Tax Time Relief for Craft Breweries

Small businesses feel the impact of tax obligations all year long, but the pressure is never higher than tax season in March and April. The April 15th deadline looms on the horizon for individuals and businesses alike. Sometimes the bills that come due in April simply exceed the cash on hand for small businesses, like craft breweries. Brewery Finance has helped many craft breweries navigate this challenging season with working capital loans. These short-term loans offer business owners the chance to get cash in their accounts to cover large, unexpected bills like income tax, sales tax, payroll tax, and other tax-related liabilities.

Types of Tax Liabilities for Craft Breweries:

Craft breweries are subject to all of the same tax burdens as other small businesses and then some such as excise tax and import/export duties. Below is a list of all of the tax liabilities your craft brewery could incur over the course of an operating year. 

Income Tax: Craft breweries are subject to federal, state, and sometimes local income taxes on their profits. Income tax is calculated based on the net income of the brewery after deducting allowable expenses and exemptions.

Sales Tax: Most states impose sales tax on the sale of tangible goods, including alcoholic beverages like beer. Craft breweries are responsible for collecting and remitting sales tax on the beer they sell, typically at the point of sale.

Excise Tax: Excise taxes are special taxes levied on specific goods, often alcoholic beverages, by federal and/or state governments. Craft breweries are subject to excise taxes on the beer they produce and sell. The rates and regulations can vary depending on factors such as alcohol content, production volume, and location.

Payroll Taxes: Craft breweries with employees are required to withhold and pay various payroll taxes, including federal income tax, Social Security tax, Medicare tax, and state income tax (where applicable). Employers also have their own payroll tax obligations, such as Federal Unemployment Tax (FUTA) and state unemployment taxes.

Property Tax: Craft breweries typically own or lease property for their brewing facilities, tasting rooms, and other operations. They are subject to property tax based on the assessed value of the real estate and any equipment or machinery they own.

Licensing Fees: Breweries must obtain various permits and licenses to operate legally, which often come with associated fees. These may include federal permits from the Alcohol and Tobacco Tax and Trade Bureau (TTB), state alcohol licenses, local business permits, and health permits.

Environmental Taxes and Fees: Depending on local regulations, breweries may be subject to environmental taxes or fees related to wastewater discharge, solid waste disposal, or other environmental impacts of their operations.

Import/Export Duties: If a craft brewery engages in international trade, they may incur import or export duties, tariffs, or taxes on their products when crossing borders.

Can I Pay My Taxes with a Working Capital Loan?

You might be wondering if you can pay a large tax bill with loaned capital, the answer is yes! In fact, this is a common solution for businesses lacking the cash on hand to cover large tax liabilities. Keep in mind, like any funding solution, you will still need to repay the financed sum in addition to interest and fees. You should only consider using loaned capital if you know your business will produce enough cash flow in the future to cover gradual repayment. Working Capital Loans are an ideal solution for this type of situation, because they can provide cash on hand quickly, and have shorter repayment terms than traditional loans.

Contact a member of Brewery Finance today to discuss securing a working capital loan for tax time financial relief.