The Latest Buzz on the Legal Landscape

The Latest Buzz on the Legal Landscape

As you go about your business, it also helps to stay apprised of what’s on the legal horizon so you can start thinking about what a new or updated law may mean to you and what you may need to do to ensure compliance.

Nutrition & Allergy Label Transparency

The U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) is in the midst of exploring mandatory disclosure rules to include nutritional information, ingredients, alcohol content, and major allergens on all cans and bottles.

In February and March, the TTB held listening sessions and collected public comments from brewers, winemakers, distillers, drinkers, and the general public as it considers whether alcoholic drinks should be labeled with the same nutritional information as other foods and beverages. This includes calories, carbs, fat, protein, and more, along with allergen information.

Small breweries and wineries are arguing against the requirement due to the burden of having annual lab tests; potential delays in label approvals and bringing products to market; and related revenue implications. In lieu of printing, some are advocating to follow the European Union’s lead of using QR codes to link to nutritional information. Proposed rules are expected to be introduced this year and, if adopted, a multi-year implementation will likely ensue.

CHEERS

The Creating Hospitality Economic Enhancement for Restaurants and Servers (CHEERS) Act was introduced to help restaurants, bars, and other businesses operating draft beer systems. The Act provides incentives to expand tap lines and keg equipment in commercial establishments, and to do so with energy efficiency top of mind.

With the backing of numerous industry groups, the CHEERS Act passed the U.S. House of Representatives in March and is now moving to the U.S. Senate for consideration. If all goes well, tax incentives for qualifying investments in energy-efficient systems will be expanded to include keg, tap, and draft line property. This could translate into significant savings for business owners and a boost for the environment.

Bubble Tax Modernization Act

In mid-January, the Bubble Tax Modernization Act was introduced to Congress with the goal of amending a carbonization tax disparity for lower alcohol cider, mead, and wine made with fruit.

Thanks to the Craft Beverage Modernization and Tax Reform Act, low-ABV carbonated grape wines are taxed at $1.07 a gallon. There is no carbonization tax on fruited beers, seltzers, and ready-to-drink cocktails. However, low-ABV fruit wine, cider, and mead have been left out of carbonation and tax advantages. The Bubble Tax Modernization Act seeks to level the playing field.

Talent-Related

Since the start of the year, a number of people-related laws have taken effect, impacting employers across industries. Changes impact interviewing and hiring practices, overtime rules, minimum wage, independent contractor rules, paid breast milk expression breaks and prenatal leave, pregnant workers fairness, and non-compete agreements. If you need assistance developing or executing an implementation plan to promote compliance, Visions Human Resource Services – an RBT CPAs affiliate – is available to help. Contact a client manager at info@VisionsHR.com or call 845-567-3978 for more information.

 

And, as always, if your organization needs any accounting, audit, tax, or advisory services, you can continue to count on RBT CPAs to do the job professionally, ethically, on time and within budget. Get in touch so we can show you how we can be Remarkably Better Together.

Please Note! Visions Human Resource Services – a wholly owned subsidiary of RBT CPAs, LLP – and RBT CPAs, LLP are not law firms. Nothing in this article should be construed as legal advice. Should you need legal advice, contact your legal counsel. 

 

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data. 

Federal and State Tax Incentives: What’s Available to Help Small Businesses in 2024?

Federal and State Tax Incentives: What’s Available to Help Small Businesses in 2024?

Recognizing small businesses are the backbone of the U.S. economy, the Federal and NY State governments offer many tax incentives to support growth, development, and sustainability. The first step to maximizing tax deductions (which reduce the amount of business income subject to taxes), credits (which reduce the amount of taxes you owe dollar for dollar), and other incentives is knowing which ones exist and may apply to your business.

Business Incentives

At the federal level, the Qualified Business Income (QBI) Deduction remains a significant benefit for small businesses. The QBI (also referred to as Section 199A) deduction allows eligible small business owners and self-employed individuals to deduct up to 20% of their QBI.

Then there’s Internal Revenue Code (IRC) Section 179. If you buy or lease (with qualified financing) appreciable business equipment, deduct the full purchase price (or lease amount) from your gross income. Eligible equipment can include computers, furniture, machinery, vehicles, and more. Plus, for 2024, there’s a 60% bonus depreciation to reduce your tax liability further.

