QB Winery Solutions

SIP Week 4 – What next for Your Winery Business?

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The shock of closing the tasting rooms, sheltering in place, and learning how to home-school your children should have subsided a bit. You have settled into a routine of baking, playing board games, and coordinating your mask with your outfit.

But you have a winery business to run. If you still don’t have the heart to tackle updating that cash flow projection ( which is still a top priority task), here are 2 suggestions for what to do while waiting for news about your PPP and EIDL applications.

Preparing your business for a post-pandemic world by Harvard Business Review

This has a nice, one page grid to help you organize your thoughts.

HBR planning grid

 

Where to start when you don’t know where to start by Predictable Success

8 minute video by Les McKeown, founder of Predicable Success (gotta love his Irish brogue … is he really filming in his bathroom?). Don’t panic when he first shows you his chart, because he whittles it down to one task for you to focus on. This is an area that the small wineries have an advantage and a strength compared to larger wineries … if they don’t get bogged down in whitewater.

Office Hours 3-31-20

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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 – Researching automated transactions. Is it effective? (1 minute mark)
  2. How to track merchandise (12 minute mark)
  3. PPP – Paycheck Protection Plan (21 minute mark)
  4. Square POS – Tracking where sales occur (24 minute mark)
  5. Selling Gift Cards (31 minute mark)
  6. Label redesigns & the costs associated with it (35 minute mark)

 

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Office Hours 3-26-20

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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. Review of Quickbooks Desktop vs Online (1 minute mark)
  2. Entering Transaction Manually (3 minute mark)
  3. The Push-in Method and Square (4 minute mark)
  4. Commerce Sync (9 minute mark)
  5. When do you run in to ‘Tax Included’? (12 minute mark)
  6. Vino Shipper, State Taxes & reimbursements (15 minute mark)
  7. Wholesale Sales to Shops – Charging Sales to a Company Card (22 minute mark)
  8. QuickBooks and the concept of price level list (39 minute mark)
  9. The Summary Method vs the Push-in Method (43 minute mark)

 

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Office Hours 3-24-20

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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. Square Sales Summary Procedure (3 minute mark)
  2. Sales Summary Procedure – Sales Tax  (7 minute mark)
  3. Sales Tax Item for your Local Sales Tax Rate (16 minute mark)
  4. Sales Shipped out of California –  Tax rules (20 minute mark)
  5. Automations synced to Square (25 minute mark)
  6. Tracking Exclusions on a spreadsheet (27 minute mark)
  7. Custom Summary Report to filter depletions (33 minute mark)
  8. Budgets and Forecasts (35 minute mark)
  9. Virtual Tastings (43 minute mark)

 

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Another Compliance Problem – Wine Club Automatic Renewals

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The Wine Institute recently held a webinar to warn members that professional litigators are targeting wineries with wine clubs who fail to meet the requirements of the Automatic Renewal laws. (If you are a Wine Institute member, log into the member’s area for a replay of this webinar.) Remember the ADA problem a few years ago? This is a similar situation, whereby attorneys are taking advantage of obscure and lesser-known laws by targeting small businesses that do not adhere. They know that small businesses do not have the resources to fight a lengthy battle. They count on settling for an amount that is just enough to be painful; however not enough to fight.

The law I’m referring to is in regards to the automatic renewal laws which apply to your wine club membership. This issue is so obscure that the only article I  found was published by the Santa Monica Daily Press! Thanks to the Wine Industry Advisor for mentioning this article. Click here to READ ARTICLE.

As I mentioned, this is not a new issue. In 2015 several regional district attorney offices formed The California Automatic Renewal Task Force (CART). That group met with the California Alcohol Beverage (ABC) and they issued an advisory. Here are the 4 key features that you must follow to be in compliance:

  • Disclosure – Disclose automatic renewal offer terms in a clear and conspicuous manner (larger font, contrasting font or another way to call attention to the terms)
  • Consent – Obtain affirmative consent before charging the consumer (ex: a checkbox)
  • Acknowledgment – Sorry, this does not translate to standard English
  • Cancellation – Provide an easy, user-friendly method for cancellation; also, if the initial signup was done online, members must be able to cancel online

For the full advisory CLICK HERE

If you are not in California, be advised that the Federal statutes are similar. There are penalties at the Federal level as well.

Please consult with your attorney to confirm that you are in compliance with all features of these laws. We all know how easy it is to fall prey to a subscription service that we did not intend to pay for. These rules are not difficult to follow, so I urge you…don’t be one of those services.

One more thing…if you are not a member of The Wine Institute, consider joining! They are great advocates for the wine industry. They have spearheaded the agenda of growing the list of states where we are able to ship wine directly to customers.

Links mentioned in this post

Wine Institute   https://wineinstitute.org/

Alcohol Beverage Control advisory on Club Renewals   https://www.abc.ca.gov/club-renewals/

Santa Monica Daily Press article   https://www.smdp.com/wine-settlement-is-latest-success-for-consumer-protection-law/186738

Wine Industry Adviser   https://wineindustryadvisor.com

 

Office Hours 1-28-20

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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. Units of Measure, getting started (1 minute mark) **I solved George’s problem and added a comment to the Units of Measure procedure
  2. Details on a new course – The Costing Book Checklist (5 minute mark)
  3. AMS and Vintrace to QB  – Converting from those programs to QB (7 minute mark)
  4. What POS programs do you recommend? Vinespring (11 minute mark)
  5. We’re donating all bottle proceeds to a special cause – How do I record it? (12 minute mark)
  6. 1099 review of new CA law (13 minute mark)
  7. Should I use Vinespring as a POS or Square? – It depends on the size of your winery (15 minute mark)
  8. VinoShipper – A discussion of workflows in VinoShipper (20 minute mark)
  9. Data dump for the Push-in Method – What does a transaction report look like? (24 minute mark)
  10. Bottle runs – How do I track 1st off and last off? (26 minute mark)
  11. Let’s chat about Kegging Wine (28 minute mark)

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Office Hours 11-26-19

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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. Part 1: I purchased a barrel from my client. I also owe the same client a credit from a previous production contract -How do I record this transaction? – at the .41 min. mark
  2. Part 2: How do I convert my client’s bill into a credit- at the 1.25 min mark
  3. How do I create a statement? at the 7.55 mark
  4. I lost a barrel of wine. How do I track the cost of wine that was lost? – at the 15.42 min mark
  5. Grape Bills – How do I record the grapes that were over my contract amount?  I did not have to pay for them – at the 16.34 minute mark
  6. I did not order enough glass or corks – How do I account for the wine I did not bottle? – at the 17.49 minute mark
  7. How do I record use ONE bill to record my grape bill, but pay the bill per my installment agreement? – at the 19.50 minute mark
  8. I have 4 users who need to access our QB file – 2 users only have access to MacOS – Should I use QBO? – at the 27.02 minute mark

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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.

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 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:

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The Crush

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