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Gear Up for These 2023 Changes to California Employment Law

Gear Up for These 2023 Changes to California Employment Law

It’s the time of year again to dive in and take a look at upcoming changes to California employment law. This fall, Governor Newsom approved several new employment laws, generally expanding on employee rights and creating new obligations for employers. From new pay scale disclosure requirements to mandatory bereavement leave to nuanced changes to the California Family Rights Act, here are summaries of a few key bills signed into law, that go into effect on January 1, 2023.


SB 1162: Pay Transparency & Data Reporting Requirements

New pay scale disclosure requirements. In 2017, California led the nation by passing the first mandatory pay transparency law, which required employers to provide pay scale information (i.e., annual salary or hourly wage range) to job applicants upon request. Effective January 1, 2023, SB 1162 will expand the law to require:

  • Employers with 15 or more employees must now include in all their job postings the “salary or hourly wage range that the employer reasonably expects to pay for the position.” If the employer uses a third party to publish or post a job, that third party must also include it in the posting.
  • Upon an employee’s request, all employers must provide the pay scale for the requesting employee’s current position.
  • All employersmust maintain records of job title and wage history for each employee for the duration of their employment and three years after the end of employment so that the state’s Labor Commissioner – who is authorized to inspect these records – can determine if there is a “pattern of wage discrepancy.”

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Pay data reporting requirements. California currently requires employers with 100 or more employees, to submit annual pay data reports to the state’s Civil Rights Department (“CRD”) (formerly the DFEH). Current law allows employers to file an annual Employer Information Report (EEO-1) with the federal Equal Employment Opportunity Commission (EEOC) in lieu of the pay data report to the CRD.

  • Effective January 1, 2023, California employers will no longer be able to file the EEO-1 in lieu of the California report to the CRD. This is because California has expanded the required information to be reported beyond what the EEO-1 requires. Thus, SB 1162 will require employers with 100 or more employees to submit a separate report to the CRD, including:
    • The number of employees by race, ethnicity, and sex in 10 job categories, based on a “snapshot” that counts all individuals employed in these categories during a single pay period of the employer’s choice between October 1 and December 31 of the reporting year.
    • The job categories include: (1) Executive or senior-level officials and managers, (2) First or mid-level officials and managers, (3) Professionals, (4) Technicians, (5) Sales workers, (6) Administrative support workers, (7) Craft workers, (8) Operatives, (9) Laborers and helpers, and (10) Service workers.
    • Within each job category, for each combination of race, ethnicity, and sex, the median and mean hourly rate.
    • The total number of hours worked by each employee in each pay band during the reporting year.
    • The employer will have the option, but is not required, to provide clarifying remarks regarding the information provided.
  • Employees hired through labor contractors. In addition, employers with 100 or more employees hired through third-party labor contractors must also submit a separate pay data report to the CRD covering those employees and disclosing the ownership names of all labor contractors used to supply such employees. A labor contractor is defined as “an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.”

The bill also changes the deadline for all future pay data reports from March 21 to the second Wednesday of May each year, beginning in 2023.


Penalties for noncompliance with SB 1162

  • Employees claiming an employer’s noncompliance with the pay disclosure requirements may file a complaint with the California Division of Labor Standards Enforcement (DLSE) within one year of the date that they learned of the violation.
  • If the DLSE finds that an employer violated the law, employers may be subject to civil penalties of $100 to $10,000 per violation. The Labor Commissioner will determine the amount of the penalty based on the totality of the circumstances, including prior violations.
  • Notably, no penalty will be assessed for a first violation where an employer shows that “all job postings for all positions have been updated to include the pay scale.”
  • If an employer fails to file the pay data reports, the CRD can seek a court order requiring compliance and recovering costs associated with seeking such an order. A court also can impose civil penalties of $100 per employee, and up to $200 per employee, for subsequent failures to file the report.
  • If an employer cannot comply because a labor contractor has not provided the required pay data information, a court may also apportion an “appropriate amount of penalties” to the labor contractor.


Private right of action for injunctive relief

  • SB 1162 also includes a civil private right of action for injunctive relief “and any other relief that that court deems appropriate.” Very little detail is provided in the text of the bill regarding what that private right of action will entail, and who will have standing to pursue such an action.
  • The bill simply provides: “A person who claims to be aggrieved by a violation of this section may also bring a civil action for injunctive relief and any other relief that the court deems appropriate.”

It is expected that the CRD will publish additional information, including FAQs and a User Guide for Employers, in the coming months.


Changes to the California Family Rights Act (“CFRA)

AB 1041: Paid Sick Leave and Family Leave Expanded to “Designated Persons”

Effective January 1, 2023, AB 1041 will expand the California Family Rights Act (“CFRA”) and the Healthy Workplaces, Healthy Families Act (“HWHFA”) to allow employees to take paid sick leave and family leave to care for a “designated person” chosen by the employee, including non-family members. The definition of designated person is: “any individual related by blood or whose association with the employee is the equivalent of a family relationship.”

An employee may change their designated person once per 12-month period.

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AB 1949: Job Protected Bereavement Leave

Effective January 1, 2023, AB 1949 will expand the CFRA to allow an eligible employee to take up to 5 days of bereavement leave upon the death of a family member.