You can also reduce your income tax liability with Section 174 tax credits for research and development. The tax credit is available to businesses of all sizes for qualifying research activities like software development, architectural design, product enhancements, and more.

As for New York, the Investment Tax Credit rewards businesses that invest in production property and equipment, providing a credit of 5% to 10% on their investments. Furthermore, the START-UP NY program creates tax-free zones for new and expanding businesses, offering a ten-year tax holiday on various state taxes to qualified businesses that relocate to these zones.

Hiring and Retention Incentives

The Federal Work Opportunity Tax Credit (WOTC) is available to businesses that hire individuals from certain groups facing barriers to employment like veterans, individuals on public assistance, ex-felons, qualified summer youth, and more. The WOTC credit equals 40% of the first $6,000 in qualified first-year wages. The maximum credit is $2,400.

New York State also offers a number of different tax credits for hiring employees from targeted groups. What’s more, the Excelsior Jobs Program provides refundable tax credits for businesses in certain industries that commit to invest in, hire, and retain employees in NY. Also, the Empowerment Zone Tax Credit provides an employer in a designated empowerment zone up to a 20% credit of the first $15,000 in annual wages paid to residents of the zone for services within the zone. Click here to learn more.

There are also incentives to help you retain employees. For example, under SECURE 2.0, you may be eligible to claim a tax credit of up to $5,000 for each of three years for the costs to start, administer, and educate employees about a SEP, Simple IRA, or other qualified plan. Under the Employer-Provided Childcare Credit, you may be eligible to receive a tax credit of up to $150,000/year for a qualified childcare facility, resources, and referrals.

Workforce Development Incentives

When you invest in developing your employees’ skills, you may be eligible for New York tax incentives. For example, the Employee Training Incentive Program provides a refundable tax credit of up to 50% of eligible training costs, as well as a tax credit of 50% of any stipend paid to an intern. The Empire State apprenticeship tax credit provides a credit of $2,000 to $6000 per apprentice per year (up to five years), with a higher credit available when the apprentice is a disadvantaged youth.

Energy Incentives

The Inflation Reduction Act (IRA), combined with New York State incentives, can help your small business adopt clean energy technologies and equipment and save on energy costs. For example:

  • Energy Efficient Commercial Buildings. Receive a Federal tax credit of up to $5 per square foot for new construction or a retrofit involving lighting, heating, cooling, ventilation, hot water systems, and building envelop improvements. In addition, in New York, you may be eligible for a variety of equipment rebates for heat pumps, boilers, water control systems, HVAC systems, lighting, weatherization, and more, depending on your energy provider.
  • New Electric Vehicles. Receive a Federal tax credit of up to $7,500 for vehicles under 14,000 pounds and up to $40,000 for larger vehicles. In addition, the Charge NY initiative offers up to $2,000 in rebates for new EV car purchases or leases.
  • Vehicle Charging & Fueling Stations. Receive a Federal tax credit of up to 30% ($100,000 maximum) for installing a vehicle charging station. In addition, NYS offers up to a $2,000 rebate per port at workplaces plus an additional $500 per port if located in a disadvantaged community.
  • Receive a Federal tax credit of up to 30%, plus another 40% in bonus credits if certain materials are mined, produced, or manufactured in the U.S.; if the business is in a low-income or energy community; and if labor requirements are met. Also, accelerate depreciation on installation costs. Combine that with potential NYS tax credits, financing, and incentives.

Click here to learn more. To find additional information on tax incentives click here and here.

This article highlights a sampling of the tax incentives available to support small businesses in New York. It’s important to recognize each incentive has its own eligibility requirements, guidelines, and rules. Still, with the new year barely under way, it’s a good time to consider how tax incentives may play into your financial strategy and support growth in 2024.

 

As always, it’s in your best interest to speak with a tax professional when it comes to any tax matters. RBT CPAs has been providing accounting, tax, audit, and business advisory services to businesses throughout the Hudson Valley for over 50 years. If you want to learn more about tax incentives and the implications of any move you make, please don’t hesitate to give us a call at 845-567-9000. We can be Remarkably Better Together.

