Make to order vs. stock: Which is best for your business?

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With advances in manufacturing technology and logistics, the ability to create custom products at scale has given businesses the ability to produce more make to order products. While make to stock products may remain the default manufacturing process for most companies, make to order production has become a viable option for more businesses to consider.

What is the difference between make to order vs. make to stock

Make to order vs. make to stock technically work at opposite ends of the manufacturing supply chain. 

Made to order

Similar to a restaurant, make to order (MTO) products are produced after an order is received. The order is considered the trigger in the manufacturing process that “pulls” the product into production, similar to just in time (JIT) manufacturing. In short, make to order relies on specific customer demand.

This type of order is especially popular with brands that might rely heavily on customization or personalization. The idea is that there is no “one size fits all” approach to product manufacturing and with the rise of innovative technologies, it takes less and less time for products to be made. 

Make to stock

Make to stock (MTS) falls into the push portion of the production process. Instead of waiting to receive an order to manufacture a product, a company will rely on previous supply and demand numbers, as well as forecasting to determine how much product stock is needed. 

Make to stock is a more traditional inventory strategy and is typically how many manufacturers handle inventory management and consumer demand. The product is ordered based on previous sales numbers and then housed in fulfillment centers until orders are received. Then the product is picked, packed, and shipped based on the order.

Benefits and challenges of make to order production

Make to order production is often assumed to be more complex than make to stock production, but it offers unique benefits that can support innovative business models.

Benefits: Make to order

Lower overhead: Inventory is expensive and stocking inventory you’re uncertain customers will want could lead to excess inventory and dead stock at the end of the year. (Even the best forecasting reports can fall short.) This dead stock typically leads to selling products at a reduced rate and causing the brand to lose money.

Higher customer satisfaction: Because make-to-order production doesn’t begin until an order is placed, companies can provide a lot more customization options to consumers. This leads to customers getting exactly what they want and personalizing a product to their own specifications. An example of this is Dell Computers, which allows customers to choose different options when building their next PC. In the end, the make to order business has provided the customer with exactly what they wanted.

Reduce inefficiency: The MTO production model focuses on making the exact item a customer orders when they order it. As a result, the manufacturing process is able to focus on exactly what materials, steps, and processes are needed to make that specific process. This cuts down on wasted time and effort and leads to a lean manufacturing model that only spends time on processes that generate revenue. 

Challenges: Make to order

Inconsistent demand: Many businesses experience ebbs and flows in product demand. Without make to stock products or safety stock on hand, a spike in demand could add undue strain to your production process. This could cause delays in manufacturing and could lead to unhappy customers who have to wait longer. A sudden influx of production stress on equipment could also lead to damage which can further slowdown your operation.

Supply chain disruptions: Recent chip shortages have led to cell phone production delays and rising car prices as the demand has exceeded the supply. This is just one example of a lack of materials causing a delay in producing a finished product. If the raw materials that are needed are hard to come by it can significantly hinder a business’s ability to actually do business.

Long wait times: Both of the above disadvantages can snowball into one giant disadvantage — long wait times. Customers still expect their orders to come quickly, even if they have placed an order for a make to stock item. Running out of raw materials or receiving an influx of orders that slows manufacturing can exacerbate wait times and lead to high levels of customer dissatisfaction. Often this leads to losing any chance of having a repeat customer as well, because they’re so disappointed in their initial experience with your brand.

Benefits and challenges: Make to stock

While make to stock is the default method of manufacturing, it doesn’t come without unique challenges.

Benefits: Make to stock

Fast fulfillment and shipping: Inventory in hand (or in your warehouse) means that as soon as an order is placed, it can be fulfilled and shipped. Most businesses can fulfill and ship orders the same day (depending on timezone and demand), meaning customers can expect products quickly. 

Easier planning and scheduling: MTS is based on sales forecasts and advanced planning. With this type of insight, businesses are acutely aware of the amount of inventory they need to produce. This leads to a lot less wasted time and money.


Scalability: By knowing upfront how much product is needed, it’s much easier to develop economies of scale and mass produce inventory profitably. 

Challenges: Make to stock

Customer unpredictability: While MTS inventory levels are based on forecasting and past sales performance, it’s hard to predict future demand when dealing with consumers. Consider any fad, and it’s easy to envision a warehouse full of Furbys or bell-bottom jeans simply collecting dust. 


Inaccurate forecasting: Due to shifting customer trends, as well as shifting economies and other outside forces, forecasting is exceedingly difficult. Even all the spreadsheets and reports in the world may not lead to the most accurate forecast and excess inventory that simply won’t sell.


Uneven inventory: Having too much of one product and not enough of another is another challenge associated with make to stock. Additionally, extended storage times in a warehouse could lead to product damage and make items unsellable. This leads to even bigger losses, while also disappointing customers who were looking for a specific item, but were unable to find it.

