QB Winery Solutions

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!

Silver Club members, please log in to view the recording

Office Hours 03-29-19

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

  1. How to bookmark pages and posts to find them again
  2. Items names and how to merge them – making sure they are set up correctly – at the 5:40 min. mark
  3. Invoicing wine to yourself and how to receive the payment (using AR clearing and JE to transfer to owner loan account or check) – at the 9:42 min. mark
  4. QB Online – at the 12:46 min. mark
  5. Qbox and cloud sharing – at the 12:08 min. mark
  6. Sales Channels (classes) –
  7. Food Sales in Tasting Room/ Food Costing – at the 38:13 min. mark
  8. Key Reports for Month Use, Yearly Processes – at the 42:05 min. mark:

Silver Club members, please log in to view the recording

Reset Inventory Accounts in the New Year

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There is no hard close to the QuickBooks file at the end of the year because that is how QuickBooks works. However, resetting the inventory accounts is a step that needs to be done at the beginning of the year.  This step does not affect any of the accounting, but it makes the sub-accounts of the bulk wine and case goods zero which makes it much easier to match the costing book to the balance sheet.

Remember that finishing the costing book and confirming that it matches the balance sheet is a necessary process, even though it is often frustrating. If you reset the inventory accounts it is much easier to match the cost pools and the transfers between the bulk wine and the case goods.

I find that it is fun to do this journal entry. I don’t know why maybe it’s because it means that a new year has started, or maybe it’s just a nerd accounting thing.

Cheers!

In this video (must be a Silver Club member to view) I will walk you through the steps. If you would like assistance, come to Office Hours or use this link to set up a coaching session.

Journal Entry to Transfer Winemaking Cost to Balance Sheet

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On my recommended Chart of Accounts, the wine making costs are in the “Other Expense” section of the chart of accounts. These costs are really inventory costs, not expenses, but I put them there for two key reasons:

  1. You can monitor the costs of the winemaking department with the Budget reports much easier than if they were recorded directly to the balance sheet.
  2. Other reports are much easier to run with “expenses” rather than “balance sheet” costs.

Before the end of the year, you will need to create a journal entry to transfer these amounts to the balance sheet. Some people will do this at the end of the month or at the end of the quarter, but the end of the year is fine because you can still use the Profit & Loss report.

I discuss this procedure in the Using QuickBooks in the Wine Industry course, but I don’t actually show how to do it.  So here is the step-by-step video of how to enter that journal entry.

Cheers!

In this video (must be a Silver Club member to view) I will walk you through the steps. If you would like assistance, come to Office Hours or use this link to set up a coaching session.

Office Hours 02-26-19

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Here is the recording for office hours. The topics that came up were:

  1. JE for Transferring Inventory for the new year
  2. How to Memorize a JE
  3. Separating out Packing & Shipping cost for retail
  4. Closing Processes for the year-end <include link to year-end checklist
  5. Resetting Inventory Accounts
  6. The cost to Aquire an asset
  7. Fixed Assets/ deprecations
  8. Shipping through another winery and how to account for the cost
  9. Sales tax
  10. Square
  11. Discounts
  12. Direct and Indirect Costs

Silver Club members, please log in to view the recording.

Office Hours 01-29-19

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Here is the recording for the January Office Hours. The topics discussed were:

  1. Items for Hourly consulting and contract payments
  2. CPA referral
  3. Inventory adjustment
  4. Creating new inventory and duplicating an item
  5. Using cases in everything – intuit will track 3 decimal pts
  6. Backing up- talking about condensing a file – damage file
  7. Revel (POS) tracks in multiple location – QB’s only one location

These are the links to places we discussed:

Intuitive Accountant

(re) Introducing The Wine DTC Vendor Matrix

Silver Club members, please log in to view the recording.

The Crush

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