Serve Up Savings with Tax Credits for Your Business

Serve Up Savings with Tax Credits for Your Business

A tax credit reduces the amount of taxes you owe, dollar for dollar. Tax credits are available at the federal and state levels. Here are some highlights about of two tax credits every brewer/distiller/distributor business should explore.

New York’s Alcoholic Beverage Production Credit

Starting tax years beginning on or after January 1, 2023, distributors may be eligible for a higher Alcoholic Beverage Production Credit than what was available in the past. Registered distributors who produced beer, cider, wine, or liquor in New York are eligible if during the tax year 60 million or fewer gallons of beer; 60 million or fewer gallons of cider; 20 million or fewer gallons of wine; and 800,000 or fewer gallons of liquor were produced.

For the first 500,000 gallons produced in the state, the tax credit equals:

  • $.14/gallon of beer or cider
  • $.30/gallon of wine
  • $2.54/gallon of liquor with alcohol by volume (ABV) not less than 2% and not more than 24%
  • $6.44/gallon of liquor with an ABV above 24%

For amounts in excess of 500,000 gallons, the credit equals $.045/gallon up to 15 million additional gallons of beer, cider or wine and up to 300,000 additional gallons of liquor. During an audit you may be required to prove entitlement to the tax credit by providing copies of various forms (click here for a list.) For more information about the credit, click here.

Federal R&D Tax Credit

The Federal R&D tax credit reduces federal tax liability dollar for dollar; unused amounts can be carried forward for 20 years. It can apply to a range of qualifying research activities (QRAs) in all size businesses and across numerous industries. Qualified small businesses can use the R&D credit to offset quarterly payroll taxes up to $500,000.

When it comes to breweries and distilleries, they may be eligible for R&D tax credits for activities relating to brewing and distillation processes that result in product changes; updating fermentation processes or changing ingredients to develop new flavors; streamlining processes for product improvements, waste reduction and efficiencies; new sustainable and eco-friendly practices; and more. Credits are based on money spent on employees’ time; contractor expenses; related supplies and equipment; and more.

For more information from the U.S. Chamber of Commerce, click here. (Kubiak, Lauren. “How to Qualify for and Claim the R&D Tax Credit.” November 13, 2023. www.uschamber.com.)

Please note: the preceding information provides highlights related to tax credits; there’s a lot more involved impacting eligibility, documentation, and such. RBT CPAs accounting, audit, tax, and business advisory professionals can help you make the most of the tax credits available to your business. To learn more, give us a call.

 

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Two Recruiting and Retention Advantages Small Businesses Have Over Big Businesses

Two Recruiting and Retention Advantages Small Businesses Have Over Big Businesses

Small businesses have two major advantages over large corporations when it comes to pay and benefits. That’s right – advantages!

First, you likely operate out of one location, which makes it easier to be well-versed on local economic conditions so you have deeper insight into what may be impacting your employees and how. Second, with fewer employees, it’s easier for you to find out what can make the biggest impact on retention and loyalty.

Let’s start with geography… It’s no secret New York is in one of the most expensive regions of the country and it’s a tough place to save money. According to the Federal Reserve Bank of New York, household debt is on the rise, especially when it comes to mortgages, credit cards, student loans and auto loans. Except for student loans, delinquency rates are increasing.  As a result, anything you can do to help employees build savings and lower debt will undoubtedly be appreciated.

Next, consider how your employees’ demographics may impact pay and benefit needs. For example, a high school graduate may be mostly concerned about saving to move into his/her own place. A college graduate may be mostly concerned about student loans. New parents may be wondering where they’re going to come up with the estimated $25,000 needed for their newborn’s first two years. Middle aged adults may be more concerned about a mortgage or paying for college. Those approaching retirement may be preoccupied with wellness and whether they have enough retirement savings.

