QB Winery Solutions

Paycheck Protection Program, part 2

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Tyler (Tyler Willis, CPA) and I met again to discuss the evolving Paycheck Protection Program (PPP) and other programs available during this unprecedented period. Here’s what we cover:

  • Why apply for both the PPP and EIDL
  • How to get the applications started
  • Locating a bank that handles SBA loans

Please navigate to these points in the video if you would like to jump straight to these topics:

1:30 PPP – Paycheck Protection Program

18:00 PPP application

28:00 EIDA – Economic Injury Disaster Loan Emergency Advance

31:00 EIDA application (We forgot to mention, on page 3 it asks for your industry. Your answer should match your NAICS from your tax return. A winery would be a “manufacturer”)

37:00 Other programs and options

SBA Website

 Paycheck Protection Program by USCC, April 1 version

 Paycheck Protection Program Application

Paycheck Protection Program, part 1

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I called Tyler (Tyler Willis, CPA) a few days after the Paycheck Protection Program (PPP) was announced. We touched on some of the very basic questions around the program. This is Part 1. Look for Part 2 in a few days. How can it help the winery industry?

The Paycheck Protection Plan is another program from the CARES Act (Coronavirus Aid, Relief and Economic Security Act) that was passed by Congress on Friday, March 27. The purpose of this program is to prevent widespread layoffs during the Covid-19 crisis. A key feature of this program is that you could get as much as 2 months of your payroll and a few other expenses paid through this program. This is a huge benefit for you.

This information is still evolving, so stay tuned for updates. (This recording was not planned…as you can see by my messy office …it’s still tax season…)

Go here for Part 2

Here are some additional resources:

SBA Disaster Programs – This is your main list of all the SBA programs available (there are other agencies with programs)

SBA Disaster Loan Assistance Online Application – This is the page I showed in the video. It is not the PPP program.

 Payroll Protection Program by SBE

 Payroll Protection Program by USCC

 

FREE Membership During Slowdown

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Recently, we seem to have settled into a new ‘normal’ in dealing with the COVID-19 situation. My team and I empathize with your frustrations regarding being quarantined (even us hermits are getting cabin fever!) while managing the uncertainty surrounding what the future holds (3 weeks? 8 weeks?).

Even if you are not in one of the five states that have mandated closure of wine tasting rooms, small family wineries everywhere have watched their sales come to a halt. Sadly, this comes at a time when many of us have had to put our social lives on pause as well. 

What are you planning to do with all of this extra time?

  1.       Untangle that pallet of wine?
  2.       Catch up on your filing?
  3.       Take an eCourse that has been lingering on your ‘to-do’ list?

If option #3 is your FIRST choice, I have an offer for you:

We have created a new FREE limited time only club membership: The Copper Club. Copper Club members have access to everything on our website that was previously only available to Silver Club members:

  •         Our foundation course: How to use QuickBooks in the Wine Industry
  •         For the excel nerds: How to Calculate the True Cost of your Wine
  •         Our new course: The Costing Book Checklist
  •         Plus all mini-courses and ‘quickies’

Copper Club members may also post questions in the Forum. Our experts answer these questions. These are not crowd-sourced, so you don’t have to guess if the answer is correct!

If you’ve ever considered joining, this may be a great time to check out just a few of the benefits our Silver Club members enjoy year round.

Is your wine glass half full or half empty? We hope a limited time free membership makes it half full. Please share this post with your wine industry friends.

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

 

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

 

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

 

SVB Annual Wine Survey – Heads Up

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The winemaking team is preoccupied with the crush, and the accounting team is just twiddling their thumbs (Ha, we never get to do that…). Rob McMillan at Silicon Valley Bank is preparing his annual Wine Report and he needs your input. Each year, 20 percent of the wineries in the US participate in this survey. Of course most of these are the large wineries. Let’s make sure that the boutique and family wineries are represented. If you want to know some benchmarks that are useful for you, the small winery, this is how they are generated.

From October 1 to October 19, the survey will be open. If you participated last year, you will receive an email. But if this is your first time, look for the announcement in industry publications or check back here for the link to the official survey.

In the meantime, here is the list of questions so you can prepare your answers.

SVB Annual Survey Questions

 

Cheers!

Jeanette

The Crush

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