QB Winery Solutions

How to Record Shiners You PURCHASED

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A winery owner asked me this question recently:

Jeanette –
I have a question of the proper way to make a new entry. We purchased 220 cases of Sparkling wine from Rack & Riddle to sell under our brand.
So, the initial entry into the system is for finished case goods 240 cases @ $108….given it’s not coming out of bulk…what is the proper entry?
Thanks – Mark

The way that shiners are entered is fairly straightforward, however it depends on the situation (doesn’t it always…)

Scenario #1 – The shiners were labeled and finished by the vendor – this is super simple
Scenario #2 – You bought shiners, labels, and foils from different vendors and hired a crew or bottling line to apply the lables – this has a few more steps

For scenario #1

  1. Create the item as usual
  2. Create a bill using the item tab to record the number of units and total cost. Remember to use the same units for this SKU as for all the others, so if you use “bottles” you will need to convert the number of cases to bottles. Also, ignore the cost that you were quoted. Enter the total cost of the actual bill. QuickBooks will calculate what your actual cost per bottle was.

That’s it…just 2 steps. Of course, you will need to pay the bill at some point.

For scenario #2

  1. Create current asset account called “Shiners” (or something like that)
  2. Create a sub-account for the specific SKU (I am assuming you might do this again in the future)
  3. As the bills (or checks and credit card charges) for the different components show up, record all of these to the SKU sub-account.
  4. If these were bottled during a regular bottle run so the labeling labor shows up on the bottler’s bill, calculate the portion of the cost for the shiner SKU and record that amount to the SKU Sub-account.
  5. After the labels have been applied and you are ready to bring them into inventory, create a Journal Entry check and enter the information on the item tab as usual. For the total cost of the wine, look at the total amount of the SKU sub-account.
  6. On the expenses tab, use the sub-account name and enter the amount as a negative number.
  7. When you save the journal entry check, the total for the sub account should be zero.

The tricky part of this procedure is that you will be recording the components with a different workflow than usual. This may be confusing, but trust me…it is much simpler than including these bottles on the Bottling worksheet in the costing book.

Cheers!

2019 DTC Surveys Compare Results

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The Wine Industry Network compared 2 major reports on DTC sales and marketing trends. I typically read industry reports with a grain of salt because they tend to refer to the large-winery-industry, which is very different from the small-winery-industry. However, I noticed the most successful wineries I work with have already implemented the article’s advice.

According to Dawn Dolan of the Wine Industry Network Advisor, these are the Quick Take Aways:

  • Online sales are increasing; be sure your e-commerce is accessible and user-friendly for not only your computer-using clients, but optimized for ease of use from your mobile users. Online sales represent the biggest opportunity for growth.
  • Utilize your tasting room for client acquisition.
  • The better trained your tasting room personnel, the higher the returns. Invest in staff training.
  • High intensity marketing = high returns. Develop a multi-pronged marketing plan.

To read Dawn’s entire article Click here

The reports discussed in the article were:

AskABookkeeper.com – Interview with Jeanette Tan

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When I was at the Scaling New Heights conference last June (keeping up with my fellow ProAdvisors), I met Ingrid Edstrom and “Penny” from www.AskABookkeeper.com. Ingrid is a ProAdvisor and has been recognized as one of the accounting professions Top 40 Under 40. She has an active Facebook group and a YouTube Channel where she answers questions about bookkeeping.

I was Ingrid’s guest during her First Friday Facebook Live event. While she primarily serves travel agencies, we both agreed that monitoring the Gross Margin of each sales channel is a critical financial metric that can provide a wealth of useful information.

To find out who “Penny” is you will have to watch the video.

Click here for the YouTube video Take Me to YouTube

Join her FaceBook Group Take me to Facebook

 

Office Hours 06-25-19

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Here is the recording for Office Hours. The topics that came up were:

Note: The first question was not captured on video. The topic and answer can be found in our forum here

  1. Converting QB Desktop to QB Online; things to consider – at the .26 min. mark.
  2. Inventory Date when converting from QB Desktop to QB Online – at the 12:34 mark.
  3. CA Consumer Privacy Act – at the 14:00 mark.

Silver Club members, please log in to view the recording

Costing Book Activities

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I updated the Costing Course (How to Calculate the True Cost of Your Wine) and I added several activities so you can practice some of the techniques I discuss.

I also added a new module with a 4th costing book example. This module explains the different choices you can make when laying out the costing book. Depending on your winemaking processes and your business needs, you may choose to have a few or a lot of bulk lots. If you have just a few bulk lots in your costing book, it will be easier to maintain the costing book.

Module 7 – Steffie Farm and Vineyard

Activity – Chart of Accounts

Activity – Allocation Math

Activity – Costing Book

Activity – Bulk Lots

Have fun!