Based on what you know about your employees’ needs (or what you find out via a survey or focus groups), you’ll be in a better position to invest in rewards that help strengthen recruitment and retention. In addition, your business may be eligible for tax deductions and credits for offering certain perks. Consider:

  • Health care coverage If eligible, there’s a Small Business Healthcare Tax Credit worth up to 50% of the cost of employee premiums.
  • Retirement savings plans With SECURE 2.0, costs for starting certain plans may be covered 100%. What’s more, eligible employers can receive an annual credit up to $1,000/employee for contributions. Plus, small businesses can receive a $500 tax credit for automatically enrolling employees in its 401(k).
  • Paid time off For Paid Family Leave coverage, consider sharing the cost or paying the full cost of coverage, so employees keep more of their pay and have peace of mind that they’ll have an income and job protection should they have to take a family leave.
  • Early wage access or on-demand pay Allow employees to access earnings before payday, so they can avoid penalties for late payments due to cash flow issues, reduce the need to use high interest credit cards, and more.
  • Emergency savings accounts Help employees prepare for an emergency with an account set up at a local bank or credit union. Starting in 2024, under SECURE 2.0, add an emergency savings account to your 401(k) plan or allow for hardship withdrawals via self-certification.
  • Groceries How much would a membership at a local discount store mean to your employees? How about a meal allowance or food stipend?
  • 529 College Savings Plan Help employees save for school for themselves or dependents. You can contribute and earn a tax credit. Savings can be used to pay for school or educational loans.
  • Tuition reimbursement or education assistance program In addition to helping pay for school, a program can also be used to help pay back student loans.
  • Child and elder care Depending on the type of benefit offered (i.e., onsite childcare versus paying for an offsite provider), your business may be eligible for tax credits or deductions.
  • Discounts programs or memberships Help employees leverage group buying power to save on everything from pet, car and home insurance to everyday purchases, appliances, and more.

Please note: The preceding are very brief summaries; a lot of conditions and requirements typically apply. To fully understand potential tax benefits of adopting certain benefits, it’s always best to consult  a tax advisor. Also, before offering a benefit, it’s a good idea to run it by your employees to make sure it’s something they’ll value and use.

One benefit that may add value to all employees is financial education or advisory services. Whether you purchase classes online, hire a professional from a neighborhood bank to host classes, or take advantage of free online tools, helping your employees evaluate their financial situation, develop a savings plan, and reach goals is a valuable benefit given today’s economic environment. You help relieve the financial stress your employees may be under and build loyalty. (Avoid giving direct financial advice yourself, as it can backfire and lead to legal issues.)

Finally, if you’re struggling to retain employees there’s a good chance neighboring businesses are as well. Team up to see if you can offer discounts to each others’ employees – it can be a win-win for employees and businesses. (Your local Chamber of Commerce may be able to help.)

New York Alcoholic Beverage Laws Changed in October: What Do Changes Mean to You?

New York Alcoholic Beverage Laws Changed in October: What Do Changes Mean to You?

Earlier this year, we reported on Governor Hochul’s Commission to Study Reform of the Alcoholic Beverage Control (ABC Law) in an attempt to modernize the state’s liquor laws (some of which purportedly date back to the end of the Prohibition Era in 1933). In May of this year, the commission released a 192-page report containing proposed changes, but the state’s legislative session ended without any updates. That changed in mid-October when Governor Hochul signed a handful of bills.

On October 14, Governor Hochul amended six pieces of legislation that took effect immediately, including:

  • Legislation S.2854/A.7305 Expands Hours of Operation for Liquor and Wine Stores on Sundays Up until the change, liquor stores were limited to open at 12 p.m. Starting October 16th, sales are allowed from 10 a.m. to 10 p.m., leveling the playing field with bars and restaurants. (This is one of the 18 changes recommended by Governor Hochul’s Commission in May.)
  • Legislation S.5731/A.6941 Allows for the Retail Sale of Beer on Sundays Now, beer, mead, braggot, and cider may be sold any day of the week, including Sunday. (Previously, sales for off-premises consumption were not allowed between 3 a.m. and 8 a.m. on Sundays.)
  • Legislation S.6443/A.6135 Lengthens the Duration of a Brewer’s License Previously, brewers were required to renew their license once a year. Now, that law has been updated to require renewal once every three years, reducing administrative burdens on brewers, while promoting equity between brewers and other alcohol producers that were only required to renew once every three years.
  • Legislation S.3364A/A.2902 Authorizes the Use of a Pressurized Mixing and Dispensing System So businesses can prepare and keep drinks that contain alcohol in pressurized dispensing machines.
  • Legislation S.3567A/A.6050A Permits the Sale or Promotional Gifting of Certain Complementary Products for Wine and Spirits As a result, retail stores can sell complementary gift and promotional items related to wine and spirit sales.
  • Legislation S.6993A/A.7688 Relates to Licensing Restrictions for On-Premises Alcohol Consumption for Manufacturers and Wholesalers of Alcoholic Beverages at Specific Locations This expands the list of premises exempt from laws restricting manufacturers/wholesalers and retailers from having a shared interest in a liquor license.

