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Protea Conversations: Destiny Burns

Protea Conversations: Destiny Burns

Protea Financial was founded in 2014 to provide high quality out-sourced accounting at an affordable price.  Given Protea’s flexible work environment, the Company especially appealed to accountants who wanted to re-enter the work force after taking time off to start a family. This allowed Protea to attract extremely talented individuals who were overlooked.  Over 80% of both Protea’s leadership and accounting teams are women.

We selected the name Protea because is the national flower of South Africa and is a symbol of our connection. The Protea flower has become an ornamental flower because of this striking beauty and is included in arrangements and bouquets as a symbol of courage or daring to be better or a sign of positive transformation.

Protea Conversations focuses on a successful woman in business and their achievements.  The hope is that these conversations will create a forum to discuss the experiences, opportunities, and challenges women face, and how we can build a more diverse, inclusive, and successful environment for everyone.

Destiny Burns is a native Clevelander (born and raised in Euclid), and she recently moved back home after more than 30 years to be near family and to live my dream of opening an urban winery here in her beloved hometown. Destiny is a retired U.S. Navy officer (served for 20 years on active duty (thank you!), and then spent more than 13 years as a business development executive in the defense industry in the Washington DC area. Destiny is also a former volunteer firefighter/EMT and has a great love and respect for first responders and for all those who serve our country and communities in uniform.

Wine has always been a great passion of hers having lived and traveled all around the world throughout her adult life, studying and enjoying wine and food. Destiny has advanced degrees in Business and professional experience in all aspects of business development, marketing and management, and also pursued formal and informal training and professional development opportunities in the wine industry. All of her experience and education, combined with a passion for wine and for her wonderful hometown, has culminated in her decision to open and run her own winery in the metropolitan Cleveland area and provide the “wine companion” to all the great craft beer and spirits made here! As they say, let’s have fun, celebrate, connect, support charitable causes and drink some great wine together at CLE Urban Winery! 

How did you get into the wine industry and how did you come up with the concept of CLE URBAN WINERY?

I always wanted a food- or wine-related business of my own as a “someday” dream. When I turned 50, newly divorced after a long marriage with an adult child fully launched, I decided to get serious about achieving this dream. I left my high-pressure career in the Washington DC area and returned to my hometown of Cleveland, Ohio to open my own business.

After performing a market analysis, I decided that opening a restaurant was too risky (too much competition), but I discovered that I absolutely loved the craft brewery culture of Cleveland. I decided to build my business based on my love of wine and my hometown, so I created a craft brewery-style urban winery and Tasting Room in a 100 year old former auto repair garage in my suburban Cleveland neighborhood. I call it Good Wine Made Fun that Celebrates Cleveland and Creates Community, and I will celebrate my 5 year anniversary this July!

 

What has been the biggest challenge you have experienced in reaching your current success (personally and professionally)?

I would say the biggest challenge that I have faced as an entrepreneur (aside from COVID-19, which has presented a number of significant challenges for all of us) is really understanding the costs, key performance indicators and other financial measures of my business. The unique business model I created is a bit of a hybrid, and I struggled with generating the financial reporting I needed to truly understand how to profitably manage and grow the business. I finally found my financial bookkeeping partner in Protea Financial – I can’t say enough good things about how they have helped me truly understand the unique financial aspects of my urban winery business model and to effectively manage my books. The resulting financial confidence has been a godsend as I have worked to successfully navigate my business through the COVID-19 crisis.

 

What are your short term goals of your career/business and yourself?

I think I have the same short-term goal as many other small business owners… to survive the pandemic, both personally and professionally. Both aspects are challenging in this stressful and unpredictable environment, and that is doubly so as an entrepreneur. I have had to continually hustle and pivot throughout this crisis – no staying home and making a sourdough starter for me!
The other short term goal that I have been working on in 2021 is to launch the Urban Wine School™ – a comprehensive wine appreciation and education learning community that is affordable, accessible and fun! I plan to bring the first courses online this spring.