The leave must be completed within three months of the date of death. The new law requires that leave be taken pursuant to any existing bereavement leave policy of the employer. If no such policy exists, leave may be unpaid. However, the employee may use other leave balances, such as accrued paid sick leave, towards the bereavement leave.


California’s Privacy Rights Act (“CPRA”)

California’s Privacy Rights Act (“CPRA”) will become effective January 1, 2023. Under the CPRA, “consumers,” including employees, will be able to exercise several new rights including:

  1. The right to know (request disclosure of) what personal information was collected by the business about the consumer or employee, from whom it was collected, why it was collected, and, if sold, to whom;
  2. The right to delete personal information collected from the consumer or employee;
  3. The right to opt-out of the sale of personal information (if applicable);
  4. The right to opt-in to the sale of personal information of consumers under the age of 16 (if applicable);
  5. The right to non-discriminatory treatment for exercising any rights; and
  6. The right to initiate a private cause of action for data breaches.
  7. The right to correct inaccurate personal information; and
  8. The right to limit use and disclosure of sensitive personal information.

Because the new law applies these protections to employees, and not just consumers, the CPRA presents a unique set of challenges for employers. The most notable is understanding what employee data the employer holds, where that data is stored, and which data is truly essential and that which should be deleted at an employee’s request.


SB 1044: Emergency Working Conditions

SB 1044, which will also become effective January 1, 2023, prohibits an employer in the event of an emergency condition, from taking or threatening adverse action against any employee for refusing to report to, or leaving, a workplace or worksite because the employee “has a reasonable belief that the workplace or worksite is unsafe.” An emergency condition is defined as:

  1. Conditions of disaster or extreme peril to the safety of persons or property at the workplace or worksite caused by natural forces or a criminal act.
  2. An order to evacuate a workplace, a worksite, a worker’s home, or the school of a worker’s child due to a natural disaster or a criminal act.

Notably, an emergency condition does not include a health pandemic.

SB 1044 also prohibits an employer from preventing an employee from accessing the employee’s mobile device or other communications device in order to seek emergency assistance. An employee is required to notify the employer of the emergency condition requiring the employee to leave or refuse to report to the workplace or worksite.


In Conclusion . . .

Before the end of 2022, employers should review their policies and procedures to ensure compliance with these new laws. Employers should also reach out to their employment counsel with any questions regarding these pending changes. Proactive changes and working with counsel will help protect employers during this season of change!

Protea Financial Can Help You Network with Other Professionals Who Can Help

Reach out to us here at Protea Financial if you want to network with people who can help make doing business easier. We are here to help!

How to Track Your Business Expenses: A Simple Guide for You and Your Business

How to Track Your Business Expenses: A Simple Guide for You and Your Business

As the owner of your own business, you’re going to be spending a lot of your time and money on it. You need to keep track of all these expenses to accurately report them when you file your taxes at the end of the year.

You can deduct many expenses related to running it. These are called “business expenses,” and they can be quite beneficial to your bottom line. The trick is tracking them and documenting them correctly, so that come tax time, you are ready to receive the benefits.

Unfortunately, many small business owners don’t take the time to document their expenses until after they have already paid their bills. This won’t help when tax season comes around, which is why we want to give you a hand with getting started now! Here is a quick guide on how to track your business expenses and what type of expenses you should keep track of in order to do so.


What Is a Business Expense?

Business expenses are any costs related to running and managing your business. These costs can include your office rent, utilities, insurance, employee salaries, equipment, travel costs, and other expenses that directly relate to your business’s operation.

Usually, only the amount that is above your typical, expected costs is considered business expenses. Your expected costs are what your business would cost you if you didn’t run it. Many of these costs have associated write-offs you can take advantage of by properly tracking them.

Business expenses are deducted from your income when calculating taxes at the end of the year. This lowers how much you owe the government, resulting in a lower tax bill.


Where to Track Your Business Expenses

There are countless apps and websites that you can use to track your business expenses. You could write them down on paper or use a virtual notebook, like Evernote. However, this could result in lost notes.

There are also some specialized apps designed to help you track your business’s expenses. These apps are usually designed specifically for tracking business expenses, so they may have features that others don’t.

Until you know which app you want to use, consider using your email. That way, when you need information, you can forward it to yourself for almost instant access to it while you sort through the apps that can help.

After a quick search for business expense tracker apps, you will likely find names like QuickBooks Expense Tracking, Rydoo, Zoho Expense, and Ramp, to name a few. You will have to sort through the apps to see which will be easiest for you and your business to accurately track each expense without taking so much time that you put off doing it.

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How to Track Your Business’s Expenses for Taxes

In order to properly track your business expenses, you’ll need to know which ones to track. Here is a basic list of common business expenses that you should keep track of for your taxes:

  • Office Rent and Utilities: You can deduct money for each square foot of your office space. You can also deduct any utility expenses that are directly related to your business.
  • Office Supplies: Any office supplies you use for your business can be deducted as a business expense. This includes things like pens, paper, printer ink, etc., so make sure you always keep receipts for each of these purchases.
  • Employer Taxes: You can deduct the employer portion of your payroll taxes. This includes things like Social Security and Medicare taxes.
  • Employees’ Retirement: Any amounts you contribute to your employees’ retirement accounts can be deducted from your taxes. This includes 401(k)s and SEPs.
  • Insurance Premiums: Amounts you pay into your insurance premiums should also be tracked to reduce your future tax bill.


