Question 1

How does a CPA firm help a distributor with inventory valuation?

Accepted Answer

We make sure reported inventory reflects true landed cost. That means capitalizing inbound freight and acquisition costs into inventory rather than expensing them when the carrier invoices, testing valuation and cutoff during audits, and analyzing shrink. Getting this right keeps gross margin from being overstated in one period and understated in the next, which is a common issue when 3PL and freight billing lags the sale.

Question 2

When does my distribution business have to collect sales tax in another state?

Accepted Answer

You generally create a sales-tax obligation, called nexus, when you exceed a state's economic threshold or establish physical presence there, such as inventory in a warehouse or a 3PL location. Thresholds and rules vary by state. We run nexus studies to map where you have obligations, then handle registration and ongoing compliance so exposure does not accumulate as you sell into new markets.

Question 3

How can distributors improve gross margin and SKU profitability?

Accepted Answer

Start by fully loading cost. Many distributors look profitable at the top line but lose money on specific products, customers, or channels once freight, handling, rebates, and 3PL fees are allocated. We help build SKU- and customer-level margin analysis so you can see where the real profit is, reprice or renegotiate where it is not, and focus growth on the mix that actually earns.

Question 4

Can distributors take bonus depreciation on warehouse equipment?

Accepted Answer

In many cases, yes. Qualifying equipment, racking, and certain warehouse assets can be eligible for accelerated or bonus depreciation, which can meaningfully lower taxable income in the year assets are placed in service. The specific percentage and eligibility depend on current tax law and how the asset is classified, so we model the tax impact as part of year-round planning rather than at filing time.

Question 5

What do lenders expect in a distribution company audit?

Accepted Answer

Lenders typically want assurance that inventory and receivables, the assets backing your credit line, are accurately stated. Expect focused testing of inventory existence, valuation, and cutoff, especially across multiple locations, plus covenant compliance reporting. We deliver audits and reviews that satisfy bank requirements and help you avoid covenant surprises by flagging issues before year-end.

Question 6

Does Pease Bell work with distributors outside Ohio?

Accepted Answer

Yes. We are headquartered in Cleveland, Ohio, and serve clients in all 50 states. For distributors, that nationwide reach matters because expansion almost always crosses state lines, creating multi-state sales-tax, apportionment, and compliance issues. We support single-location wholesalers and multi-state distribution networks alike, wherever your customers and warehouses are.

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Industries: Distribution