 

What is the best piece of advice you have ever received that has helped you in your success?

The best piece of advice I ever received was from a former boss who once told me that “Hope is not a strategy.” The only way you will be successful is through hard work and by developing a strategy and executing a plan to get you where you want to go… just hoping everything will work out is not going to get you very far.

  

What is the piece of advice that you wished you had gotten when you were starting out?

I knew this when I started out as a small business owner, but I didn’t fully understand how important this advice was until I was neck-deep in it… CASH IS KING.

  

What advice you give to others to help them be better leaders?

Don’t be afraid – and the best way to mitigate that fear is through knowledge. Do your homework, leverage resources, work hard and stay focused. Don’t take no for an answer. Set clear expectations and goals, and then hold yourself and your team accountable for achieving them. Surround yourself with great people and do everything you can to make them successful and productive, both personally and professionally – they, in turn, will then take care of you and your customers.

 

As a thank you to our interview and Protea’s commitment to more diverse and inclusive leaders, Protea will make a donation to Vital Voices. Vital Voices Global Partnership is a global movement that invests in women leaders who are solving the world’s greatest challenges. They are “venture catalysts,” identifying those with a daring vision for change and partnering with them to make that vision a reality. They scale and accelerate impact through long term investments to expand skills, connections, capacity, and visibility. Over the last 22 years, we have built a network of 18,000 change-makers across 182 countries who are collectively daring to reimagine a more equitable world for all.

Tax Preparation Enablement

We provide your organization a true end to end solution to all of your tax needs. Tax season is year round to Protea – if you aren’t preparing daily, it’s too easy to get behind. We are always working with your organization to streamline your businesses tax management.

5 Key Elements Influencing the Accounting and Finance Hiring Environment in 2021

5 Key Elements Influencing the Accounting and Finance Hiring Environment in 2021

 

In my first 19 years of recruiting Accounting and Finance Talent, the number 1 job benefit Professionals wanted was the flexibility to work from home- at least partially.  This was always desired more than it was available.  Employers cited security, teamwork, synergy, oversight, systems limitations, and a whole host of reasons for resisting the coveted work from home arrangement.

Enter the most significant Public Health Crisis of many of our lifetimes: COVID-19. Suddenly, many people were forcefully shoved into remote working due to Shelter in Place orders.  This dramatic shift has given many people the opportunity to fully live the work-from-home life and has offered us many new gifts, including terms like “Suit Mullet” referring to professional attire on top for Zoom meetings and pajama pants and slippers on the bottom.  Some people love it, and some people can’t wait to return to the office.  Most people are somewhere in between. 

Despite a nosedive in employment rates in March, April and May of 2020, Accounting and Finance professionals generally maintained their positions and salaries with the exception of industries tied closely with hospitality, travel, or other government shut down businesses.  With vaccines being more widely available and economic recovery underway, we find ourselves stepping into a changed work force and way of operating as business owners, managers, and employees.  The way we work has changed, the way we hire and onboard has changed. 

The entire job market that is emerging out of 2020 is different from before.  These are the Top 5 Key Elements Influencing the Accounting and Finance Hiring Environment today.

 

 guy with paper fanning

 

Resignations are abundant.

The most recent JOLTS Report (Job Opening and Labor Turn over Summary Report published by the Bureau of Labor Statistics) Shows that there were 3.3 Million Voluntary Resignations compared with 1.8 Million Layoffs and Discharges.

There are 4 main reasons why resignations are outpacing terminations and layoffs at nearly a 2 to 1 ratio.

