YOUNGSTOWN, Ohio – Kayla Emanuelson is a big fan of craft beer, and she likes being able to help breweries through the accounting firm where she works, Schroedel, Scullin & Bestic LLC in Canfield.
About five years ago, she and fellow craft beer aficionado SSB principal Judy Sees launched a specialty within the firm to help brewers meet their needs.
“The craft brewery industry is just full of really good people, down-to-earth people,” Emanuelson says. “It’s neat to work with them in that way. I just really enjoy it.”
The craft brewery specialty is several that area accounting firms have developed to meet the particular needs of clients in specific or niche industries.
The Business Journal reached out to professionals at SSB, Bodine Perry and HBK CPAs & Consultants to get a closer look.
SCHROEDEL, SCULLIN & BESTIC
Schroedel, Scullin & Bestic LLC has 10 clients in its craft brewery specialty and the firm is working on expanding that, including outside Ohio, Kayla Emanuelson, manager at SSB, says.
The practice grew out of an interest in craft brewing she shared with Sees, who also is president of the Ladies’ Beer Club of Youngstown, she recalls. They also recognized an opportunity for SSB, which has “a strong base” in manufacturing tax and accounting advice and consulting.
“Brewers manufacture beer,” Emanuelson says. While they are good at what they do, they might need help with accounting and tax issues.
Among the matters that might be discussed are entity structure and how the business might choose to be taxed.
“Another way that we can consult with them is on raising capital. It’s not uncommon to maybe start out with some kind of loan, or maybe they’re doing some equity raising,” she says. “We even have clients who have done crowdfunding as a unique source of raising revenue.”
Another way SSB has been able to help brewery clients is with the research and development tax credit – a tool many don’t even know exists, she reports.
“Basically, as long as you are continuously working to improve your product or process, you generally can qualify for the R&D credit for some costs that you incur to do that,” she says. Brewers can qualify because they are “always in this process of experimentation,” whether working to develop new beers or implement a new bottling or canning line.
Additionally, SSB has matched its brewery industry services with its client accounting and advisory services, which handle internal functions such as bookkeeping and payroll, “taking a lot of that off their plate,” she says.
One of the practices that Bodine Perry, Canfield, specializes in is the employee retention credit, a payroll tax credit created as part of the Coronavirus Aid, Relief and Economic Security – or Cares – Act and modified a couple of times since then, Debbie Liggett-Dixon, partner and firm tax director, says.
“It’s like nothing I’ve ever seen in my 30-year career,” she says. “Any business that is not looking into it, if they have payroll in 2020 and 2021, should definitely be speaking to their business advisers about this.”
The credit has meant “millions of dollars” for businesses in this area, Laura Van Ness, Bodine Petty director of marketing, adds. “So, it’s a big deal around here,” she says.
For wages paid between March 13 and Dec 31, 2020, employers could receive a credit of 50% of qualified wages up to an annual wage limit of $10,000.
Qualifying employers included those required to fully or partially suspend operations because of a COVID-19 government order limiting commerce, travel or group meetings or a 50% decline in gross receipts for the calendar quarter compared to the same period in 2019.
For the first three quarters of 2021, employers can qualify for a credit of 70% paid per employee up to $10,000 per quarter, or $21,000 per employee if qualified for all three quarters, or “ERC on steroids,” as Liggett-Dixon puts it. Starting out with just her and a colleague, Bodine Perry now has 10 staff members dedicated to the ERC credit across its nine offices.
To qualify for the 2021 ERC credit, the business must have fully or partially suspended operations because of a COVID-19 order, as with the 2020 credit or had a 20% decline in gross receipts for the quarter compared with the same quarter in 2019. If the business did not exist at the beginning of the same calendar quarter in 2019, then the same quarter in 2020 can be used for comparison.
A business that doesn’t qualify for the credit based on its gross receipts might qualify for it under a partial suspension, Liggett-Dixon says. For example, a fast-food restaurant could qualify for the credit based on the reduction of dine-in service because of COVID orders, even if its takeout business increased.
“That is an area where we are having huge success,” including with restaurants, bars, breweries, offices, gyms, small retail and preschools, she says. “Eight times out of 10, we can normally find some benefit to the employee retention credit if they have the payroll and they have other eligibility and they have these restrictions.”
Businesses also have three years from when they filed their Form 941 quarterly federal tax return to amend it and claim the credit if they hadn’t previously, VanNess says.
“We do say the sooner you can poke us and ask us questions, the sooner we can get the process started,” Liggett-Dixon says.
The firm is just starting to gather hard numbers on how much area clients have benefited from the credit, but VanNess estimates the figure is in the tens of millions.
“We’re just getting started,” Liggett-Dixon says.
HBK CPAS & CONSULTANTS
The most recent addition to the industry solutions group at HBK CPAs & Consultants, Canfield, is the cannabis industry, which has “different compliance needs, specifically within taxation,” Amy Reynallt, senior manager, HBK manufacturing solutions, says.
HBK has had industry solutions going back to the early 2000s and is working aggressively to build on the existing six units. Specialties within the group include manufacturing, construction and health care.
“We have certain industries where we specialize and they are the industries that you would expect due to a large participation rate in our geographic footprint,” she says. “We continue to look at our client base and we look at the geographic markets that we’re in to develop those as needed.”
The industry solutions go beyond traditional compliance services people normally associate with an accounting firm. “Instead, we are really looking to understand the industry and really help our clients meet their goals,” she says.
Specific accounting needs of these industries depend largely on the industry itself. Events of the past couple years, including the pandemic, have changed what the major focuses and problem areas are for clients, she says.
“For instance, in manufacturing we’re seeing a lot more focus on costing and understanding that costing as inflation is causing a big problem with increasing raw material costs,” she says. “On the health care side, we may be able to provide some support in areas such as billing.
“So it’s not even just about the accounting piece as it’s understanding the goals and the problems of the industry, what challenges they’re facing, whether it be as the individual company or as the industry as a whole and helping them either directly find solutions to those challenges or using businesses that we know, partners that we know, to help to get them the help that they need to solve those challenges,” she continues.
Many of the businesses in the cannabis segment are startups, “so they have different needs as they are starting and growing than a business with a longer lifespan behind it,” she says.