This article originally appeared on QuickBooks and was syndicated by MediaFeed.org.

15 tax forms you should know about (but probably don’t)

15 tax forms you should know about (but probably don’t)

For most people, filing a tax return means making sure you have the right forms. But with hundreds of Internal Revenue Service (IRS) tax forms out there, how do you know which ones you need to file?

The key is pinpointing which ones pertain to your individual circumstances. For example, if you’re employed, working as a freelancer, receiving Social Security, or earning income from investments, you’ll find a different form for each situation.

Weeding through the various types of tax forms isn’t always easy, but this guide can help clear up any confusion. 

Editor’s note: Updated July 2

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IRS income tax forms are the official documents used to report income, expenses, and other financial transactions. In order to figure out whether or not you owe the federal government taxes or if you’ve overpaid in the past year, you’ll need to file a tax return.

A tax return consists of this documentation. While residents of all states use the same federal forms, you may also have to fill out specific state tax forms as well, unless you live in one of the nine states that do not collect state taxes on earned wages. You may also have to fill out certain forms if you live or work in a certain city as well. Check with your particular state and local tax departments or divisions to see if any additional paperwork is necessary to file at tax time.

As mentioned earlier, since there are hundreds of different tax documents, the whole process of understanding your taxes can be dizzying. That’s why knowing the exact forms you’ll need can help you feel less overwhelmed and may prevent you from making any mistakes when filing.

That’s an important point. Submitting a tax return that doesn’t report all your income can trigger an IRS tax audit. You can also incur penalties and interest if you’ve submitted a return with errors and don’t file an amended one. And, yes, there’s a form for that, too.

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Typically, the more complicated your finances, the more tax forms you’ll probably need. For instance, if you are a freelance worker with multiple clients who also rents out your second home, you’ll have a more complex tax return than a salaried employee with no side-hustle earnings or rental income.

To help make things easier, here’s a list of common tax forms you may need as you prepare for tax season. Knowing what they are can help boost your financial literacy and your tax-filing confidence:

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The 1040 form is the first step for most taxpayers when filing their annual tax return. It’s the document you use to declare your filing status, report your income, claim deductions and tax credits if you have any, and determine the amount of tax you owe or whether you’re due a tax refund.

Depending on the type of income you need to report, it may be necessary to attach additional forms, also known as schedules. These various schedule forms are used to itemize deductions, report interest and ordinary dividend income, or profit or loss through business, among others.

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Nearly identical to Form 1040, this document is specifically for people age 65 and older. It’s printed using a larger font so it’s easier to read. Form 1040-SR uses the same schedules and instructions as the main 1040 form and is designed to feature fewer complications than the standard 1040.

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If you find you’ve made a mistake after you’ve filed your return, you’ll want to get Form 1040-X. This form is for taxpayers who need to fix or make amendments after previously filing their 1040 form.

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Also known as the Wage and Tax Statement, the W-2 form tells you how much money you earned in the previous year and the amount of tax your employer withheld from your paycheck. The statement also supplies other very important information you’ll need when you fill out your 1040. This intel includes how much your employer paid for other benefits including health insurance, dependent care assistance, health savings account (HSA) contributions, and more.

Employers who have withheld income and Social Security should issue a W-2 to their employees and the IRS by January 31. If you haven’t received yours by then, follow up with your employer and let them know.

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There are several types of Form 1099, which is a record from an entity or person other than your employer (if you’re a salaried worker) who paid you income during the year that’s subject to a self-employment tax. According to the IRS, a self-employment tax is one consisting of Social Security and Medicare taxes primarily for individuals who work for themselves.

The 1099-NEC, which the IRS rolled out in 2020, is what companies or individuals now use to report money paid to any non-employees who did work for them. If the business or employer paid the freelancer, independent contractor, or gig worker more than $600 a year in non-employee compensation, they should send you a Form 1099-NEC. The employer that paid you will also send a copy to the IRS.

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Form 1099-MISC is used by businesses when reporting other miscellaneous paid income such as rents, attorney fees, royalties, commissions, prizes, or awards paid to third parties. In general, an individual will get a 1099-MISC form to report payments such as these that are not subject to self-employment taxes.

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Form 1099-G is issued by a government agency if you’ve received certain government taxable income, such as unemployment benefits. The form also provides information on other government payments such as state and local tax refunds, credits or offsets, taxable grants, and money received from the Department of Agriculture. You’ll need to report information from Form 1099-G on your federal return.

Most states mail it out and may send more than one to you. However, some states don’t. If you need to access your state form, try obtaining it online from your state’s department of revenue or contact the department directly.

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People who receive Social Security benefits during the tax year will receive a SSA-1099 form from the Social Security Administration. The SSA-1099 form tells you how much Social Security income to report to the IRS on your tax return and is mailed out each January to people who receive benefits. The IRS will also receive a copy of this form.

