Chortek adds food and beverage niche practice

4 Brothers Blended Beer Co., which was founded in Waukesha in 2012, didn’t need an accountant when it was getting off the ground.

But the blended craft beer maker, run by six siblings (four brothers and two sisters), turned to Chortek LLP to assist with its most recent tax return.

Waukesha-based Chortek has developed a food and beverage niche practice to serve food manufacturers and suppliers like 4 Brothers across the country, said Mark Albrecht, partner.

The firm has been serving food and beverage manufacturers for years, but recently decided to strengthen its focus on the industry with tax planning and compliance, accounting and advisory services and technology solutions tailored to the food business.

Mark Albrecht, partner at Chortek LLP

4 Brothers has referred to Chortek for industry research and resources, and the businesses are members of some of the same industry trade associations, said Kristy Mueller, co-owner of 4 Brothers.

Tom McRae, director of business development at Chortek LLP

“I think them dedicating the time and personnel to those industries, one that we’re in, they’ve got the opportunity to really learn everything there is to learn and pass on that information, and I think we can only benefit from their knowledge,” Mueller said. “I know they did some work in conjunction with the tax return on startup costs and Mark has talked about working with research and development to find out how that should be accounted for.”

Chortek, which also has locations in Appleton, Northbrook, Ill. and Washington, D.C., has 55 employees. About 30 of them are at the Waukesha headquarters.

The firm evaluated industry research and the growth in the craft brewing business before forming the niche practice. For example, there are more than 1,000 food processing firms and more than 100 craft brewers in Wisconsin, according to Forward Wisconsin Inc. and the Milwaukee 7 Regional Economic Development Partnership. It also reviewed its client list, and found it already served many food and beverage manufacturers and suppliers.

“That shift really happened early in 2013,” Albrecht said. “We had just gone through, at that point, the rebranding process here at the firm. We started thinking about how we were approaching the marketplace and the need to differentiate ourselves from other accounting firms.”

Among the food and beverage clients Chortek serves are craft breweries like 4 Brothers, bread makers, pet food manufacturers, cheese producers and beverage distributors, Albrecht said.

“We don’t have a lot of agricultural clients right now,” he said. “I think that is something that will come as we grow our presence in this market. The market’s clearly statewide. There’s a significant number of these businesses, whether it be cheese manufacturers or brewers.”

A legal referral partner and banking partner that work in more rural areas of the state will likely bring more clients to Chortek’s food and beverage niche practice, said Tom McRae, director of business development.

Just like in other industries, food and beverage business owners are very passionate about and focused on their companies, but don’t necessarily have expertise in taxes, Albrecht said.

So Chortek familiarizes food and beverage producers with tax credits they can take advantage of, like research and development credits, or steps they can take to improve their tax rates, like setting up an Interest Charge-Domestic International Sales Corporation (IC-DISC).

“The research and development tax credit rewards companies that are innovating, mostly by their own efforts, although sometimes with (contractors), to develop new and better products,” Albrecht said.

The tax credit can apply to any business, but is especially beneficial to food and beverage manufacturers, who often release several new products each year, he said. Though it’s not yet in place for 2014, it will likely be extended retroactively for 2014.

IC-DISC is a separate company set up by a business or group of shareholders who pay the company a commission to handle export sales, Albrecht said. Chortek helps clients realize tax benefits by exporting in this manner.

The company also offers technology solutions that are useful for food manufacturers. One system tracks products from their original source, to the manufacturing process, and to the final destination so manufacturers can easily locate any problems that occurred during the process.

“We might work with a food and beverage manufacturer on doing projections and analysis necessary to develop the ability to obtain credit facilities for expansion, for example,” Albrecht said. “We need to project cash flow, in particular the after tax cash flow, that’s associated with that. The smaller ones a lot of times need help in developing the cost structure for their products. We work with them on developing the best employee benefit plans, succession planning – really everything that a non-food and beverage business would need as well.”

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