To calculate COGS, periodically transfer the accumulated totals from these temporary ‘other expenses’ accounts on your P&L to the appropriate inventory accounts on your balance sheet. For example, “work-in-progress” for aging wine, or “finished goods” for ready-to-sell bottles. 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.
Liability accounts
- Key components of wine accounting for a winery include cost of goods sold (COGS), inventory management, and production costs.
- Without thoughtful attention to your chart of accounts, your business performance will be nearly impossible to interpret.
- We also provide General Ledger Work, Bank Reconciliations, Typing, Spreadsheets and Telephone Answering.
- It also has extraction abilities, so it can pull information from invoices and receipts and put it directly into QuickBooks Online.
- For example, don’t create a “tasting room rent” expense if you are not renting tasting room space.
- Lowering your overall COGS will help increase your profit marge, but there are plenty of considerations to carrying this out successfully.
A winery is built on the sweat of its vineyard workers, the skill of its winemakers, the connections of its sales force and the patience of its owners. It also needs to be organized for success, including having a good bookkeeper and accountant to pay attention to details. If you are in the wine industry and have questions about accounting or bookkeeping, Protea Financial is here to help.
Tax Planning
From our experience, it has been best to deal with this challenge outside of QBO. However, we warn clients to take their time with any new features they adopt and to know that they don’t need winery bookkeeping to adopt every feature that QuickBooks Online offers. QuickBooks Online is still a solid foundation for your accounting, even when you are not using all the program’s bells and whistles.
Why does the winery chart of accounts matter?
Financial reporting operates under GAAP guidelines and allows your company to remain compliant with policy boards. In contrast, management reporting analyzes department performance as well as its relationship to expenditures and returns on investment (ROI). In other words, management reports are the diagnostics on your winery’s financial health. The foundation of any successful business – including wineries – is made up of the numbers that underly everything. Tracking your performance using these numbers is vital to maintaining and expanding a profitable business.
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. Sometimes the accounts you need will be dictated by your business circumstances.
- Their outstanding team works fast and has the soft skills needed in this business, and their efficiency and attention to detail mean I can relax and do what I love.
- We are here to help you see your story and move forward with insight and understanding, so you can build your winery business into what it was meant to be.
- Protea Financial is here to help you navigate the world of wine accounting.
- Under this method, the cost of each inventory item is tracked from the time of purchase or production through the time the wine is bottled.
- To understand these costs, determine how much product will be sold in each channel and at what price(s).
- We wrote an entire blog post about your expense accounts which you can geek out on here.
Software vendors may understate potential difficulties in implementing their product while an independent advisor can provide valuable advice and support. When using the cash basis for tax, the tax prepreparer has more flexibility in applying tax regulations to your situation to ensure you are minimizing your tax liability. If you’re considering hiring a bookkeeper to prepare your financial statements, be sure to know what to consider when selecting one.
Allocating costs correctly
The downside is that a review provides only limited assurance and is substantially less in scope than an audit. At Protea Financial, our team of financial experts specialize in supporting wineries like yours with expert bookkeeping and accounting services tailored to the unique needs of the wine industry. Our experienced professionals can help you understand and manage your P&L more effectively, providing the insights you need to drive your business towards greater profitability. Finally, in the area of overhead, wineries will need to exercise judgment and use appropriate estimates. Wineries may choose to utilize other industry contacts or a CPA with wine industry experience to discuss the best approach for the situation. An outside entity can offer an unbiased perspective on missed costs and alternative ways to allocate the identified costs.
