30% to 50% of a warehouse facility operating costs come from property taxes.
Property taxes are frequently overlooked when acting on reducing expenses, considering that supply chain, logistics, and transportation are industry areas focused on reducing costs and maximizing efficiency.
Learning about property taxes can benefit facility owners in managing their own competently and identifying opportunities to reduce them.
When property taxes are recognized and permanently tagged as "a cost of doing business", continuous improvement and cost reduction possibilities are being missed. The good thing is that it doesn't have to be like that.
When warehouse facility owners are aware of property taxes' basics, they can make adjustments to reduce their impact on the warehouse's bottom line.
Straight to the point, here are 6 steps to property taxes learning kickoff.
1. Receive Professional Advice
Talk to the experts. It will save time, effort, and money. Contacting the right professional brings peace of mind and certainty. Having someone on the team is an outstanding benefit; outsourcing is a great option for startups or small businesses.
Addressing property taxes with assertiveness is a must-have asset for every warehouse facility.
2. Understand Local And State Regulations
This is a key area. Property taxes fluctuate depending on jurisdictions and counties. Deadlines, appeals, and other meaningful information is publicly available and can be found on the local government's website.
In the United States, 38 collect real estate taxes and business personal property taxes. The other 12 states don't evaluate business personal property taxes, impacting how to make an appeal and the information needed to conduct it.
To have an idea, real state taxes are based on the land and building value.
On the other hand, business personal property taxes, also known as tangible personal property, are things a company uses and holds for day-to-day operations. This information is crucial when deciding a warehouse location for startups and small businesses, but it is also important for established brands moving operations or expanding to new regions.
3. Perform Data Research On Local Market
Trade publications, real estate magazines, and other industry resources can keep you informed on the trends. For example, bankruptcy and layoffs information can be used as supporting evidence to appeal a case to decrease property taxes.
4. Lease Warehouse Equipment
In many cases, lease financing represents a potential tax benefit by offering a total deduction of lease payments against current earnings. It also protects working capital, which wouldn't be available if you had to purchase the equipment up-front. Before making a decision, talk with an expert to determine the best option for you.
5. Keep Your Records Updated And With Lots Of Details
Maintaining a detailed record in warehouse and manufacturing facilities is very important due to all the machinery and equipment used to perform operations that need to be reported as property or business personal property taxes. Depreciation and residual value are considered, as well as technological and new acquisitions. Having up-to-date and detailed records will help assess the real value of all warehouse property.
6. Schedule All Important Dates In A Tracked Calendar
Laws, regulations, compliance, and appeal deadlines are different, based on each county and/or state. Keeping track of the dates is key to maximize opportunities to reduce costs properly and with all the documentation needed.
Image by Marcin Jozwiak via Unsplash
Other ways to reduce warehouse costs
At the top of the to-do list of distribution professionals, 3 sets of words can be read: reduce warehouse expenses, continuously improve quality levels, and provide superior customer service. In simple terms, operating a warehouse is more complicated than it looks.
A firm step to approach a "spend less, make more" mentality is to believe there is always room for improvement.
In addition to the regulations and taxes subject, there are other measures to reduce warehouse costs while achieving item protection and accessibility and maintaining a supply and demand balance.
Check the following ideas to keep warehouse expenses spending under control.
Optimize storage while reducing space - land costs impact warehouses' overall expenses. Redesign the storage areas and procedures to maximize the use of smaller spaces.
Choose to cross-dock - Whenever possible, plan to receive and dispatch cargo at the same time. Unloading cargo and simultaneously dispatching it bypasses the put-away process and storage space usage, saving labor, time, and money. It also reduces cargo touches, exposing cargo to unintentional damage, transportation and internal movement, and unnecessary equipment usage.
Reuse old containers for transportation or storage space - High-quality containers like metal bins, plastic totes, food trays, plastic drums, and many others can serve as storage spaces for merchandise. Keeping them clean and regularly inspected is not as costly as buying new containers with every purchase. Also, large containers, like ocean containers, can be refurbished and placed in a parking lot, providing additional storage space for palletized cargo.
Use proper packaging, control systems, and procedures - This will reduce expenses related to losses, theft, and unintentional damage. Constant training will reinforce policies, and it is imperative to keep the team engaged.
Water and energy cost reduction - install appropriate insulation. Take advantage of solar energy and natural light. Also, consider hands-free faucets and low-flow automatic flush toilets.
Maximize labor - Increasing worker engagement leads to retention, which saves money. It is less expensive to pay an experienced worker than to hire and train a new one. Implementing cross-training is also a great way to keep everyone in a learning state of mind. Also, reducing idle time is an excellent step toward maximizing labor.
Perform and monitor equipment maintenance - schedule maintenance checkups for all equipment used at the warehouse. Being consistent with these tasks is vital to protect and extend the warehouse tools and equipment's life.
Explore warehouse technologies - I am a firm believer in technology to support intelligent operations and decision-making. Once again, warehouse technologies and inventory management platform alternatives could be the key element and differentiator in providing a fast and assertive response.
There is no cookie-cutter solution to warehouse savings.
Every storage facility is different, and for that reason, some ideas will work and others won't.
The good thing is that with each change, other opportunity areas will be uncovered, leading to new ways to reduce and control expenses, which is a win in the short and also in the long term.
Thank you for reading ✌️!
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