The making of a good varietal is a fine art. It takes years of research and experimentation to get all the components just right to achieve that perfect blend of undertones and notes that wine connoisseurs will gush over.
The patience and skills this art requires for success are priceless. But with this art, you also need the science of data to comply with laws and regulations to stay in business. It’s the less glamorous side of the wine industry, but equally important.
Vintners have their work cut out for them when it comes to the ever-changing standards and laws they must follow. It’s a challenge to keep track of the legal and regulatory requirements when your products ship to various states and countries.
To avoid fines and delays, many wineries are turning to Cloud-based ERP offerings that help track the enormous amounts of data necessary to keep up with regulations, form submissions, taxes and distribution. Beverage businesses that invest in this technology can rest assured they will always have the most accurate data to stay up to date with local, state and federal laws.
If your winery is running on solutions like QuickBooks & Excel - your managing a very manual, tedious and time consuming process to ensure your data for compliance forms are accurate and complete. Your technology solutions need to be able to support you through these challenges and mitigate risk. If your current solution is preventing you from doing that, download this video to learn how the industry’s most mature and proven wine business management system has enhanced operations for 20 years. You'll hear directly from Vintage Wine Estates about their experience utilizing this solution and partnering with us.
Avoid TTB Excise Tax Audits with Accurate and Secure Data
According to the Alcohol Tobacco Tax and Trade Bureau (TTB), the most common compliance or tax issues all fall within four main categories: records, inventory, reporting and tax payment, and basic permit, registration and bonds. All four of these categories require complete and accurate data across the entire operation to be available at your fingertips.
This data is not accessible in one place when you use Excel and QuickBooks, which is how many small and medium sized wineries still operate. If you are audited using one or a combination of these basic systems, your audit will go at a snail’s pace. Snails aren’t only bad for vineyards, they’re also bad for audits. Instead of spending this valuable time perfecting your blends, you’ll be spending it shuffling through files trying to make sense of finances that happened a year or more in the past.
You need reassurance that, if you are going to be audited, it’s going to go smoothly because all the data you need is complete, accurate and easily accessible. This reassurance is a core benefit of migrating to Enavation Cloud: VinPoint Wine Management, a turn-key ERP-based Cloud offering that speaks the language of wineries and their reports.
Records
Inadequate bookkeeping is the most frequent downfall of wineries. Not only do wineries need to make sure necessary information is correctly populated on every form, but this information needs to be able to be recalled for reference and audits. Several forms that typically have either incorrect or incomplete information are:
- Source records
- Transfer in bond records
- Taxpaid removal records
- Bills of lading or other export documentation
Inventory
Inventory records are a priority in any distribution facility, but even more so in the alcohol industry as the timing of your annual inventory is mandated. Did you know that the TTB requires annual inventory to be completed in June or December of every year and if done at any other time you need to notify the TTB? If you didn’t, you’re not alone as most people in the industry don’t realize that this is a requirement and not a guideline.
In addition to what you have in your physical location, you also need to know what you have lost from your bulk wine storage since your last annual inventory report. This loss can be attributed to evaporation, leakage or spillage and other issues that naturally occur from storing bulk wine. Without keeping track of this loss, you will have to pay tax on the wine that was never sold. This high level of traceability can only be done with a sophisticated Enterprise Resource Planning (ERP) system.
Reporting and Tax Payments
Be on the TTB good list by doing two things that most wineries struggle with: filing on time and entering all information correctly. ERP software can do little to help with the actual process as the TTB website currently does not allow electronic filing, but what it does help with is letting your team access all the information in one place quickly, saving you significant time on the filing process. You also have the peace of mind of knowing that the information you are entering into the tax forms is complete and accurate.
Although a top-of-the-line ERP system specifically made for beverage industries provides you accurate information across the entire business, you still need to make sure you are entering the correct data, in the correct units (dollar values vs wine gallons), on the right lines. So please always leave time in your process for reviewing and double checking your work.
One of the most helpful features of an ERP beverage offering is the assistance it provides in excise tax reporting. Excise tax reporting is the responsibility of the “bonded wine proprietor who removes the wine from bond for domestic consumption or sale.” This tax rate is dependent on the type of wine that is being moved and rated by the wine gallon.
Whether you are paying by check, money order, electronically or by an electronic fund transfer, you need to have accurate records to determine how much you owe. You can trust an excel spreadsheet that relies on manually created formulas and values, or you can trust an ERP offering that not only provides standard financial profit and loss, but also a complete recording of all inventory movements – making sure you pay the right amount of taxes and avoid penalties from paying too little.
Basic Permit, Registration and Bonds
It is necessary for wineries to maintain adequate bond coverage to ensure long term coverage of their assets. When it comes to this category, the TTB states that one of the most common issues is that wineries are not buying enough in bonds, so they are undervaluing themselves based on their accounting records.
For you to correctly value and keep track of changes in the valuation of your business, you need to be able to trace your capital expenditures, purchases and inventory. An inaccurate valuation means you will not be able to maintain an adequate amount of bond coverage. To protect your business and comply with laws, you need to work with current data and compare it with past financial and tax records.
Protect your Winery with an Accurate Financial and Tax System
Technology has come a long way in the beverage industry, specifically with wineries. With wineries scaling up and expanding their customer reach, the amount of data they are collecting and reporting on is also increasing at a rapid pace. Systems that kept up with demand a few years ago are no longer robust enough to keep up with what is required today.
In order for wineries to stay in compliance with laws, regulations and taxes, they need a complete ERP system, such as Enavation Cloud: VinPoint Wine Management. This system will generate reports that give you the accurate information you need to transcribe the TTB forms with minimal effort. The system gives you the reassurance that you are working with the most accurate and current financial information so you can make sure you are staying in compliance with local, state and federal laws and regulations.
If you need to update your financial system and want to know what else is out there, contact one of our Enavate beverage experts to learn more about how implementing a new ERP system can streamline your business and help you stay in compliance.
