement. The SIMPLE plan is also subject to much less stringent requirements than traditional qualified retirement plans. Or, an employer can adopt a SIMPLE 401(k) plan, with similar features to a SIMPLE IRA plan, and avoid the otherwise complex nondiscrimination test for traditional 401(k) plans.

For 2025, SIMPLE deferrals are allowed for up to $16,500 plus an additional $3,500 catch-up contribution for employees age 50 or older.

Unique advantages

As you can see, SEP and SIMPLE plans offer unique advantages for small business owners and their employees. Neither plan requires annual filings with the IRS. Contact us for more information or to discuss any other aspect of your retirement planning.

What tax records can you safely shred? And which ones should you keep?

Jacob Courtright on April 15, 2025

Once your 2024 tax return is in the hands of the IRS, you may be tempted to clear out file cabinets and delete digital folders. But before reaching for the shredder or delete button, remember that some paperwork still has two important purposes:

Protecting you if the IRS comes calling for an audit, and
Helping you prove the tax basis of assets you’ll sell in the future.

Keep the return itself — indefinitely.

Your filed tax returns are the cornerstone of your records. But what about supporting records such as receipts and canceled checks? In general, except in cases of fraud or substantial understatement of income, the IRS can only assess tax within three years after the return for that year was filed (or three years after the return was due). For example, if you filed your 2022 tax return by its original due date of April 18, 2023, the IRS has until April 18, 2026, to assess a tax deficiency against you. If you file late, the IRS generally has three years from the date you filed.

In addition to receipts and canceled checks, you should keep records, including credit card statements, W-2s, 1099s, charitable giving receipts, and medical expense documentation, until the three-year window closes.

However, the assessment period is extended to six years if more than 25% of gross income is omitted from a return. In addition, if no return is filed, the IRS can assess tax any time. If the IRS claims you never filed a return for a particular year, a copy of the signed return will help prove you did.

Property-related and investment records

The tax consequences of a transaction that occurs this year may depend on events that happened years or even decades ago. For example, suppose you bought your home in 2009, made capital improvements in 2016, and sold it this year. To determine the tax consequences of the sale, you must know your basis in the home — your original cost, plus later capital improvements. If you’re audited, you may have to produce records related to the purchase in 2009 and the capital improvements in 2016 to prove what your basis is. Therefore, those records should be kept until at least six years after filing your return for the year of sale.

Retain all records related to home purchases and improvements even if you expect your gain to be covered by the home-sale exclusion, which can be up to $500,000 for joint return filers. You’ll still need to prove the amount of your basis if the IRS inquires. Plus, there’s no telling what the home will be worth when it’s sold, and there’s no guarantee the home-sale exclusion will still be available in the future.

Other considerations apply to property that’s likely to be bought and sold — for example, stock or shares in a mutual fund. Remember that if you reinvest dividends to buy additional shares, each reinvestment is a separate purchase.

Duplicate records in a divorce or separation

If you separate or divorce, be sure you have access to tax records affecting you that your spouse keeps. Or better yet, make copies of the records since access to them may be difficult. Copies of all joint returns filed and supporting records are important because both spouses are liable for tax on a joint return, and a deficiency may be asserted against either spouse. Other important records to retain include agreements or decrees over custody of children and any agreement about who is entitled to claim them as dependents.

Protect your records from loss.

To safeguard records against theft, fire, or another disaster, consider keeping essential papers in a safe deposit box or other safe place outside your home. In addition, consider keeping copies in a single, easily accessible location so that you can grab them if you must leave your home in an emergency. You can also scan or photograph documents and keep encrypted copies in secure cloud storage so you can retrieve them quickly if they’re needed.

We’re Moving! New Office Location in Dublin

Jacob Courtright on April 9, 2025

Big changes are happening! With our new brand and evolving values, we’ve outgrown our current space and found a location that truly reflects who we are.

New Address: 655 Metro Place South, Suite 450, Dublin, OH 43017

Don’t worry—we’re still conveniently located just a short drive from our Worthington location, and you’ll continue to receive the same great service you know and love. This move allows us to better support our team and enhance your experience.

Stay tuned for updates as we prepare for this exciting transition!

5 QuickBooks reports to review each month

Jacob Courtright on April 7, 2025

Understanding your business’s financial health is essential for long-term success. QuickBooks® offers a powerful reporting tool suite that can provide critical insights to support decision-making and help you comply with accounting and tax rules.