  1. The first being economic drivers. For many years now Professionals stand to earn a larger pay increase by taking on a new role at another company rather than getting promoted at their current firm. Studies show that a change in Employer offers an average pay increase of 14% versus the average Promotion offering an 11% increase in compensation.
  2. Secondly, remote work makes it much easier to look for and interview for new positions. Gone are the days of making up a fake Doctor’s Appointment in order to meet with a potential employer. Zoom interviews and lack of oversight create a ripe environment for job seeking!
  3. Thirdly, with the demands of working from home and in many cases homeschooling, parenting or caring for other family members, many people are bowing out of the workforce to have more balance and support their families where hired support may be unavailable or unsafe.
  4. Finally, the Baby Boomer Generation has reached retirement age, and with the Stock Market’s strong performance, many people have financially recovered enough to retire.

 

bunny slippers

 

There is a rub between Remote Work expectations and Post Pandemic Plans.

 

Some people can’t wait to get back into the office. Some people never want to go back. There is a rainbow in between. Whatever your position is, does it match that of your Employer or employees? Many people have changed their view on how often they desire to commute to work even when it is totally safe to do so. The trend seems to be that employees wish to continue working from home 3-4 days a week or entirely, where employers remain hopeful that a more regular in office working style will return. This poses challenges in employee retention as well as gaining long-term commitment from potential new hires.

 Pent Up Demand.

According to a recent staffing industry survey, 45% of CFOs plan on bringing back laid-off or furloughed employees. 42% plan on hiring for new roles that they didn’t have on staff before the pandemic hit. This combined with the increased demand for Accounting support and financial analysis to navigate new market conditions, Paycheck Protection applications and forgiveness, and compensating for the resignations; there is Pent Up Demand for hiring. In short, COVID threw us all for a loop! We had to adjust to working from home. For many people this was for the very first time and meant many organizations needed to learn how to onboard staff remotely. It took us awhile to get this down, while emotionally managing fear, uncertainty, and in some cases personal stress and loss as a result of COVID and the resulting life changes. Now we have mostly adjusted, and although “#zoomlife” is not perfectly smooth, hiring managers feel ready to hire and confident enough or short-staffed enough to give it a go.

 

 

Compensation Divide.

Never before have I seen such a swing in compensation from company to company. I’ve seen industry Salary insights that quote the Bay Area as offering Salaries at 25%, 28%, and even 40% above the national average. What is true?! The truth is there are absolutely people working in downtown San Francisco using the same skills working for roughly the same size company making salaries that differ by more than $40,000/year.

Why is this? There has always been a variance between what different employers offer to attract and retain employees. However, today the divide is greater for several reasons. One, the Paycheck Protection Program stepped in and protected the compensation of many employees, but not all. Additionally, with some companies embracing remote and hiring workers in less expensive areas and others limiting their hires to their local region, pay rates have SWUNG! Another ingredient in the new comp divide is we are no longer asking candidates what they earned in their previous jobs. It’s been illegal since 2017 according to California Labor Code 432.3! Based on candidates’ pay desires, positions that have changed employee seats may have had to move up in comp faster than those roles that had retained talent since before before that employment law changed.

 

 

Burn Out.

Hiring Managers and Jobseekers alike have all just survived 2020, and it was a trying time for most people. Burnout is rampant! Many Accounting and Finance professionals that I have spoken with have cited that they have worked more consecutive hours thru the pandemic than ever before. With no natural coming and going flow of life, lack of commute, lunch breaks and water cooler conversations, the constant screen and zoom time- people are fried. Who would ever think we would look back on our commute time with nostalgia?? The other huge element contributing to burnout is the lack of novelty in our lives. Vacations to look forward to, parties, concerts, hugs from a loved one, going to the spa or salon, or a sporting event- even coaching your kid’s soccer team are all things that tend to offer a re-charge to many people, and those are all activities that in many areas have not yet returned. This is affecting the hiring environment in the way of diminished optimism and confidence in searching, hiring and overall zest for and zeal in our business lives and certainly for taking on new opportunities.