An Easy Way to File CA Sales Tax (without Ship Compliant)

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If you have more than $500,000 in revenue in California (excluding distribution and wholesale sales), you are subject to the sales tax filing rules that were effective April 1, 2019. Many small wineries now meet this requirement and filing the California Sales Tax return is much more complicated than in the past. You can thank South Dakota vs Wayfair for this new complication. In the past, the district tax only applied to companies that had a “physical presence” in that district, but it now applies to any winery (or business) that exceeds $500,000 in retail sales in California.

This is not as simple as looking up the zip code because it might cross different districts. For example, the zip code for Healdsburg, 95448, includes addresses in the City of Healdsburg which are taxed at 8.75% whereas an address in Dry Creek Valley which is outside the city has the rate of 8.25%

The State of California has a nice webpage where you can plug in an address and it will lookup the sales tax rate. Click Here. But it is not realistic to lookup up every address.

You could signup for a service like ShipCompliant or Compli, which are programs designed for the wine industry, but these are expensive, and you may not justify the fee just to file your California Sales Tax Return.

Here is the outline for a process that will cost about $210 per year. I will record a complete video to show the steps, but in the meantime, these are the basic steps

  1. Sign up for a Basic plan at Taxjar.com. This is a sales tax program that will look up the sales tax rate. It is not an alcohol compliance program, so you will have to keep an eye out for those details with whatever procedure you are currently using.
  2. Find a report from your POS program that includes the shipping address and the taxable sales.
  3. Edit that report to fit the format required by Taxjar.
  4. Upload the report to Taxjar.
  5. Print the California report and use those details to enter the sales in the various districts.

This process is super fast. The most complicated part is formatting the report to match Taxjar’s required format, but once you do it the first time, it will be easier the next time.

Note: TaxJar could file the California return for you, but there is additional information that must be included, so you still have to file the return yourself using the CDTFA portal. But, having TaxJar summarize the sales for each district is a huge time saver.

If you already have ShipCompliant: You need to turn on the reporting module, and then turn on the California state form. Make sure your settings have been revised for the new rules.  As with TaxJar, you will use ShipCompliant to calculate the sales by district, but you will still need to manually enter the details into the CDTFA sales tax portal.

If you are interested in the full mini-course on how to file the California sales tax return, fill out the form below and we will notify you as soon as it is ready.

QuickBooks Online (QBO) – Pros and Cons

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I am not a huge fan of QuickBooks Online, however for some situations, it is a good choice. Here is my list of the Pros and Cons to QBO for a winery:

Pros

  • Great bank feed integration
  • Good integration with Square (there is still an extra step, but it’s easy)
  • Up to 5 people can use it simultaneously
  • PC and Mac users can both access
  • VineSpring has a new integration, but I have not tested it

Cons

  • No Custom Summary report (only in the Accountant version)
  • Cannot do the 2-step bottling method
  • No Inventory value adjustment, only quantity (workaround is to do a JE check)
  • Hard to have multiple windows open
  • Bank reconciliation is clunky
  • The bank reconciliation report does not update after you make changes (for example, if you delete a duplicate transaction, it will still show up on the report)
  • No sales by rep report
  • Chart of Accounts and Item list will only show up alphabetically (workaround is to use numbers and a dash)
  • Payroll is funky and it cannot do job costing, so my usual procedure which is super simple in Desktop does not work. This is not a problem for a super small winery, but once you have staff it becomes a big problem.

I find that the best use for QBO is the small, startup winery where the owner is doing the bookkeeping, because you want to take advantage of as many automatic integrations as possible. You will need some method of processing credit card charges, and Square integrates nicely. However, Square is a short term solution, and as soon as you can justify a true winery program that will handle a Wine Club, you want to get that going so that you can start to capture details about your customers.

California Sales Tax MAJOR CHANGE

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The CDTFA (California Department of Tax and Fee Administration) made a significant change in the sales tax rules effective April 1st.  Click Here for the ShipCompliant article on this change.

Here is a summary of the changes.

