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 work-papers (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.

Selling Used Wine Barrels

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This time of the year many of you are selling wine barrels to make room for new barrels. So what is the best way to handle this?

First, make an Other Charge type item and point it to a Misc Income account:

On your invoice, fill in the number of barrels and the cost per barrel. For the description, enter enough detail so that the barrels can be identified on the depreciation schedule. For example, “3-year-old barrels” or “2016 barrels”:

Here’s where things get tricky: if the barrels are sold to a winery they are not taxable because they are “ingredients” and are part of the thing they are selling. Or if they are sold to a woodworker who is fashioning it into something awesome so that the barrels are eventually sold (albeit in a different form), they are not taxable. In both these cases, your buyer has a resale number which you should collect for your records. (You are collecting these forms from all of your distributor and wholesale customers, right?)

However, if the barrels are sold to an individual to be used as a planter or something for themselves then it is taxable and needs to be counted as taxable sales on your sales tax return. It’s fine to sell the barrel as “tax included”. Just remember to not include the sale in your “sale to reseller” amount on your sales tax return.

Another detail is that the barrels need to be removed from the depreciation schedule. So be sure to let your CFO (or whoever calculates your costing) before the year-end is closed so that the right amount of depreciation is included in the costing. And, of course, let your tax preparer know so that the depreciation on the tax return is correct.

Coming Soon: How to pull the list of new fixed assets so you (or your tax preparer or CFO) can update the depreciation schedule.

Office Hours 11-27-18

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Here is the recording for Office Hours. The topics that came up were:
1. The Push-in versus Summary method
2. Entering grapes
3. Selling grapes

These are the links to places we discussed
Grapes, Grapes, Grapes course
Creating inventory items
Bottle Runs
Baystate Transaction Pro

Silver Club members, please log in to view the recording

The Crush

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