(It is important to note that some counties may have stricter rules. It is always in your best interest to consult legal counsel with questions.)

In the press release announcing the legislative changes, Governor Hochul said, “Across New York, breweries, distilleries, and other alcoholic beverage businesses are creating jobs and expanding economic opportunity. I’m proud to sign this legislation that will modernize the laws governing the sales of alcoholic beverages in New York.”

We hope your business benefits from these changes and that there will be more to come. Stay tuned! In the meantime, please remember RBT CPAs is here to help with your accounting, tax, audit, or business advisory needs. Interested in learning more? Give us a call today.

 

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

What’s Driving the Meteoric Growth of Non-Alcoholic Craft Brews?

What’s Driving the Meteoric Growth of Non-Alcoholic Craft Brews?

There is nothing better on a hot summer day than reaching for an ice-cold brew. With growing frequency, the craft brew people reach for is missing one key ingredient – ethanol a.k.a. alcohol. The non-alcoholic craft brew market has been growing at warp speed, even as beer sales decline. What is propelling this expansion and what comes next? Let’s take a look.

Non-alcoholic brews have been around for decades but never picked up much steam. There were stigmas attached, identifying its drinkers as those with or recovering from alcohol issues. Perhaps a bigger problem was the fact that they just didn’t taste good. Over the last five years, however, evolving societal norms and craft brewers have changed all of that.

Now, the “sober curious” have embarked on finding great-tasting adult beverages without the alcohol. They want the social side that comes with imbibing, minus the hangover (and potential legal risks).

Younger generations – Millennials and GEN Zers – have turned values on their head with things like not living to work but instead working to live. They also don’t readily associate drinking with being cool.

Those who make fitness and health cornerstones of their lives appear to feel better about imbibing without the buzz, even touting non-alcoholic brews’ potential restorative health powers. Some assert it’s the same as or better than sports drinks following a workout, with research pointing to benefits like less inflammation, improved immunity, and good hydration. (Reynolds, Gretchen. “Why non-alcoholic beer beats regular beer after exercise.” January 25, 2023. The Washington Post.) For fitness enthusiasts, there are other perks such as no hangover, fewer calories, natural ingredients, and, with growing frequency, great taste.

A paper published in the National Library of Medicine last year, entitled: “Features of Non-Alcoholic Beer on Cardiovascular Biomarkers. Can It Be a Substitute for Conventional Beer?” reviews several studies showing the potential benefits of drinking non-alcoholic brews, including decreased cardiovascular risks and mortality; positive antioxidant effects; additional benefits over water for those with non-alcohol related cirrhosis of the liver; and ischemic heart disease benefits. It does point out that current knowledge is limited, but simultaneously opens the door to continued exploration of the link between health and non-alcoholic brews. (Sancen, Marco; Leniz, Asier; Macarulla, Maria Teresa; Milton-Laskibar, Inaki; Portillo, Maria; and Estruch, Ramon. December 30, 2022)

Just as craft brewing created its own market and following, inviting fans to enjoy a myriad of recipes, processes, and tastes, the non-alcoholic craft brew market appears to be on the same track. In addition to breweries and retail stores, there are a growing number of non-alcoholic bars and restaurants featuring non-alcoholic menu selections. Recently, the first major U.S. airline signed on to offer non-alcoholic brews.

Actual financial performance shows this market has serious uphill momentum. The Brewers Association’s publication, The New Brewer’s January-February issue reports: “Craft non-alcohol beer was scarcely a category five years ago. Now it’s a hot commodity, propelling the once-moribund NA beer segment to grow 31.7%.”

CNBC reports, “With more consumers choosing non-alcoholic beers in a move towards healthier drinking alternatives and safer drinking habits, the global non-alcoholic beer market has grown to $22 billion in 2022, according to GMI Insights, which projects that could reach $40 billion by 2032. According to Nielsen, non-alcoholic beer grew 20% in the U.S. in retail dollars in the past year.”

