QB Winery Solutions

Office Hours 4-14-20

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Here is the recording for Office Hours today. You can find the following wine accounting & QuickBooks topics in this month’s recording:

  1. Virtual tastings – How to turn your events to an online environment (3 minute mark)
  2. PPP & the black box (12 minute mark)
  3. Websites that allow you to submit your PPP application (16 minute mark)
  4. Verification phase of the PPP & medical payments (23 minute mark)
  5. Paypal as a payment processor in addition to Square (30 minute mark)
  6. Costing book & Bottle Runs (32 minute mark)
  7. Cash Flow projections, discounted wines & club runs (38 minute mark)

 

Silver Club members, please log in to view the recording

Office Hours 4-2-20

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Here is the recording for Office Hours today. You can find the following wine accounting & QuickBooks topics in this month’s recording:

  1. Commerce Sync – How well does it sync? (6 minute mark)
  2. Shogo.io – Tracking transactions (11 minute mark)
  3. Square – Individual sales reports, transactions & batching (15 minute mark)
  4. Square & Quickbooks mapping – VineSpring (32 minute mark)
  5. Manually entering into Square – Less expensive than VineSpring (39 minute mark)

 

Silver Club members, please log in to view the recording

Is your QuickBooks file healthy?

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It’s spring and you should have finished closing your QuickBooks file for last year. Therefore, now is a great time to do some Spring Cleaning! This means it is time to check out the health of the file.

Open QuickBooks and hit the “F2” key to see the Product Information window.

 

 

 

 

File Size: When the file gets too large, it will run slowly. Reports will take a long time to load and new transactions will take a long time to save. This is super frustrating because we all have a hundred things to do at any given time; however, a file with data damage can be very expensive to repair. If you push-in the sales receipts from the POS program, you will reach the maximum file size limit much faster than a winery that does the summary method. If you hit that maximum file size limit, or if you notice that the program becomes sluggish, then it is time to condense the file. Intuit suggests these maximum limits:

Pro/Premier – 400 MB (that’s 400,000 K)

Enterprise – 1.0 to 1.5 G (that’s 1,000 to 1,500 MB)

If the file in the example above was Pro/Premier, then with 300,000K, they are still looking good. In this situation, you should check again in approximately six months to review how the file grew during the six-month timeframe.

DB File Fragments: By design, Microsoft writes bits and pieces of the files throughout the hard drive. This is why you should “de-frag” your hard drive on a regular basis so that you can put the pieces of the files back together. The “DB File Fragments” tell you how many pieces your QuickBooks file is broken up into. This number should be no higher than 10. Too many fragments can create data damage. You want to avoid that scenario at all costs because repairing data damage is both painful and expensive.

File Verification: You should be running the QuickBooks backup with Full Verification on a regular basis. Do not rely on the cloud backup that you also have in place, therefore this step is not part of the Spring Cleaning routine. The file verification will tell you if you have any errors. Let’s assume you are doing this at least weekly – are you getting a regular message to Rebuild the file? If so, double-check the DB File Fragments and File Size. If that doesn’t fix the problem, then give your friendly ProAdvisor a call.

READ THIS FIRST: Before you condense, you must clear up all of the errors. The condense will not fix errors and it can make some errors worse. Therefore, first fix the file fragments, then do the condense. As a side note, before you upgrade the file to the newest version, complete these steps and fix all of your errors first. The upgrade will not fix errors either.

To fix the file fragments, you do what we call the Portable File Round-Trip:
Make a Portable file (File -> Create Copy -> Portable Company File).
Restore that file and give it a new name. I typically change the “tail” of the file name instead of changing the whole filename.
Do this 2 more times.
You will do 3 round-trips; this should reduce your file fragments to one, as in the example above.

If you need to condense, read on….

If you have QB 2019 or newer, Intuit added a new condense feature that deletes the Audit Trail. This can reduce the file as much as 30%. Murph (one of us ProAdvisors’ favorite go-to tech guy for all things QuickBooks), typically doesn’t like the QB condense feature, but he really likes this new option.

Step 1 – Make a backup with full verification.

Step 2 – Pull a current trial balance. You will use this to compare the file after the condense.

Step 3 – Condense by deleting the Audit Trail. (File -> Utilities -> Condense File) Make a backup before you start, and store this is a safe place because you never know if you will need this information.

Step 4 – If you want to make the file even smaller, use the second step of the condense to remove selected transactions. The usual choice is “transactions before …” then pick a date. In the next window, you have 3 choices about how to handle the transactions that will be removed.

  1. One summary journal entry: This is a good choice for you folks in the wine industry. However, the journal entry does not show the class or the item detail, therefore there is no useful information. However, this option will make the adjustment to true up the file to match the original Trial Balance minimal.
  2. Summary journal entry for each month: This information is virtually useless for the wine industry, so don’t bother. It also takes a long time to run.
  3. Don’t create a summary: This is also a good choice because the information in the single journal entry is essentially useless. You will need to create a journal entry to adjust the beginning account balances.

For a detailed list of all the steps, refer to this article by Intuit, or call your favorite ProAdvisor.

Condense Data File

If you find that the Trial Balance has a huge discrepancy from the original Trial Balance, or if you are getting some goofy results, then it is time to call a specialist. I recommend Matt Clark, who is essentially a QuickBooks file doctor.

Good luck and always remember to make a backup before you start so that you can restore the file if the results are not what you expected!

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!

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.

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.

The Crush

Your first step to running a profitable winery and crushing your business goals.