In summary, employers who can express to potential hires and existing staff how they help their employees conquer burnout, maintain a flexible working arrangement, and receive highly competitive compensation are winning the battle on talent. It truly is a battle out there, and with more Accounting and Finance professionals leaving the job market every day than entering, the companies who win this battle will also win the war.

Protea Conversations: Nastassia Lopez

Protea Conversations: Nastassia Lopez

Protea Financial was founded in 2014 to provide high-quality out-sourced accounting at an affordable price.  Given Protea’s flexible work environment, the Company especially appealed to accountants who wanted to re-enter the workforce after taking time off to start a family. This allowed Protea to attract extremely talented individuals who were overlooked.  Over 80% of both Protea’s leadership and accounting teams are women.

We selected the name Protea because is the national flower of South Africa and is a symbol of our connection. The Protea flower has become an ornamental flower because of this striking beauty and is included in arrangements and bouquets as a symbol of courage or daring to be better or a sign of positive transformation.

Protea Conversations focuses on a successful woman in business and their achievements.  The hope is that these conversations will create a forum to discuss the experiences, opportunities, and challenges women face, and how we can build a more diverse, inclusive, and successful environment for everyone.

In February 2021 we spend time with Nastassia Lopez. Nastassia is a partner in Booker and Dax, a kitchen equipment design company. Additionally, Nastassia co-hosts the weekly podcast “Cooking Issues,” with host Dave Arnold, the highest-rated show on the Heritage Radio Network. She also co-founded Pasta Flyer, the critically-acclaimed, fast pasta concept with Chef Mark Ladner. 

Nastassia also created the controversial Wine Santa and introduced it to bars and restaurants in NY and LA. Dave hates it because he didn’t think of it.

Prior to her work with Booker and Dax, Nastassia opened Salumeria Rosi with Chef Cesare Casella in New York’s Upper West Side in 2010. She also managed the Culinary Technology Department at the French Culinary Institute with Chefs Nils Noren and Dave Arnold before launching Booker and Dax.

Nastassia currently sits on the Culinary Board of the Museum of Food and Drink, and the Junior Council at the American Museum of Natural History. 

Nastassia worked in restaurants to pay her way through Stanford University, where she earned degrees in both Creative Writing and Communications. In 2015 she graduated from Stanford Business School’s Entrepreneurship Program. She lives in Hell’s Kitchen and has a passion for hosting and entertaining.

Now, this is what we call a successful leader.

 

 

How did you get into the food industry and specifically your current role at Booker and Dax?

I paid my way through college by working in restaurants in Palo Alto (I went to Stanford). I was the first in my family to ever attend college. I hated working in restaurants—I would see a lot of my classmates come in and I’d have to climb under their table and fix the wobbly leg or pretend I knew the difference between Grey Goose and Absolut when making their bloody mary. When I graduated, I resolved to never work in food again. I went on to work in music at MTV and fashion. On a trip to Italy to visit a former roommate when I was 24, I remembered how much I loved food. When I got back to NYC, I applied and started working as the assistant for Italian chef, Cesare Casella. The Food Network had just launched, and “foodie” wasn’t a thing yet. Cesare introduced me to Dave Arnold, who was/is a crazy, food tech, philosophy undergrad at Yale/art master’s at Columbia. Dave and I became friends for a few months, and then eventually became business partners because we both realized we had similar weird backgrounds, but also loved food and could think strategically.

 

 

What has been the biggest challenge you have experienced in reaching your current success (personally and professionally)?

Misogyny, verbal abuse, psychological abuse, some physical abuse. This industry is no joke, and I’ve had to act like one of the guys to get by, while also taking on a lot of shit.

 

 

What are the short-term goals of your career/business and yourself?

Sell our business to a larger company, and do something completely different career-wise after that. 

 

What is the best piece of advice you have ever received that has helped you in your success?

Be nice, work hard, and never sign the contract.

 

 

What is the piece of advice that you wished you had gotten when you were starting out?