Beverage Industry’s 2023 State of the Beverage Industry says, “Although a smaller segment in the overall U.S. beer category, non-alcohol beer increased 22.8% for the 52 weeks ending May 21 in total U.S. multi-outlets for a total of $308.7 million. Case sales also increased double digits with an 11.6% increase.” While inflationary pressures are expected to slow growth in the coming years, the market still has plenty of opportunity ahead. (Jacobsen, Jessica. “2023 State of the Beverage Industry.” July 6, 2023. Bevindustry.com.)

No doubt, we are still in the early chapters of this market’s story. Whether you’re considering the role your business will play in non-alcoholic brews or the impact it will have on your story, please know RBT CPAs are here to support your accounting, tax, audit, and business advisory needs. To learn more, give us a call today.

 

RBT CPAs do not outsource work to any other country. All of our work is prepared in the U.S.A.

Power Your Small Business with Energy Tax Credits, Incentives, and More

Power Your Small Business with Energy Tax Credits, Incentives, and More

If you have been thinking about upgrading your business facility or vehicle, there is no better time than the present.

Today’s tax laws and resources can help your small business reduce energy and maintenance costs; create a more comfortable and productive work environment; reduce your carbon footprint; and enhance your brand.

The Federal Inflation Reduction Act (IRA) provides tax credits for operating more efficiently and cleaner. New York state offers tax credits and numerous clean-energy programs. Add to that the incentives, special services, and financing available through energy-related providers and your small business may find significant energy and monetary savings. (Of course, eligibility criteria apply.) For example…

For New Construction or a Retrofit (addition of something new to something old) of a Qualifying Energy Efficient Commercial Building

With the IRA’s Energy Efficient Building Deduction (a.k.a. 179d), when construction or updates reduce annual energy and power costs by at least 25%, and prevailing wage and apprenticeship requirements are met, your business can receive a deduction of $2.50/square foot. For each additional percentage that annual energy and power costs are reduced, the deduction increases by $.10, with the maximum deduction being $5/square foot (up from $1.88 in 2022).

Lighting

One of the easiest ways to save energy (and money) is to upgrade to energy efficient lighting. Some LED solutions can save you up to 90% on energy related costs and some solutions can last up to 25 years without replacement. What’s more, if you make this part of new construction or a retrofit, upgrades may qualify for IRA deductions.

Building Envelope

Everything that goes into creating the shell of your building – walls, roofing, foundation, doors, and windows – is considered part of the building envelope. Improve temperature control, air quality, and condensation with building envelope updates like weatherstripping windows and doors, increasing insulation, and air leak sealing. Not only will your building be more comfortable, but you can also lower energy and operating costs, and possibly take advantage of IRA deductions.

Heating, Ventilation and Air Conditioning (HVAC)

Upgrading to a high-efficiency system can improve energy performance, especially if current equipment is more than 10 years old or malfunctioning. New clean heating and cooling systems not only save on energy, but also help your business reduce its carbon footprint. Plus, they have longer lifespans than older systems and provide more accurate temperature control. Make this part of a new construction project or retrofit to qualify for IRA deductions.

Solar

One of the cleanest energy options is solar. Businesses that adopt it can save up to 30% on installation costs with IRA tax credits, while potentially reducing energy costs by 75%. If interested, get started soon as these tax credits begin to phase out in 2033. In addition, New York offers solar tax credits (for the lower of $5,000 and 25% of installation costs). If your business is eligible for both the IRA and NY credits, you can reduce installation costs by more than 50%.

Vehicles

With the IRA’s Clean Vehicle Tax Credit, your business may qualify for up to a $7,500 credit for a plug-in EV or fuel cell electric vehicle (vehicles 14,000 pounds and over may qualify for up to a $40,000 credit). In addition, for cars, you may qualify for a $2,000 rebate under the Charge NY initiative, bringing your total potential tax credit to $9,500.

 

If you’re not sure where to start, numerous resources (including energy audits) are available through New York State and local utility providers (i.e., NYSEG, Orange & Rockland, or Central Hudson). Learn more about the many programs available to help your business operate greener and cleaner at https://www.nyserda.ny.gov/PutEnergyToWork/Industry-Energy-Solutions/Small-Business.

