QB Winery Solutions

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.

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)

 

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!

Questions for your Tax Preparer

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If you ask your tax preparer to explain the difference between your True Income and your Taxable Income they should be able to easily answer this question. However, what if you asked your tax preparer to explain the difference between True Cost and Taxable Cost? If this question made you (or them) say “huh?”, then read on!

It’s tax season, therefore the term Adjusted Gross Income (AGI) should have crept back into your brain. AGI is the amount of money that you use to calculate the income tax which you owe. In plain English, AGI is also called Taxable Income. How is it calculated?

Take your True Income, which is the amount of money that you earned before deductions and taxes. You will find this in box 1 on your W-2 form. You may also have interest and dividend income. The loose change found in your sofa doesn’t count.

Subtract as many deductions as possible – this should be easy for everyone. If you have a good tax preparer, they will find as many legal deductions (aka, loopholes) as legally allowable (some unscrupulous preparers will find a few more). You know the concept…the more deductions the better.

Next, let’s talk about your Taxable Income – the amount used to base the income tax that you will owe. The lower the number the better.

Your Taxable Income will vary depending on the tax rules in place each year. For instance, let’s say you made the same True Income, before and after any of the “tax reform” bills of the last 30 years. In most circumstances, your Taxable Income will be different. Sometimes “tax reform” changes the tax table. However, most of the time Congress fiddles with the deductions. If you were on Congress’s good side, your Taxable Income went down. If Congress thought you were not important (or not paying attention), your Taxable Income went up.

Your True Income is always bigger than your Taxable Income. And your True Income doesn’t change depending on which party is running Congress, or whether a “tax reform” bill was recently passed. You base your most important decisions, such as “Can I afford to buy this house?”, on your True Income. In fact, lenders look at your True Income, not your Taxable Income to decide if you are able to pay the mortgage on that new house.

The cost of your wine also has a True Cost and a Taxable Cost. There are other similarities:

  • True Cost is higher than Taxable Cost (except for very large wineries who are not using QuickBooks and are not reading this article)
  • The lower the Taxable Cost the better
  • True Cost does not change when Congress passes new tax legislation
  • You need to make your most important decisions based on True Cost

I work with a winery that initially made less than $1 million dollars in revenue. Within a few years, thanks to their awesome wine (and an excellent CFO…Yours Truly!), their sales grew to over $1 million dollars. At that point, their taxable cost more than doubled because they passed the $1M threshold, which was where the tax rules changed. Then, in 2018, Congress changed the threshold to $25M. This means that this winery (and all the others making between $1M and $25M) saw their taxable cost go down significantly.

Thus, in the course of five years, this winery’s Taxable Cost changed three times, and each change was significant. I cannot share their actual numbers. However, let’s revisit the ‘Three Muskateers’ from our How to Calculate The True Cost of Your Wine course or Discover QuickBooks for Wineries. Remember the True Cost for each of the wineries is the same. The first phase is similar to ‘Athos’ where the taxable cost was $36/case. The second phase was similar to ‘Aramis’ at $114/case because they had passed the $1M threshold. And in the third phase, it was back to ‘Athos’ at $36/case. (For purchased grapes the change is $90 to $197 and back to $90). If we had been managing the business using taxable cost, it would have been chaotic; possibly disastrous. Of course, we were using True Cost to manage the business, so the business continued to grow, and they could enjoy the tax windfall that first year.

The point is this: just as you have a True Income and a Taxable Income, your wine has a True Cost and a Taxable Cost. At your next appointment with your tax preparer, your accountant or CPA, ask them to explain the difference.

If your tax preparer’s response is “huh?”, then you have a big problem!

Office Hours 2-25-20

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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. Picking Bins – What Account should they be sold under? How is it invoiced and how’s it taken out of assets? (1 minute mark)
  2. VinoShipper – an option for small wineries looking to ship out of state (11 minute mark)
  3. Costing & Grapes – Growing your own grapes? What’s your yield of Farming VS Winery? (14 minute mark)
  4. Changing to cash basis for the tax return. (23 minute mark)
  5. Ready to sell wine? How to track bottle sales & sales by the glass (29 minute mark)
  6. Managing gratuities (33 minute mark)
  7. Traveling to events to sell your wine? Changing the tax rate using Square (35 minute mark)
  8. Preferred Class Lists – Keep them simple (43 minute mark)

Need help with creating classes and job flags? Watch “Using QB in the Wine Industry” for more information.

Silver Club members, please log in to view the recording

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)

Silver Club members, please log in to view the recording

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.

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

Silver Club members, please log in to view the recording

Office Hours 10-29-19

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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 watched the Grapes, Grapes Grapes course, but I am a VERY Small winery – Do I have to use the clearing account to record my grapes? – at the .51 min. mark
  2. Part 2: Why should I use Purchase Orders during harvest? – at the 3.11 min mark
  3. How do I find if the cost inventory is set up in the file? (We show how to find the report and how to use it) at the 22.18 mark
  4. What are the 5 Fundamentals of a winery QuickBooks File – at the 36.53 min mark
  5. Is there a more simple way to do the costing book? – at the 43.38 minute mark

Silver Club members, please log in to view the recording

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!

The Crush

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