Logistics
Audit, tax, and advisory for third-party logistics providers, freight brokers, and warehousing companies whose revenue, leases, and tax footprint need careful accounting.
Overview
Logistics companies often sit between shippers and the carriers or facilities that move and store goods, and that position creates accounting questions asset-based carriers rarely face. Should a freight broker report the full freight charge as revenue, or only its margin? How should a long-term warehouse lease appear on the balance sheet? Which states can tax a company with customers, freight, and facilities spread across the country? Pease Bell, a Top 200 U.S. CPA firm headquartered in Cleveland, Ohio, helps 3PLs, brokers, and warehouse operators answer these questions with documentation that holds up to lenders, auditors, and tax authorities.
This page is for non-asset and asset-light logistics businesses: brokerage, freight forwarding, warehousing, fulfillment, and managed transportation. Companies that primarily own and operate trucks are covered by our trucking practice. For logistics clients, many of whom process thousands of shipments and invoices each month, our work centers on revenue recognition, lease accounting, multistate tax, and the internal controls that keep high-volume transaction processing accurate.
How We Help Logistics Companies
Revenue Recognition Analysis
Principal versus agent analysis under ASC 606 to determine whether brokerage and managed transportation revenue should be reported gross or net, with written conclusions that support your financial statements and lender reporting.
Warehouse Lease Accounting
Implementation and ongoing application of ASC 842 for warehouse, distribution center, and equipment leases, including lease classification, right-of-use asset and liability calculations, and the effect on debt covenants.
Multistate Tax Compliance
Nexus reviews, income tax apportionment, and sales and use tax analysis for companies with customers, facilities, and freight activity in many states, plus help resolving notices and voluntary disclosure where needed.
Financial Statement Audits
Audits and reviews of logistics companies for lenders, investors, and customers, with focused attention on revenue cut-off, accrued carrier costs, receivables, and the judgments involved in gross versus net presentation.
Internal Controls and SOC Reports
Assessment of controls over billing, carrier payables, and customer data, and SOC 1 or SOC 2 examinations for logistics providers whose customers rely on their systems and need independent assurance.
Transaction Support
Quality of earnings analysis, tax diligence, and integration support for logistics companies buying or selling businesses, including normalization of revenue presentation and accrued freight costs across the parties.
Challenges We Help Logistics Companies Address
- ✓Deciding whether brokerage revenue should be presented gross or net
- ✓Bringing warehouse and equipment leases onto the balance sheet under ASC 842
- ✓Nexus and apportionment questions across many states
- ✓Accruing carrier costs accurately when invoices lag shipments
- ✓Customer demands for SOC reports on systems that handle their data
Featured Insights
Frequently Asked Questions
Should a freight broker report revenue gross or net?
It depends on whether the broker is the principal or an agent under ASC 606. The key question is whether the broker controls the transportation service before it is transferred to the shipper, considering factors such as primary responsibility for fulfillment and pricing discretion. Many brokers conclude they are principals and report gross revenue, but each contract structure should be evaluated and documented.
How does ASC 842 affect warehouse leases?
Under ASC 842, most leases longer than twelve months are recorded on the balance sheet as a right-of-use asset and a lease liability. For logistics companies with significant warehouse and distribution center leases, this can substantially increase reported liabilities, which may affect debt covenants and lender ratios. Proper lease classification and discount rate selection both matter.
Which states can tax my logistics company?
Any state where your company has sufficient connection, or nexus, may be able to impose income, franchise, or sales tax obligations. Facilities, employees, inventory, and in some states the level of sales into the state can create nexus. Logistics businesses frequently have broad footprints, so a periodic nexus review helps identify filing obligations before a notice arrives.
How is logistics accounting different from trucking accounting?
Trucking companies own or lease equipment and employ or contract drivers, so their accounting centers on fuel, equipment, and driver costs. Logistics companies such as brokers and 3PLs often arrange services performed by others, so their key issues are revenue presentation, accrued carrier costs, warehouse lease accounting, and controls over high transaction volume.
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