If Social Security was your only type of income last year, your benefits may not be taxable and therefore, you may not need to file a tax return. However, if you have income from other sources, you may have to pay taxes on some of your benefits.

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Individuals who have received $10 or more from their retirement plan should receive a 1099-R. Besides reporting distributions from retirement plans, the 1099-R also covers annuities, profit-sharing plans, IRAs, insurance contracts, or pensions. Additionally, any rollover transfers from one retirement account to another will also be reported on Form 1099-R. The plan issuer is responsible for sending out the form to the taxpayer, but, as with most forms, it’s on the individual to include it when filing.

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The 1099-INT form is used by taxpayers to report any income received from interest. This statement comes from the entity who issues the interest payments. Interest income can come from a mutual fund, brokerage, bank, or a U.S. Savings Bond.

Payers must issue a Form 1099-INT to any party to whom they paid at least $10 of interest during the year. The document includes a roundup and categorization of all types of interest income and associated expenses. People should receive Form 1099-INT from their particular financial institution, which also makes sure the IRS gets a copy. The information should be reported on your tax return.

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Individuals who have received $10 or more in dividends or distributions from any type of investment, should get a 1099-DIV form from the financial institution with whom they invest. Since dividends are an extra income stream for investors, the money has to be reported to the IRS.

Investors can receive more than one 1099-DIV if their portfolio spans multiple investment funds. Any 1099-DIV form figures should be reported when filing.

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If you’re a homeowner with a mortgage and paid any interest over $600, you’ll get Form 1098 from the lender. Form 1098 reports the amount of mortgage interest you paid during the year. Your lender, though, isn’t required to send you this form if your mortgage interest was less than $600. Mortgage interest can be taken as an itemized deduction.

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The 1098-T form is sent by eligible universities, colleges, and vocational schools to students who paid qualified educational expenses in the prior year. Qualified educational expenses include tuition, books, any required enrollment fees, and course materials for those who have attended an eligible educational institution. These specific expenses may entitle you to a tax credit or an adjustment to income, according to the U.S. Department of Education.

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Form 1098-E is a student loan tax form that reports the amount of interest paid on a student loan. Loan lenders submit a copy of this form to the IRS and send one to the borrower who paid $600 or more in interest during the tax year. On the flip side, if you didn’t pay at least $600 in student loan interest, you won’t receive any 1098-E forms. Students with more than one loan servicer will receive a separate 1098-E form from each lender.

Use your 1098-E Form to figure out your student loan tax deduction. Borrowers can deduct up to $2,500 in interest from their taxable income if they meet certain requirements, such as not being claimed as a dependent on anyone else’s tax return or not filing your taxes as married filing separately, among other circumstances.

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Need more time to file your taxes? If so, you’ll want to fill out IRS Form 4868, also called Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Form 4868 gives taxpayers an additional 6 months to file their federal income tax returns.

If you decide that you do need a tax extension, be sure to file Form 4868 by the normal April filing deadline. By obtaining the extension, you avoid any late-filing penalties as long as you file by the extended due date. However, it’s important to note that any taxes due must still be paid on time.

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Now that you know a bit more about common tax forms in the United States, here’s some advice on filling out your tax return in time for the mid-April deadline.

  • Start gathering your paperwork early. Give yourself time to make sure you’re not missing any tax documents. It’s better to have ample time to track them down if you don’t receive them from your employer, brokerage firm, or bank, for example.
  • Enter your information on your return correctly. Avoid any headaches down the road by ensuring you’re entering the right information. Even one incorrect Social Security or tax ID number, name spelling, or not signing and dating all the relevant pages can cause problems in processing your return. If you’re filing your taxes for the first time, double-checking the details is a great habit to start.
  • Have last year’s tax information handy. It might be helpful to have your federal and, if applicable, your state return accessible as a guide and good refresher of what you filed last year and the forms you used.
  • Get help from the IRS. The IRS provides online instructions on how to fill out the various tax forms. You can plug in the particular form number you need help with into the search field here.
  • Consider using a professional tax preparer or tax software. This is especially true if your taxes tend to be more complex, you’re strapped for time, or the thought of filling out forms yourself sends you into panic mode. Although it costs more than filing yourself, having someone else who knows exactly how to file a tax return on your side can help alleviate unnecessary anxiety and stress. The same holds true for tax software. By getting professional support in this way, you may also uncover deductions, which can lower your taxable income, that you didn’t know you were eligible for.

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Tax time can be stressful and confusing, especially if your tax situation is more complex. Being familiar with the types of tax returns and the specific IRS tax forms can help make things easier, especially if you’re doing the filing yourself. Keeping track of the statements you receive from employers, financial and educational institutions, loan lenders, and more can help ensure your taxes are done accurately by Tax Day.

This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.


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