  • Applicable for wineries with over $500,000 DTC revenue in California
  • Sales tax is now based on the district that the wine is shipped to, regardless if you have a physical presence in that district.
  • Retroactive to April 1st

The hardest hit by this rule change are the micro wineries, because the larger ones are already using ShipCompliant (or something similar)

Note: I called the CDTFA to clarify some of the details, but if you have any questions call them directly at 1-800-400-7115. I am only sharing the guidelines

Applicable for wineries with over $500,000 DTC revenue in California

  • If you are not close to this threshold, go back to your racking project. Just keep this number in the back of your head.
  • Only DTC revenue shipped in California (yes, pickup at the tasting room counts at “shipped in California”). So distribution and wholesale sales are excluded. Also the rules states “tangible personal property” so that would exclude things like event fees, but again…check with your compliance consultant to determine what other exclusions would apply to your situation.
  • First, calculate your DTC revenue in 2018. If you were under $500k, you are excluded for now. When you cross that threshold, even if it is in the middle of the year, the rule will begin to apply.
  • If you include in “California taxable sales” the sales you make to states that you are not licenced in, then you will need to know that total for this threshold. (See below if you this is not clear)
  • If you are not in California, the rule applies if you ship $500k of personal property into California

Sales tax is based on the district it was shipped to

This is the crux of the rule change. In the past you only paid for districts where you had a physical presence. I know that many of you have been doing this all along, especially folks who worked in a large winery and then transferred to a smaller one, but it was actually not correct.

The solutions to this are:
  1. Use ShipCompliant
    • This is fine if you feel you are can justify the fee, because the program works well.
    • File the CA return through ShipCompliant, because there will be a lot more boxes to fill in.
    • If you currently have ShipCompliant, double check your settings to make sure they will meet this new rule
  2. Do it manually
    • Only for the wineries with minimal shipments
    • You will need to run a report that lists the shipments by zipcode, then match the zip code to the district. Check with your POS program to see if this report exists. If you push in your sales, you can run this report in QuickBooks. Pop a question in the forum for the checklist to make sure you are pushing in all the details.  (I asked the VineSpring team to add this column to their Sales Tax Reconciliation report…let’s see if they come through)
    • Download the CDTFA report with the districts and tax rate. What is useful are the district names. Click Here
    • I am still googling for a report the lists the CA zipcodes and the district it is in.
    • Remember, you are only liable to pay for what you should have collected, not what you actually collected, unless you collected too much. So charge your customers for the CA Statewide rate (currently 7.25%). When you file your return, you will end up paying a little more than what you collected, but consider that a savings over using expensive software.
  3. Do a semi manual method
    • Upload your shipment report (described above) to a Sales Tax reporting program that is not winery specific. There are a few out there, and I am testing one right now. That’s it.
    • However, you will not have live updates to the district rate changes, so hopefully your POS program will have that.
Notes for everyone
  • Make sure your POS program is properly setup. If the winery is in a district with a high rate, you don’t want to be charging all of your shipments that rate. The best would be to have an on-site rate (your home district) and a shipment rate (the CA Statewide)
  • I would strongly recommend NOT setting up a QuickBooks sales tax item for every district. This is too time consuming to manage. I don’t think the difference between what you collect from your customers and what you pay when you file your sales tax return warrants the giant mess you will have with all of these sales tax codes.
  • Frankly, I recommend that you shut off the QB sales tax feature and let your POS program handle that calculation
  • Double check your ShipCompliant settings

Retroactive to April 1st

This was signed on April 25th and made retroactive to April 1st. So if you already ran your April club run, you are SOL. Sorry.

One final note

Just to clarify what are “California taxable sales”… let’s discuss the 3 ways I have seen wineries handle out-of-state sales

Out-of-State Options

  1. If licensed in that state, charge that state’s rate. Report and pay to them.
  2. If not licensed in a state
    1. Charge CA rate. Report and pay to CA
    2. Charge zero. Since the wine was shipped out-of-state, CA cannot say it was a CA sale so it is excluded. Since you are not licenced, do not report, and do not pay that state, and include with the Out-of-State exclusion on your sales tax return.
    3. Use a third party shipper like Vinoshipper. Their system will charge the tax, collect it, report it, and pay it.

Discuss with your Compliance specialist or legal team which option you are comfortable with.

Stay tuned for that mini-course on Sales Tax I have been promising for over 3 years now….

Cheers!

Jeanette

 

Office Hours 04-30-19

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Here is the recording for Office Hours. The topics that came up were (follow the links for additional information):
  1. Inventory Tracking In QB – at the 10:04 min. mark
  2. Intuit Help is more for tech support then winery support – at the 10:11 min. mark
  3. Entering 3 Liter Bottles into inventory – costing sheet – at the 10:12 min. mark
  4. Wine for Donations/ Depletions – at the 10:14 min. mark
  5. Merchandise – grouping, baskets, assemblies Inventory – at the 10:22 min. mark
  6. Back to Inventory – at the 10:30 min. mark
  7. Bottling – at the 10:33 min. mark
  8. Bottling Game Plan – at the 10:52 min. mark
  9. Labor Cost – at the 10:54 min. mark
  10. Barrel Cost Allocation – at the 10:56 min. mark
    1. Downloads for the Calculate the True Cost of Wine Course
    2. Module 2 – Allocation Math
    3. Example Depreciation Spreadsheet
      1. Note a lesson on this will be out soon!

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