While Microbrewery may have been a correct terminology for new craft beer breweries and startups, they no longer remain “micro” in numbers and revenue. The craft beer industry has increased by over 20% each year since 2013.
While brewing up the signature style and tasty cold beverage is key on the creator’s minds, the Research & Development (R&D) Tax Credit can save the craft brewing industry significant dollars that we can all say “Hop Hop Hooray” too.
The R&D Tax Credit has been an underutilized dollar for dollar cash savings in the brewery industry. New law changes have made the definition of R&D more expansive. Additionally, it’s now a permanent tax credit and even easier and more lucrative for a small brewery or startup. A misnomer is that a company has to be successful or developing something new for the “world.” The R&D Tax Credit can turn skunky brews into sweet aromatic tax savings.
Ask yourself, while you may be known for your signature pale ale, have you been working on brewing up the latest lager to captivate the increasing market? Have you adapted your recipes for changing connoisseurs? It is uncommon that your brewery has not made any improvements to the product, technology or internal processes to grow and maintain success. Internal process improvements are often overlooked and provide valuable savings to the industry.
The benefits that the R&D Tax Credit can provide the brewing industry will not leave you with a hangover but hopped up for exciting permanent tax savings.
A few examples of activities that would qualify for the R&D Tax Credit are:
- Developing new bottle conditioning
- Developing new or improved manufacturing technology in efforts to improve manufacturing flexibility and agility due to increased product volume and diversity
- Development of new or improved hopping techniques and styles
- Development of new or improved filtration methodologies or waste water methods
- Development of new or improved product formulations or recipes e.g. dry hopping
- Testing of product ingredient mixtures for desired flavor or aroma profiles
- Development of new or improved quality assurance testing processes
- Producing prototype product samples for testing and validation of new recipe formulations
- Testing prototype samples for analytical and microbiological qualities
Law changes for tax years after December 31, 2015:
- Qualified small businesses may use the R&D Tax Credit to reduce AMT
- Qualified start-ups may use the credit to offset up to $250,000 in payroll taxes
A free preliminary analysis can give you an idea of how the R&D Tax Credit can benefit your company.