Can Your Business Benefit from the Enhanced Alcoholic Beverage Production Credit?

Can Your Business Benefit from the Enhanced Alcoholic Beverage Production Credit?

Along with a new New York State budget for fiscal year 2024 comes an expansion of certain Alcoholic Beverage Production Credits (ABPC), which can be good news for eligible distillers, wineries, and farm-based beverage producers.

Each year, New York State alcohol manufacturers pay an excise tax to the state. This can be offset by filing for an ABPC. Until recently, the credit was the same regardless of whether you manufactured beer, cider, wine, or liquor. It equaled $.14/gallon for each of the first 500,000 gallons plus $.045/gallon for each gallon above 500,000 (up to a maximum of an additional 18 million gallons for beer, cider, or wine and an additional 300,000 gallons of liquor).

For most beers and ciders, the credit equaled the excise tax. For wine and liquor, however, the credit was lower than the excise tax.

Effective immediately for tax years on or after January 1, 2023, under New York Tax Law Section 37, if the following is produced in New York, the ABPC equals:

  • Beer: $.14/gallon (no change).
  • Certain cider products: $.14/gallon (no change). Applies to cider, artificially carbonated sparkling cider, and natural sparkling cider containing more than 3.2% alcohol.
  • Certain wine products: $.30/gallon. Applies to still wine, artificially carbonated sparking wine, and natural sparking wine.
  • Certain liquors containing 2% to 24% alcohol: $2.54/gallon.
  • Certain liquors containing less than 2% alcohol: No credit.
  • All other liquors: $6.44/gallon.

You will still need to pay the excise tax and then file for the ABPC to receive what equates to a rebate. Corporations need to file Form CT-636; all others need to file Form IT-636.

Your business is eligible for the ABPC if you are a registered distributor under Article 18 of the Tax Law and during the tax year produced 60 million or fewer gallons of beer or cider; 20 million or fewer gallons of wine; and 800,000 or fewer gallons of liquor. Certain recordkeeping requirements apply. For details, visit the New York State Department of Taxation & Finance website.

If you have any questions about how the ABPC change may impact your accounting and taxes, please give us a call. We’re RBT CPAs, a leading accounting firm in the Hudson Valley and beyond for over 50 years, and we believe we succeed when we help you succeed. Let’s start today!

When Hospitality Thrives, The Entire Community Benefits

When Hospitality Thrives, The Entire Community Benefits

When people eat, partake in entertainment and travel, they are setting in motion a series of interactions that can help a local community’s economy thrive.

According to Cumberlandbusiness.com, “When you choose to shop or dine at a local business or restaurant, you generate almost four times more economic benefits for your local community.” Fundera reports that when you spend $100 at a local business, about $68 stays in your local community. How is that possible?

It starts with the money a customer spends at a restaurant, hotel, and/or entertainment venue. In turn, those venues pay taxes on income earned and, at least a portion of those taxes get reinvested in the local community’s schools, roads, infrastructure, and more.

The money spent at a local restaurant, hotel, or entertainment venue also helps cover payroll for a business’ employees. In turn, those employees likely spend some of those earnings at other local businesses, whether it’s to put gas in their cars, food on the table at home, or just some retail therapy during breaks. If those employees and business owners live locally, they’re also adding to the local revenue and tax base every time they purchase oil or wood to heat their homes, pay for local recycling services, and more.

Additionally, restaurants, hotels, and entertainment venues are likely purchasing supplies – from food and toiletries to furniture and more – from local businesses. They may also be spending locally on business-related services like accounting, banking, cleaning, maintenance, printing, plumbing, heating, marketing, legal, and snow removal, to name just a few.

Hospitality businesses oftentimes serve as sources of referrals for one and other, as well as local tourist attractions, via flyer displays, placemat advertisements, and verbal recommendations. So, the cycle of spending – and collecting tax dollars within a community – continues.

There’s more. Community-based organizations and non-profits often depend on local hotels, restaurants, entertainment venues and other businesses for financial support, donations, and volunteers for their own fundraisers. According to TheFulfillmentLab.com,52% of small business owners donate to charity, and of those that donate, 90% donate to local causes.” Again, a portion of funds raised likely get reinvested back into the local community.