Don’t hold on to the way things “should be.” Everything changes in ways that you will and won’t be prepared for, so don’t try to control the environment or the outcome. Ride the wave and be flexible. Everything usually always shakes out the way it’s supposed to. Worrying and fretting makes you age faster and does absolutely nothing for you.

 

 

What advice you give to others to help them be better leaders?

Managing people is incredibly hard, and trusting a team execute your vision is even more difficult. Go with your gut if someone isn’t working out. Don’t waste time thinking they’ll “get better.” Cut them as soon as you feel they’re not on course.

 

As a thank you to our interview and Protea’s commitment to more diverse and inclusive leaders, Protea will make a donation to Vital Voices. Vital Voices Global Partnership is a global movement that invests in women leaders who are solving the world’s greatest challenges. They are “venture catalysts,” identifying those with a daring vision for change and partnering with them to make that vision a reality. The scale and accelerate impact through long-term investments to expand skills, connections, capacity, and visibility. Over the last 22 years, we have built a network of 18,000 change-makers across 182 countries who are collectively daring to reimagine a more equitable world for all.

Tax Preparation Enablement

We provide your organization a true end to end solution to all of your tax needs. Tax season is year round to Protea – if you aren’t preparing daily, it’s too easy to get behind. We are always working with your organization to streamline your businesses tax management.

Accrual Accounting vs. Cash Accounting – What’s the Difference?

Accrual Accounting vs. Cash Accounting – What’s the Difference?

There are two methods for recording financial transactions in your books—the cash basis and the accrual basis. The primary difference between these two is the timing of when transactions get recorded.

Choosing a method depends on your business’s needs, and most wineries should use the accrual basis to value inventory properly. However, we’ll discuss both ways so you can see how each impacts a business.

Cash Basis Accounting

The cash basis of accounting records financial transactions when cash changes hands. When you receive money from customers, you record revenue. And conversely, when you pay your bills, you’ll record the expense. It’s that simple.

Although the cash basis of accounting generally doesn’t comply with Generally Accepted Accounting Principles (GAAP), it’s widely used by small businesses and new companies due to its simplicity.

And using the cash basis doesn’t necessarily require hiring an accountant with years of experience. A competent bookkeeper will easily be able to keep your cash-basis books.

Accrual Basis Accounting

Recording revenue when it’s earned and expenses when they are incurred is the basis of accrual accounting. When cash is received or used is irrelevant to the recording of the income and expenses

The foundation behind accrual accounting is the matching principle. This means that companies match expenses with related revenues to calculate profitability for a specific period.

For example, when you sell a case of wine, at the same time, you need to record the cost of the wine and any related selling expenses so, at the end of the day, you know your profit on the sale of that case of wine. 

Accrual accounting will make use of accounts receivable and accounts payable to keep track of money owed to you and money you owe to others. These accruals allow you to match your expenses with the corresponding revenue.

For example, when you ship 20 cases of wine to your distributor with an invoice, those 20 cases’ sales price becomes a receivable to you. You earned the revenue by completing the sale but haven’t yet received payment.

 

The converse works for the money you owe to others. When you receive a shipment of glass bottles from your supplier, you incur the expense when you receive them. But you may not pay that invoice for 30 days, so you’ll have a payable on your books for the value of the bottles. Accrual accounting is more complex than cash accounting but does provide a truer picture of the profitability of your business.

Most larger companies and companies with numerous owners are required to use accrual accounting to adhere to GAAP principles. In fact, the IRS also has requirement on when accrual accounting must be used, namely for.

  • most businesses with inventory,
  • C-corporations, and
  • companies with more than $25 million in annual sales.

Examples of Effects of Cash and Accrual Accounting

Effects on Income

Assume you sell 100 cases of wine for $1,000 to your top distributor and the total cost of making, bottling, and packaging that wine was $500. 

Cash basis

You record the $1,000 in revenue when your distributor pays you.

