Learn about three tax credits and one tax deduction with today’s great tips from craft brewery tax expert Chris Farmand.
What with the seemingly endless taxation on craft brewers, you may sometimes feel that the US government rules are your constant adversary.
However, we have good news! There are some tax credits and a tax deduction that apply to your business! We’d like to make you aware of them so that you can tell your CPA—and then drink deep of the savings you deserve.
These tips come from BeerRun advocate Chris Farmand, a CPA who focuses on the needs of craft breweries in his business, Small Batch Standard. To learn more about the details of these tips, please check out the original article.
**Of course, this post is not legal advice, and not all of these tax savings will apply to your brewery. Our intention with this post is to empower and encourage you to start a discussion with your dedicated tax professional.
1. FICA Tip Credit
If you’re a brewpub or microbrewery with tipped employees, you can probably recapture your FICA paid on reported tips for employees whose hourly wages exceed the minimum wage. According to Chris Farmand, if you have tipped employees year-round, you probably qualify.
2. Research and Development Credit
If you’re creating test batches, or strategizing to minimize your waste, you’re performing Research and Development at your brewery. For your R&D to be eligible for savings, it must:
- Help an existing process, or be a new process
- Eliminate uncertainty
- Actively evaluate alternatives, in a systematic manner
- Relate to physical, biological, engineering, or computer science principles
3. State Credits and Incentives
Your state probably offers a lot of incentives to empower or grow businesses, and you’ve probably met a lot of these incentives—which means you’re eligible for state tax savings. One common example is hiring a veteran, another common examples is running a manufacturing facility. Look into these state incentives on your state’s Department of Revenue website.
4. Domestic Production Activity Deduction
This “use it or lose it” deduction allows manufacturers on U.S. soil to deduct up to 9% of wages for your brewhouse staff (production workers), and your Cost of Goods Sold.
Contact BeerRun Software to learn more
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