Industries

Manufacturing

A manufacturer's margin is decided by its costing. Materials, labour and production overheads have to be absorbed into work in progress and finished goods on a consistent basis, with fixed overheads spread over normal capacity and abnormal waste written off as it occurs. Standard costs drift, bills of materials go out of date, and the inventory figure is only as reliable as the last count reconciled to the ledger. For federal tax, the uniform capitalisation rules of section 263A can require more costs in inventory than the books carry, unless the business qualifies for the small business exemption.

• Product costing, overhead absorption and monthly variances against standard (see cost analysis)
• Raw materials, work in progress and finished goods valued, with counts reconciled to the ledger (see inventory management)
• Plant and machinery held in a fixed asset register agreed to the ledger, with book depreciation and tax depreciation under MACRS kept side by side
• Gross margin by product line and plant in your monthly management accounts

Agriculture

Farm income tends to arrive at harvest while costs run all season, so cash planning and crop finance matter as much as the annual accounts. Under US GAAP, growing crops and livestock raised for sale are generally carried at cost, and the cost of developing orchards and vineyards is capitalised, then depreciated once they come into production. Many farms report for federal tax on Schedule F using the cash method, and where at least two-thirds of gross income comes from farming, one estimated tax payment by 15 January is enough, or none if the return is filed and the tax paid by 1 March.

• Costs recorded by crop, field or herd, so each season's margin can be compared with the last (see cost analysis)
• Cash-flow forecasts built around planting, harvest and input purchases, for owners and lenders (see budgeting and forecasting)
• Seed, fertiliser, feed and harvested produce reconciled to counts, and growing crops and livestock valued with documented workings (see financial statements)
• Schedule F prepared from the same books, with the cash-basis tax figures reconciled to the accrual statements your lender asks for (see US tax returns)

Shipping & logistics

Freight and logistics margins are thin and earned across a high volume of shipments, so revenue and cost need to be matched shipment by shipment, including carrier and agent bills that arrive weeks later. Under ASC 606, revenue on shipments still in transit at the period end is generally recognised as the service is performed, and a freight broker or forwarder must assess whether it acts as principal or agent, which decides whether revenue is reported gross or net.

• Margin by shipment, lane or customer, with carrier costs accrued to the month they belong to (see cost analysis)
• Customer receivables and carrier payables reconciled to statements each month (see receivables and payables)
• Owned trucks, trailers and equipment carried in an asset register, and leased ones in ASC 842 lease schedules, both agreed to the ledger
• Cash forecasts for a business that pays carriers before its customers pay (see budgeting and forecasting)

Retail & e-commerce

Retailers and online sellers take payment through tills, card terminals, web stores, marketplaces and payment platforms, each paying out on its own schedule after deducting commissions, refunds and chargebacks. Stock is often the largest asset on the balance sheet. In the United States, selling into a state can create a sales tax obligation there without any physical presence, while marketplace sales are generally taxed by the marketplace under facilitator rules.

• Payouts from marketplaces, payment platforms and card processors split into sales, refunds, commissions and chargebacks, and matched to bank deposits (see account reconciliations)
• Stock costed with landed costs, counts reconciled and slow-moving lines provided for (see inventory management)
• Sales tax nexus reviewed and returns prepared in each state where you must file (see sales and use tax)
• Gross margin by product, channel and customer (see cost analysis)

Small businesses

In a small business the owner is usually the finance department as well. Business and personal spending mix, bills are paid from whichever account has funds, and the books are caught up once a year for the tax return, by which time the figures are too old to help with decisions.

• Monthly bookkeeping in QuickBooks Online, Xero or Zoho Books, closed on an agreed timetable (see bookkeeping)
• A named accountant, live access to your ledger and reviews by video (see virtual accounting)
• A health check of the existing books, with a ranked list of fixes (see accounting health check)
• Federal and state returns prepared from books that are already current, with the owners' quarterly estimated tax worked out as the year goes (see US tax returns)

Franchises

Franchise accounting runs on reported sales: royalties and marketing fund contributions are calculated from them, and franchise agreements commonly give the franchisor the right to check them. A franchisee with several units needs every location on one chart of accounts and one closing timetable. A franchisor accounts for royalties, marketing fund contributions and upfront payments from new franchisees, which under ASC 606 are generally recognised over the term of the franchise unless they pay for distinct goods or services. Its Franchise Disclosure Document must generally include audited financial statements, so those judgements have to stand up to an auditor.

• Every unit on one chart of accounts and one close, with results by location and in total (see management reporting)
• Royalty and marketing fund reports agreed to point-of-sale sales before they are submitted (see account reconciliations)
• Franchisor revenue, including royalties and upfront payments, recognised and documented for your auditors (see financial statements)
• Marketing fund contributions and spending tracked separately, ready for reporting to franchisees