You record the costs for the grapes, labor costs, bottles, etc. when you pay for those items, which was likely long before you sold the wine.

Gross profit reported at the time of receiving the cash from the distributor is likely to equal to the revenue.

Accrual basis

You record the $1,000 in revenue when you deliver the wine to the distributor.

You record the costs of the materials and labor at the same time that you record the sales revenue.

Gross profit reported at the date the wine shipped (or a different date depending on the shipping terms) and will be equal to sales revenue less the cost of the wine.

You can see how the cash basis doesn’t provide a good representation of profit when your revenue gets recorded long after the expense shows up on the income statement.

Effects on Taxes

Using the same example of 100 cases sold for $1,000 at a cost of $500, the tax effect creates a similar mismatch.

Cash basis

You probably (due to the length of the inventory cycle in wine) recorded most of your costs in previous years, making your taxable income lower in those years.

But this year, when you record the $1,000 in revenue, your taxable income will be higher because you don’t have the offsetting expenses.

Accrual basis

This year, you’ll be taxed on your $500 profit on this sale since you’ll record revenue and expenses in the same year.

You’re starting to see that the accrual basis creates more of a steady financial environment than the cash method’s peaks and valleys. Accrual accounting provides a clear picture of the profitability of a business as the income and expenses are matched.

Which is Better? Cash Basis or Accrual Basis

Choosing the correct accounting method will depend on your business’s specifics. Things to consider when deciding on a method include:

  • Do you think you’ll need bank financing in the future?
  • Is expanding the business to include more owners a possibility?
  • Will your books ever need to be audited?

Cash Basis

Pros
Cons
Simple and easy Inaccurate financial picture
Easy cash flow management No records of what you’re owed or what you owe
Good short-term view Doesn’t comply with GAAP

 

Accrual Basis

Pros
Cons
The better overall financial picture Requires more resources
Commonly expected in business The short-term picture can be skewed
Conforms with GAAP

Once you pick a method, you’ll want to stick with it for two reasons. Firstly, for consistency in your financial information. This way you’ll always be comparing apples to apples. Secondly, the IRS requires you to maintain the same method. If you ever want to change, you’ll need to ask for the IRS’s permission.

It’s best to consult with your accountant when selecting the accounting method that’s best for your winery and could be different for operational needs and tax needs. They can help you set up your accounting system and processes to ensure you’re recording your transactions correctly. You can also lean on them when you need expert help or additional hands to get the work done. Protea has decades of experience helping winery owners navigate the bookkeeping, accounting, and tax waters. Contact us today to see what we can do for you.

Why You Should Hire a Bookkeeper

Why You Should Hire a Bookkeeper

Running a successful winery requires you to manage numerous departments—production, processing, sales, and administration, to name a few. Often bookkeeping and accounting are some of the first areas neglected when there’s not enough of you to go around.

When you find yourself scrambling at tax time or with a pile of unopened bills, hiring a bookkeeper can help ease your burden. With a professional in charge of your day-to-day finances, you’re free to tend to the areas of your winery that need your expertise.

 

A Bookkeeper Will Allow You to Focus on Your Business

 

Great bookkeeping is the backbone of any successful business. Ensuring your bills and employees are paid on time, your taxes are filed, and your financial statements are current are just some of the things a great bookkeeper does.

While you may think that doing your own bookkeeping saves you money and allows you to better understand your business’s finances, every bit of time you spend crunching numbers is time away from building, managing, or expanding your business.

You didn’t get into the winery business because you enjoy accounting and administrative work. Your time is better spent working on producing wine.

Bringing in a professional to help with your bookkeeping can prevent you from being spread too thin and burnout. Stay focused on what you really love doing and leave it to the financial expert to handle the numbers.

 

A Bookkeeper Will Help You Better Understand Your Business

 

You know a lot about wine grapes, harvesting, and selling wine. Chances are you aren’t a skilled accountant.

