By: Steve Treglia, CPA
The past few years have seen a renaissance in the beer industry, with numerous new local breweries opening throughout the state and region, offering spaces for people to gather, socialize and enjoy the breweries popping up around them. It has become a brand new industry for the area, as these businesses no doubt do more than their fair share to contribute to the local economy.
Brewing great beer, however, has to be considered the easy part when it comes to opening and operating a brewery, and it’s certainly the more enjoyable part. Because with it comes the accounting and bookkeeping, the tax laws, the human resources duties and other administrative work—this is work no one generally wants to do but, unfortunately, has to be done. And not only can it be time consuming and confusing, no matter the brewery’s size, it can also require additional manpower which, inevitably, means additional spending.
From a tax perspective, breweries need to consider:
· There are certain tax credits available that many small businesses and breweries are unaware of and therefore go unutilized, including the tax benefits related to fixed assets and startup costs.
· Many startup companies may be in a loss position for the first year or two due to initial startup costs—and with new tax provisions, these losses can be handled differently, depending on the size of the business.
· Given that many small business owners may own other companies or portions of other companies, those different ownerships under the new tax law can have varying implications and need to be considered from a personal tax standpoint.
From a bookkeeping perspective, the most common issues and traps for breweries, as well as any small businesses, are as follows:
· These are time consuming burdens on owners that can take away from what’s most important
· Hiring bookkeeping personnel, even part-time, may be costly if benefits and other pay is involved and may not be necessary when there are other cheaper third-party solutions
· Hiring a quick fix bookkeeper that isn’t qualified for the future growth of the business
· Determining which software is best for the company, based on its size and its future plans
Finally there is the human resources perspective; many breweries struggle in this area and with the administrative side of things as they begin to grow and need the following:
· Creating hiring and firing policies to protect the company from lawsuits
· Creating employee handbooks / code of conduct and other business wide policies
· Offering benefit plans or other incentives to employees and drafting these agreements
None of this, of course, should deter people from their dreams of owning and operating a brewery; it is a widely expanding field that has seen much success for those who do it the right way. Having the right team in place, both internally and externally, is imperative. It goes way beyond expertise in making and selling beer, and into the realm of tax policy, human resources functions, bookkeeping and auditing. It’s a business and should be treated like any other one; watching out for the above traps and utilizing a trusted advisor or third party at times will go a long way towards making it a successful one.
Steve Treglia, CPA, is a manager with BlumShapiro, the largest regional business advisory firm based in New England, with offices in Connecticut, Massachusetts and Rhode Island. The firm, with a team of over 500, offers a diversity of services, which include auditing, accounting, tax and business advisory services such as HR and bookkeeping. Blum serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies. To learn more visit us at blumshapiro.com.