QB Winery Solutions

Cash Basis vs Accrual

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In honor of tax season, I am unlocking a lesson in the How To Calculate the True Cost of Your Wine so that everyone can hear this information.

This lesson explains the difference between Book Cost and Tax Cost and how the recent tax changes have affected this issue.

The critical points are:

  • You must use True cost/Accrual in your QuickBooks file so that you have accurate numbers to manage the business.
  • The tax preparer can convert from True cost/Accrual to Tax cost/Cash basis in their workpapers (but you cannot convert in the other direction)

For the non-accountants, in this context these terms mean the same thing:

Book cost = True cost = Accrual

Tax cost = Cash basis

We have an on-demand lesson for the tax preparers on how to convert from Accrual cost to Cash basis costing GO HERE .

We also offer live seminars with CPE on this very topic, led by Tyler Willis, CPA . For the schedule GO HERE.

2020 California AB5 and Independent Contractors

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On January 1st, 2020 California AB5 or the “gig worker bill” went into effect. This means that your weekend warriors can no longer qualify as independent contractors because IC’s must be a bona fide business. You should have a contract with these folks — and they should have a business license and other clients. Before AB5, it was easier to give a 1099 to these folks, but with the new rules it will be easier to pay them with a paycheck.

For wineries and businesses in California: As you prepare your 2019 1099s, have a close look at the list to see if anyone should be paid as an employee beginning in 2020. And for any new workers, decide up front if they will be an employee or an independent contractor.

For more details, download our guidelines:

CA AB5 Guidelines

 

2020 SVB State of the Wine Industry Report

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The annual State of the Wine Industry Report prepared by Rob McMillan and his team at the Silicon Valley Bank Wine Division is here! It’s hot off the press, so I have not had a chance to read it. I watched the first webinar on January 14th, and I will watch the second webinar on January 22nd.

In the meantime, check out Rob’s blog where you can get links to the recordings of the webinars.

2020 SVB Annual Report

 

Cheers!

Jeanette

How to Setup and Use Multiple Units of Measure

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Many small wineries use “bottles” for their standard unit because of how they integrate the POS program with QuickBooks. While this works fine for the sales receipts created during the integration process, the invoices sent to distributors are another story, because you have to enter 120 bottles of XYZ Wine instead of 10 cases of wine. The way to have both “bottles” as the standard measurement and “cases” for invoices is to turn on the Multiple Units of Measure feature. Once you make the set lists, the rest is fairly straight forward.

In this video I walk you through creating and using Multiple Units of Measure.

Silver Club members, please log in to view the recording

 

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-wine-industry, which is very different from the small-winery-wine-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.

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