You may know how much your grapes cost but do you know you receive a 10% discount if you pay your vendor a few days early? A bookkeeper will help you manage cash flow to ensure your business takes advantage of any money-saving opportunities.

As your winery grows, knowing how much cash you have in the bank isn’t enough. You’ll need to know how much money you have coming in and going out in the future. Keeping track of it in your head can lead to cash flow struggles.

A great bookkeeper will manage your accounts receivable and accounts payable to keep cash moving.

Having a bookkeeper who’s devoted to your winery’s books allows them to be able to spot irregularities early. Maybe a vendor is charging more or you are selling more than in the past, but you aren’t  collecting more sales tax. Addressing any inconsistencies from the start will save money and time in the long run.

An experienced bookkeeper can help streamline procedures too. They can help standardize how documents are retained or create a calendar to manage due dates of bills.

Tax Preparation Enablement

We provide your organization a true end to end solution to all of your tax needs. Tax season is year round to Protea – if you aren’t preparing daily, it’s too easy to get behind. We are always working with your organization to streamline your businesses tax management.

A Bookkeeper Will Help Keep Your Business Compliant

 

Taxes come in many shapes and sizes. Federal payroll and excise taxes. State payroll and income taxes. Sales taxes and business licensing.

Bookkeepers excel at organizing, recording, and filing. Experienced winery bookkeepers know the ins and outs of the various taxes your winery will need to pay. They will ensure processes are in place so that your taxes are filed and paid on time, preventing you from incurring penalties and reducing your anxiety.

State regulations govern the winery industry. Keeping on top of your winegrower’s license, wholesaler license, and your on or off-premise retail license is another area an experience bookkeeper can assist. They can ensure your licenses are renewed before they expire and can provide any necessary reports. 

If you have loan covenants to maintain or investor reporting to prepare, an experienced bookkeeper can manage this to ensure you don’t miss a deadline.

With a dedicated bookkeeper, year-end tax time can be less stressful. Your bookkeeper has kept your financial house in order throughout the year. This makes it easy to hand over your tax records to your tax professional.

 

A Bookkeeper Can Save Your Business Money

 

In addition to the compliance aspect of tax time, your bookkeeper is probably less expensive than your tax professional. Having a bookkeeper on staff who timely records your transactions decreases the amount of work your accountant has to do to prepare your tax return.

A high-quality, experienced bookkeeper will have a general idea of how much things costs. While they may not know specifics about the winery industry, they will know prices for office supplies, telephone service, and bank fees. This wealth of knowledge will prevent you from paying more than you should.

A bookkeeper will ensure your bills are paid on time so you avoid late payment fees or interest. These unnecessary expenses reduce your profits and may harm your business’s credit score.

Bookkeepers can also monitor your budget. They can provide reports comparing your budget with actual expenditures and will be able to zero in on any differences. With enough experience with your winery, they can also assist in developing future years’ budgets.

Even if you’re just starting on your business journey, hiring a bookkeeper early will prevent the stress and struggle that comes from DIY bookkeeping. And those further along the business path, now’s the time to consider the benefits a bookkeeper can provide.

Whether you’re looking to hire a bookkeeper as an employee or outsource it, having a professional in your corner makes sense. You’ll be able to focus on taking your winery to new heights.   

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Small Producers Tax Credits for Everyone!

Small Producers Tax Credits for Everyone!

‘Small Producers Tax Credits for Everyone!’ (Said in my best globally famous talk show host voice.)

So you’ve heard that the Craft Beverage Modernization Act was made permanent. And you operate a winery or you support operational reporting for a winery.  Now what?