Accrual-basis QuickBooks users should get in the habit of reviewing the following five reports monthly to keep their finances in check and be proactive instead of reactive when challenges arise. Note: Before running reports, confirm that QuickBooks is set to display accrual-basis (not cash-basis) results.

The profit and loss statement: Scoring your monthly performance

The profit and loss statement summarizes your business’s revenue and expenses over a given period. Also known as the income statement, it serves as a “scorecard” of whether your business is profitable and how income compares to spending.

This report can also highlight trends. Compare the current month to prior months or the same period last year to evaluate performance over time. Monthly reviews allow you to track whether revenue is increasing, expenses are under control, and margins are healthy.

QuickBooks allows you to break down this report by business segment, location, or class. A customized breakdown shows which parts of your business drive profitability — and those that may be underperforming.

The balance sheet: Taking a snapshot of financial health

The balance sheet shows your financial position at a specific point. It lists assets, liabilities, and equity. This helps you understand what your business owns versus what it owes. Compare your current balance sheet with previous periods to identify any material changes. Reviewing this report monthly helps evaluate whether your business is:

Maintaining adequate working capital,
Investing in long-term assets, and
Managing debt responsibly.

It can also reveal imbalances — such as unpaid liabilities or aging inventory — that may need management’s attention. With QuickBooks, you can filter or group the report by class or department to gain deeper insights into how different parts of your business affect your overall financial standing.

Accounts receivable aging summary: Staying on top of customer payments

Unpaid invoices can severely impact cash flow. The accounts receivable aging summary categorizes outstanding customer balances by how long the invoices have been due. QuickBooks uses the due date fields from recorded invoices to group receivables into 30-, 60-, 90- and 90-plus-day buckets. Reviewing this report each month allows you to quickly identify which customers are behind on payments and how much is at risk. Timely follow-up on overdue invoices can significantly improve cash inflows and reduce bad debt write-offs.

QuickBooks users with multiple customer types or sales channels can customize this report by customer type, region or sales rep. This helps pinpoint trends in slow-paying clients or potential areas for process improvement in billing or collections.

Accounts payable aging summary: Managing cash outflows

The accounts payable aging summary shows outstanding bills and categorizes them based on the due date field in QuickBooks. This report helps ensure that bills are paid on time, avoiding late fees and protecting vendor relationships. Reviewing payables monthly also helps manage cash flow more strategically. For instance, you can defer some payments without penalty, while others may need to be prioritized to maintain supply chains or essential services.

QuickBooks users with complex supply chains can tailor this report to show spending by vendor category. This pinpoints where your money is going and whether there may be opportunities to consolidate or renegotiate terms.

Statement of cash flows: Following the money

The statement of cash flows tracks how cash moves in and out of your business. Cash flows are reported under the following categories:

Operating activities,
Investing activities, and
Financing activities.

A profitable business may still struggle to pay bills if its cash flow is weak. That’s why it’s so important to review this report regularly. It helps you understand whether your operations generate enough cash to sustain the business and whether large outflows, such as equipment purchases or debt repayments, are straining liquidity.

QuickBooks lets you view this report over time. For instance, viewing it on a month-by-month or rolling 12-month basis can reveal seasonal trends and help you anticipate upcoming cash needs. This is especially useful when making strategic plans for capital investments, hiring, and financing.

Beyond standard reports: Customizing for deeper insights

While the standard versions of these five reports are helpful, tailoring them to your specific needs can yield even more valuable insights. With just a few clicks, you can filter reports by class, customer, vendor, or location. You can also add or remove columns, sort data differently, or apply custom date ranges. These options make it easier to understand business unit performance.

To save time and ensure consistency in your review process, QuickBooks allows you to “memorize” customized reports and schedule them to be automatically generated and emailed to your management team each month. You can also use the management reports feature to bundle multiple reports into a branded, presentation-ready package. This can facilitate internal meetings and discussions with lenders or investors.

Small habits lead to big insights

Reviewing monthly financial reports doesn’t have to be overwhelming. After you make journal entries in QuickBooks, the software handles most of the legwork. However, if you’re unsure how to customize your reports or need help interpreting them, contact us. We can help you leverage QuickBooks to its fullest potential.

Category: Business

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