Winery Accounting, Financial Advisory & Bookkeeping Services

The truth is that you have quite a lot of leeway when it comes to how you group your expenses on the COA, however, there are 6-7 main categories that we generally recommend for small wineries. Sometimes the accounts you need will be dictated by your business structure. For example, an S- Corp will have an account for the owner’s salary, which you wouldn’t have in an LLC. In a partnership, you might have accounts for Guaranteed Payments, which you would not have in another structure. We have an internal convention of listing parent accounts in all normal balance caps, and subaccounts in lowercase. To keep things clean, no transactions should be posted to the parent account.

• If you want to spend your time doing what you do best, let the experts at Protea give you the luxury of not having to think about your books.
• Getting the details right is the only way you can trust the big picture.
• For instance, if the actual cost of harvesting grapes significantly exceeds the standard cost, it may indicate issues with labor productivity or equipment efficiency that need to be addressed.
• For example, carefully vetting applicants for sensitive positions in the winery, including background and credit checks, can help to ensure an honest workforce.
• This enables better decision-making and enhances the vineyard’s financial stability​.
• These include costs of grape acquisition, labor, packaging materials, overheads, and cellar operations.

Maintaining the financial order of your winery is critical to future success

However, this business has its hurdles and challenges regarding keeping track of their accounts. These are very different from other businesses that can work with old-school bookkeeping methods. We invite you to deepen and expand your knowledge of wine industry finance, accounting and best practices by attending one of our educational courses. Check out our current and upcoming offerings to make new industry connections, learn about the latest value-added processes and procedures and acquire the tools and knowledge necessary for success. IC-DISCs do not have employees or offices and are not taxed at the federal level; instead, they charge a sales commission from the exporting winery. This revenue is then distributed to the shareholders, who tend to be the same individuals or entities that own the exporter, as qualified dividends.

Align your winery tax & accounting services.

It is essential for producers to accurately calculate and report these taxes at federal, state, and local levels. They may also be eligible for particular taxation credits or incentives for which proper documentation and reporting are essential. The Winery Remote Bookkeeping Accounting Services can be of great help in managing inventory. They have specialized skill sets that can implement systems and control processes to track inventory accurately. Hence, keeping a firm track of all the changes requires specialized accounting skills.

Record Expenses When They Occur

If you want to spend your time doing what you do best, let the experts at Protea give you the luxury of not having to think about your books. We will put that information into useful reports that actually improve your ability to run your business. Liability accounts start with the most current (the ones you have to pay soonest) and move to the more long-term liabilities. We also like to list out rent accounts separately, one for each property or building we are renting. We keep separate accounts for each type of interest we are paying and title the accounts appropriately.

• Such records provide important ongoing accounting and internal control data.
• The numerous and unique challenges wineries face make accounting harder and more overwhelming than other businesses.
• Understanding the winemaking process is necessary to appreciate the industry’s unique accounting, tax, and business risk issues.
• These transfers necessitate additional documentation on the kinds of wine and alcohol content, volume of each type of wine, as well as varietal, vintage, and appellation of origin.
• Now that you understand the two primary accounting terms related to production, we need to dig deeper into the different ways to develop a value for your COGP, starting with the groups of costs involved.
• This overview is followed by several concrete examples of special accounting and tax issues that can affect wineries and vineyards, as well as fraud schemes that are present in the industry.
• Although preventive controls are essential, detective controls can also be helpful for wineries storing wine in bonded warehouses.

Lowering your overall COGS will help increase your profit marge, but there are plenty of considerations to carrying this out successfully. There will always be a cost of doing business, and finding where you can reduce costs takes time, thoroughness, and consistency. Protea Financial knows and understands the specific challenges of running a successful winery.

Major categories of winery costs

• It’s critical to record these costs in the same period that the related revenue is recognized to ensure accurate profitability analysis.
• One of the major accounting complications faced by wineries is extensive regulatory compliance (and its changes).
• The authors explain the numerous places in the wine-making process where accounting expertise is necessary.
• We work closely with your tax accountant to provide all of the necessary year-end financials.
• You will need to be able to determine and understand what you can sell your wine for and how much that wine costs to produce.
• To run a profitable winery, it is vital to understand how much profit you are making per bottle of wine sold.

Such records provide important ongoing accounting and internal control data. From POS setup to payroll review, we review and manage your financial processes from end-to-end. We currently have a team of 5 accountants, 1 compliance specialist, and 2 advisors spread across the country. Our core offering is to serve as the outsourced accounting department for small and midsized wineries.

Wine accounting is the specialized process of managing and winery accounting tracking the financial transactions within the wine industry, including vineyards, wineries, and distributors. It’s crucial because accurate financial records help businesses make informed decisions, manage costs effectively, and ensure compliance with tax regulations. In the competitive wine market, sound accounting practices can significantly influence profitability and operational efficiency. The big difference with accrual accounting is that it adheres to the Matching Principle, which is a cornerstone of GAAP (Generally Accepted Accounting Principles). This Matching Principle dictates that expenses should be recorded in the same period as the revenues they help generate. For a winery, this means production costs like grapes and labor are not expensed immediately but are capitalized as inventory on the balance sheet.

Gross Profit

Whether you’re a seasoned vintner or new to the industry, understanding the financial underpinnings of your business is crucial. For example, if the area dedicated to packaging takes up to 30% of your total facility floor space, you can apportion 30% of your total rent and building insurance to package. Conversely, utilities are usually broken down by actual consumption per production stage, unless all departments are using nearly equal amounts of energy. When calculating labor costs, it can be difficult to pin down the pay of executives and owners to any one specific department, let alone a single vintage. To account for these employees, portion out a slice of the revenue from each department that person regularly attends to. The Cost of Goods Sold (COGS) accounts include all of the costs that go into generating your revenue.