Owning and operating a brewery can be an expensive business, from the cost of maintenance and ingredients for brewing the beer, to employee compensation and everything in between. What can breweries brewing their own beer do to help keep their costs in check and the lights on? One often-overlooked option is taking advantage of the broad array of state, local and federal incentives available to businesses of all sizes for their investments to develop new or improved products and processes. For instance, many business owners may not realize that they needn’t be a high-tech business to qualify for state and federal R&D tax credits. In fact, a wide swath of activities are eligible for these credits, not just groundbreaking discoveries, but also activities to incrementally improve products and processes. Even failed attempts can qualify. In fact, they’re even more likely to qualify.
At the federal level, helpful resources like the U.S. Small Business Administration (SBA) encourage innovation and healthy businesses. Through the SBA, several incentives for small businesses are funded, including one that is particularly relevant to brewers, the Small Business Innovative Research Grant Program (SBIR). This program helps to fund R&D through contracts and grants, awarding nearly $2.5 billion annually. Brewers would also be remiss if they didn’t consider the opportunities that came with the passage of the Protecting Americans from Tax Hikes (PATH) Act of 2015. As a part of the PATH Act, many small businesses have a new opportunity to reduce their taxes, namely by offsetting their Alternative Minimum Tax (AMT) with R&D tax credits. In addition, some startup businesses can elect to take up to $250,000 in credits against their portion of payroll taxes (FICA) annually for up to five years. This allows companies to monetize credits where they previously could not due to a lack of federal income tax liability.
Given that these types of incentives are readily availability, they should be a critical part of the planning process for anyone thinking about opening a new brewpub, expanding into a new market or adding a brewing component to their existing restaurant.
Call Becky Quintana or Jay Feller at Somerset CPAs to find out more information – 317-472-2200.