Many people wonder exactly how much a brewery needs in terms of a federal brewers bond in Phoenix. That can depend entirely upon the individual situation, but the following things should be taken into consideration. A brewer’s bond is a method of promising TTB that any excise taxes for beer will be paid. In the event that the brewery does not pay those taxes, the bond will compensate for any amount that they are lacking. Therefore, it is very important to make sure that the bond is more than large enough to cover all of the beer production for the brewery.
There are two basic kinds of brewer’s bonds. The first kind is a surety bond. A surety bond is created when a third party is brought in to cover the bond. In many ways, a surety bond works very much like insurance. The brewery will be required to pay for a specific amount up front, and the bond is usually procured through an insurance agent. A large amount of breweries select this option because it allows them to use the bulk of their cash where they need it as they begin their new business. The collateral bond, in contrast, does not usually work as insurance.
A collateral bond is often simpler, but it is more costly. In this type of brewer’s bond, the brewery will pay the entire amount of the bond to TTB. TTB will simply retain that money, keeping it as a kind of independent insurance policy. As long as the brewery is able to pay for the full amount of the bond and they do not require that money for business costs, this can be a very attractive and hassle free bond choice.
Bond amount is primarily dependent upon production. The maximum production levels should be estimated, and the federal tax that would be due on that total production per quarter should then be calculated. Of course, a brewery may not end up producing as much as anticipated, but it is always better to be prepared for maximum production when it comes to brewery bonds and protection for the brewery. Contact us to learn more about a Federal Brewers Bond in Phoenix now.