 

Let’s Begin at the Beginning – Tax Class for Still Wine

Before you can figure out how to take a tax credit, you need to check the tax class.  The rates of tax for still wine can be found in 26 U.S. Code SECTION 5041 (c) or by clicking here if you really want to read tax code.  Effective January 1, 2021, still wine that is not more than 16% alcohol by volume (‘ABV’) is taxed at $1.07USD per gallon and still wine between 16% ABV and not more than 21% ABV is taxed at $1.57USD per gallon.  That means that while the tax rate has not changed, the ABV for still wines in a specific tax class did change.

If you produce still wine and you have removed it tax paid from the winery’s bond, the excise taxes owed are based on the rates listed above.  Still wine that is transferred from the winery’s bond to another bond (typically for storage or order fulfillment) and tax paid later is still eligible for the tax credit.  In short, if you pay tax on still wine of your own production you are eligible for the tax credit described below.

 

Side Note – Labelling Rules

TTB labeling rules for listing the ABV on wine labels did not change.  I received questions about this over the past two years and the listing requirements along with permitted tolerances, can be found HERE.

 

Tax Credit?  What Tax Credit?

Effective January 1, 2021, among other changes, the words ‘For Small Domestic Producers’ is removed from that same 26 U.S. Code SECTION 5041(c) mentioned above. This permanently establishes that the following tax credits are available to all wine producers and importers:

  • $1.00USD/gallon on the first 30,000 gallons produced in the United States or imported into the United States in a single calendar year
  • $.90USD/gallon on the next 100,000 gallons
  • $.535USD/gallon on the next 620,000 gallons

Up to 750,000 gallons of wine are eligible for some form of tax credit in a single calendar year.  Note that while the tax class changes only applied to still wine, the tax credits apply to all types of wine.

Excise Tax Class? Check.  Tax Credit? Check.  Where Do I Claim the Credit?

Before you can claim the tax credits listed above, you need to first tell the Tobacco Tax and Trade Bureau (‘TTB’) that you have removed the wine from bond to tax paid status.  If you work on the winemaking side of the business or support winery operations, you’ve probably heard the terms ‘702’ or ‘5120’, depending on your vintage in the industry.  Those terms apply to the TTB Report of Wine Premises Operations, found HERE on the TTB’s website. This report is where a wine producer declares how much wine they have produced, what winemaking activity (including bottling) occurs and, among other things, what wine is removed from bond during a given reporting period.  (Reporting periods vary based on production volume.) Just in case you’ve looked up the form and you’ve never filled one of these out before, there are two rows on the form where you list wine removed tax paid – Section A (Bulk Wines) on row 14 and Section B (Bottled Wines) row eight. Both rows have multiple cell options depending on the tax class and type of wine or hard cider that was removed, but those rows are where you specify what has been removed tax paid. Once wine has been reported as ‘removed taxpaid’, excise tax is owed on that wine.  After the operations report is filed, it is time to file and pay the excise tax for the wine removed from bond along with claiming available tax credits.

The TTB Excise Tax Return or TTB F 5000.24sm, is where you declare the taxes you owe and credits allowed.

 

Updated Forms Available

There are now forms available for winemaking activity prior to January 1, 2018 and activity from January 1, 2018 to present.  You can find the most common TTB forms HERE.

 

A Permanent Tax Credit is Not a Change in Tax Rate

Making these two changes permanent is great news for producers large and small.  What needs to be clear is that these are two different changes – one to the up to 16% ABV tax rate and the other allowing all producers to claim a tax credit that had previously been reserved for small producers.  While the net impact may be a reduction in taxes paid, it is not a reduction in a tax rate across the board.

For anyone who has read the relevant section of the 5,000 plus page document where these changes were made permanent, you will notice something missing from this post.  This post is directed at domestic wine producers and does not explain how it may apply to importers of wine in the United States.

 

Need More Information?

Cronbach Law Group PC is a law firm located in Napa, California.  Our focus is helping our clients understand the complex world of alcoholic beverage regulation –  50 states, 51 sets of rules. Let us be your guide and keep your busines priorities top of mind on along the way.  www.winedeal.law

 

 

 

 

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