It’s been a tough summer. First, the COVID pandemic slowed down commerce, and most recently the massive wildfires are burning throughout Northern California. This year’s fires came earlier than they historically have and this early arrival means grape harvesting is caught in the crossfire.
Many winery owners are rightfully nervous about what the future holds and are thinking about what they can do to protect their business. Fortunately, the government has stepped in to help businesses impacted by the wildfires and there are numerous action steps you can take today to help prepare you and your business for future natural disasters.
Extended Tax Deadlines
The IRS recently granted some relief to taxpayers impacted by the California wildfires. It extended the filing deadline for all tax returns and payments that were due starting on August 14 through December 15. The new deadline for these returns and payments is December 15. The California Franchise Tax Board followed suit and issued a similar extension.
So, C-corporations that timely filed for an extension to file their annual tax return would have had to file by October 15. The new deadline is now December 15.
Likewise, S-corps, partnerships, and sole proprietors would have had to file by September 15 but now have until December 15 to do so.
Any estimated income tax payments that would have been due on September 15 are now bumped back until December 15.
Those 3rd quarter payroll tax returns and any payment that would have been due on October 31 are now due by December 15.
If your county has been declared a federal disaster area by FEMA, you will receive this automatic extension. This new extended deadline is automatically applied by the IRS and there is no need to file any paperwork. As of September 2020, FEMA has declared the following counties federal disaster areas: Sonoma, Napa, Lake, Yolo, Butte, Solano, San Mateo, Santa Cruz, and Monterey.
All penalties and interest will be waived so long as you file all your returns and pay all your tax by December 15.
Disasters and Insurance
Most wineries have multiple layers of insurance protection. Property, business interruption, and viticulture policies just to name a few.
Now might be that time you need to make use of your insurance. If you’ve suffered damage from the wildfires, contact your insurance agent right away. Many property insurance policies cover natural disasters like wildfires. And some policies will cover a portion of lost revenue and increased expenses due to business interruptions.
Reviewing your insurance needs should be a regular occurrence. And if you haven’t had that conversation with your agent in a while, now is a good time. Talk through all your business needs to craft the coverage that’s right for your winery.
Disaster Preparation
It’s never a fun topic to discuss but disaster preparation and plans should be an important part of your winery’s business strategy. With a proper plan and early preparation, you can lessen the chance of being negatively impacted by a natural disaster.
Regular Maintenance Is a Must
Winery owners should make sure their property is in the best possible shape to withstand any natural disaster. Repairs and maintenance should be made regularly, including clearing fallen debris and removing dead or dying landscaping.
Create a Continuity Plan
Have a plan in place to communicate with winery staff in the event of an emergency. Create a contact list with all employee’s names and phone numbers and establish procedures about how communication will happen in the event of a disaster. Don’t forget to consider how you’ll communicate with customers and suppliers.
Have a point person at your winery who is responsible for monitoring natural disasters. This person should have clear authority to make decisions about the safety of your crop, inventory, and staff.
Ensure your plan includes how you’ll protect your equipment, buildings, and inventory.
Protect Your Electronic Data
With so much of your business data stored electronically, be sure that it’s backed up regularly. The backup should happen off-site so that in the event your computers and servers are damaged, you’ll still have access to all your records.
If you’ve been hesitant to use the cloud to store your data, consider making the switch. Most cloud storage providers make multiple backups each day and access is easy from anywhere you have an internet connection. Cloud storage could help your employees to continue working even if your winery has been evacuated or damaged from a natural disaster.
Document, Document, Document.
Keep thorough and complete records of all your business assets and keeping pictures of all your assets will help if you have to make a claim to your insurance carrier.
You’ll want to document:
- The type of asset, including model number and serial number, if applicable
- The year it was placed in service
- The price you paid for it
- Any customizations made to the asset
A good place to start would be using a fixed asset schedule or report. If you don’t keep this schedule, your tax accountant should have a copy.
Keep in mind all your assets might not be on the fixed asset schedule. Inexpensive equipment like computers or office furniture may not be on the fixed asset schedule, but you’ll want to keep track of those, too.
Managing and Protecting Inventory Before a Disaster
Inventory is one of the largest assets a winery owns. With a robust inventory management system, you’ll know exactly what you have, and protecting your inventory from a natural disaster should be included in your contingency plan.
Your wine racks should be sturdy enough to withstand the shaking of an earthquake or strong winds from storms and your wine inventory should be well organized and labeled correctly.
Keeping your inventory system up to date and organized will be helpful in the event you need to file an insurance claim.
Your inventory management system should know the exact dollar value of all your inventory at any given moment. And if you hold a large amount of inventory, ensure your insurance policy covers all of it. A report with your costs and quantities can be created quickly.
If your business has been affected by the wildfires in California or you could use a helping hand with your business strategy or accounting, get in touch with Protea now. Our professionals are experts at bookkeeping for wineries and work tirelessly to ensure your financial goals are met. Learn how outsourced accounting and bookkeeping can save your winery time and money.
