Today is a perfect time to be a beer lover, especially brews made through the passion and excitement of a craft brewer. As a nation, the U.S. has more beer varieties and brands to choose from than any other market in the world. Over 2,300 breweries line the nation with 97% of them categorized as small or independent craft brewers.
Craft brewers face the same challenges that many other small businesses come upon, including cash flow, inventory management, distribution, and heavy tax regulations.
The experienced team of tax planning, accounting, technology consulting, and M&A professionals at Chortek has a wealth of knowledge to meet the needs of craft breweries. After all, building a 65 year legacy in the “brewing capital of the world,” we’ve come to know a thing or two about beer.
Tax Planning and Reporting
We understand the complexities of having your craft brewery comply with Federal, State, and local tax requirements and make every effort possible to prepare a complete and supportable income tax return that takes advantage of appropriate tax deductions, resulting in the lowest allowable income tax liability.
We treat your business and business issues as though they were our own, implementing strategies that we would use for ourselves. Many of our professionals have been business owners and will use their experience to recognize your tax savings opportunities and help you strategize for future business growth.
General tax planning and reporting services include:
A bill currently working its way through the Federal legislative system, titled the Brewer’s Employment and Excise Relief (BEER) Act, will hopefully reduce the excise tax on each barrel from $7 to $3.50 up to 60,000 barrels produced each year and knock the escalated rate down to $16 from $18 for every barrel produced after 60,000. We stay up-to-date with tax-related legislation such as this excise tax in order to help our clients reduce their annual tax burden.
If a closely held company earns significant income from exporting US-made products, it may be a good idea to form an ‘Interest Charge Domestic International Sales Corporation’ (IC-DISC). An IC-DISC is relatively inexpensive to set up and operate, and it can reduce the federal tax rate on a portion of net export income by up to 20 percentage points. You benefit from establishing an IC-DISC by having your ordinary income taxed at only a 15 percent tax rate.
Our tax professionals can analyze your specific situation, apply for an IC-DISC, and manage the tax planning and reporting so you can focus on growing your brewery.
Research & Development (R&D) Tax Credits
The Research & Development Tax Credit can provide an immediate source of cash for your business, including a significant reduction to current and future year’s Federal and State tax liabilities. If your business has invested time, money, and resources, in other words, your sweat equity, towards the advancement and improvement of its products or processes, then you may qualify for the R&D tax credit. The following is a list of innovations eligible for the R&D tax credit:
- Development of new or improved hopping techniques
- Development of new or improved hop varieties
- Development of new or improved yeast strains
- Development of new or improved fermentation processes
- Development of new or improved bottling or canning processes
- Development of new or improved bottle, bottle crown or can designs
- Development of new or improved keg filling or treatment techniques
- Development of new or improved ingredient processing techniques
- Development of new or improved water recycling or waste management processes
- Development of filtration methodologies
- Development of new or improved brewing or bottling equipment
- Development of new or improved product formulations
- Development of ingredient mixing methodologies
- Development of new or improved product prototype batches
- Development of flavor or aroma profiles
- Development of new or improved preservative chemicals
- Testing of new or improved product designs to ensure consistency
- Testing of new or improved product designs to ensure shelf life
- Testing of product ingredient mixtures for desired flavor or aroma profiles
- Development of new or improved quality assurance testing processes
We can help guide your business through the process of determining eligibility and filing proper documentation.
Value Added Service Offerings
The talented team of professionals at Chortek understands your brewery needs and offers additional solutions to manage your business, such as daily cash flow management, accounting services, and technology enhancements. As you work closely with our advisors, we will help you achieve greater efficiencies in your business operations that allow you to focus on brewing remarkable craft beers and expanding your business.
Let’s see what we can brew up for your business.
Contact our team of professionals today.