There are also big picture benefits. When local hospitality establishments succeed, it can help a community attract and retain other employers, which can translate into more jobs, skills, and tax dollars.

Beyond financial benefits, hospitality businesses fulfill important social and emotional needs. In fact, a study conducted by  TheCustomerBrand Keys, and Suzy during the Coronavirus quarantine found that the first thing people wanted to do once quarantine restrictions were lifted was eat in a restaurant (that was followed by get a haircut/go to the salon and shopping.)

When hospitality businesses take advantage of all the opportunities available within a local community, and combine that with disciplined business practices as measured by key performance indicators, they not only promote their own success but that of the surrounding community as well. That benefits everyone.

How ASC 842 May Affect Your Decision to Lease or Buy

How ASC 842 May Affect Your Decision to Lease or Buy

With ASC 842 in full effect, your lease versus buy decisions have become more complicated and they will impact your balance sheet, income statement, financial reporting, and more.

Senior VP of Lease Management Strategy at Visual Lease (a lease accounting software company) Joe Fitzgerald summarizes the situation this way, “For the first time ever, public and private companies, as well as government entities, are required to disclose asset and liability details for anything they pay for the right to use—including real estate, equipment, fleet and land leases—on the balance sheet under the new lease accounting standards.”

He continues, “This is easier said than done as leases are complex agreements that change all the time, and they’re managed by siloed stakeholders, processes, and systems. Not to mention, lease transactions can have hundreds of permutations and calculations to capture in reports and throughout the year in order for a company to successfully achieve and sustain lease accounting compliance.” (Pelovitz, Rachel E. Lease Accounting Readiness: A Report. November 7, 2022. Construction Executive.)

Joe also notes that failing to meet and maintain lease accounting compliance can compromise the accuracy of financial reporting and result in higher audit fees, not to mention a damaged reputation.

NetGain.tech, a finance and accounting application developer, summarizes key accounting impacts this way:

  • “Both leasing and purchasing recognize an asset and liability.
  • A lease will be recognized under the ROU asset and lease liability accounts, while purchasing is recognized under the fixed asset and note payable accounts.
  • The asset and liability for an operating lease would typically be smaller because the lease term would not be for a significant portion of the asset’s useful life
  • Otherwise, it would be classified as a financing lease.”

In addition, “On the income statement, an operating lease will be classified as an operating expense. This means that EBITDA and net income will be impacted. If a company were to buy an asset, the expense would be allocated to interest and depreciation expenses. These expenses are below the EBITDA line, which means that they only have an impact on net income. Because many companies are valued on multiples of EBITDA, it becomes a very important decision whether to lease or buy assets because it would have a direct impact on your valuation (sometimes a 15x swing, for better or worse).”  (Triton, Lee. Deciding to Lease or Buy an Asset: Financial Statement Implications. September 14, 2022. NetGain.tech.)

When it comes specifically to fleets, workplace, and asset management software company Accruent reports,” What makes lease accounting complicated is that within a single master lease agreement for a fleet, individual items, and assets are constantly moving in and out of the lease. Previously, the financial accounting system did not have to be concerned with that, as the assets remained off the balance sheet.”It goes on to give example: a trucking manufacturer signs a 10-year master lease agreement for 50 tractors, which are ordered, delivered, and put into service. A change in business strategy 10 months later drives the need for 40 additional box trailers added to the lease, plus 10 cars for salespeople and executives.

“These bulk transactions, each with different lives (tractors 10 years, box trailers 7 years, and automobiles 5 years) need to be accounted for at the asset level. This is particularly important and challenging when one-off changes occur. Properly making those individual changes is an operational challenge. On top of that, those changes now impact the needs and functionality of the accounting software. Lease accounting now needs to occur not just on the macro level, but on the micro, or individual asset level, as well.” (Hammerslag, Mike. How Fleets Are Addressed Under the New Lease Accounting Rules. Accruent.com.)

That’s a lot to take in, but RBT CPAs is here to help. Our client advisory services team can help you understand the financial pros and cons of making a lease versus buy decision, while our accounting, tax, and audit professionals can help with financial calculations and reporting required under ASC 842. To learn more, give us a call today.