Advertising and Marketing Expenses

Advertising and marketing expenses are essential business expenses that many people overlook. You can deduct these expenses as long as they are reasonable and related to your business.

Advertising and marketing can include anything from buying ad space on a billboard to paying for an ad on a website. It can also include things like hiring a branding agency to design your logo and branding materials. Hiring a social media agency to promote your business also falls into this category.

You can also deduct any online marketing costs that are related to your business. This includes things like buying ad space, hiring a marketing firm to increase brand awareness, or buying products from Amazon to resell and promote them as an affiliate.


Office Supplies and Equipment

Office supplies and equipment are another necessary business expense that you need to track. This is another expense you should track so long as it is reasonable and related to your business.

You can deduct things like printer ink, paper, and toner cartridges. You can also deduct the cost of office furniture, your computer, and other equipment that is related to running your business.

Another thing you should be aware of is that you can depreciate certain assets over time. This is when you deduct a portion of an item’s cost each year over its expected life span.

Protea Financial Small Business Receipts Protea Financial Common Business Expenses

Travel and Entertainment Costs

While you could deduct travel-related expenses related to your business, you can only deduct 50% of the amount that exceeds the standard deduction. This means that if you travel for work and spend $1,000 on travel, only $500 of that can be deducted from your taxes.

Entertainment costs, however, are a bit different. You can deduct most reasonable expenses related to your entertainment, but only up to the amount of income that you earn. This means that if you make $100,000 and spend $10,000 on entertainment, you can only deduct $10,000 of those expenses from your taxes, no matter how many tickets or dinners you bought.


Professional Services

Professional services are another important business expense. This includes things like hiring an accountant, a lawyer, or hiring an outside firm to manage your website and engage with your social media followers.

It also includes hiring a bookkeeper to manage your finances and keep track of your business expenses. Having a good bookkeeper is as essential as having a good accountant. They keep track of your expenses and workflows in order to help you avoid silly mistakes and oversights.

You can deduct the cost of these services from your taxes, just like any other business expense. You might want to consider having your bookkeeper and accountant bill you for their services instead of paying them up-front each month.


For Help Tracking Your Business Expenses, Contact Protea Financial Today!

Business expenses are any costs related to running and managing your business. To properly prepare for your taxes, you’ll need to track all these expenses.

Many of these have associated write-offs you can take advantage of by properly tracking them. For help keeping track of your business expenses, contact Protea Financial. We can help keep your business organized so you can focus on growth and customer engagement.

Let Protea Financial Help Teach You How to Track Your Business Expenses Properly

When you need help learning how to track your business expenses properly, it’s essential you learn from the people who track them for a living. Let the experts here at Protea Financial teach you how!

Tips to Make Your Month-End Close Processes Easier

Tips to Make Your Month-End Close Processes Easier

Month-end processes are often a source of stress for finance teams. Many organizations find month-end processes challenging, which is why it is important to put processes in place early and consistently.

If that sounds like your month end, you’re not alone – many businesses will face similar challenges. While most accounting departments dread the end of the month, an organized team can make things much easier on themselves at this time of the year. Here are some tips to reduce stress and streamline your month-end close processes.


What Are the Most Common Month-End Processes?

Month-end processes are standard parts of the business cycle. You may need to process payments, collect receivables, make payroll, or do regulatory filings at the end of each month. These tasks are often automated in modern businesses but can still be time-consuming and tedious for employees to complete.

  1. Collect payments: Businesses must collect monthly payments from customers if they want to stay fluid. This process can be automated, but it should also have enough human oversight to ensure that everything is current and no payments slip through the cracks.
  2. Write checks: This is often the most tedious process in any business. A lot goes into writing a check, from calculating the proper amount to getting each check sent out appropriately.
  3. Process invoices: Processing invoices involves reading invoices and making sure they are accurate before you pay them. Then there are calculating payment amounts, which can be a challenge for many small business owners who aren’t used to doing it manually.
  4. Pay taxes: Taxes are a hassle every year, no matter how well organized you are. You need to calculate sales tax and ensure all the correct forms have been filed. You also need to track sales receipts to know where your money is going and whether it’s being spent appropriately.
  5. Process credit card payments: When you accept credit cards, it’s important to process them quickly and accurately so that you don’t lose any money. In addition to earning more money from quickly processing these cards, quick and accurate processing of card transactions can help you avoid costly chargebacks. A chargeback happens when a card customer disputes a purchase and gets their money back. It can be expensive for businesses to deal with chargebacks, especially if they are accused of fraud. It’s, therefore, important to keep careful records of all your transactions, monitor your risk, and stay above the minimum transaction amounts for each card type.

Protea Financial Month End Close Process Easier

Organize Your Data

There are many examples of disorganization leading to errors and delays in month-end processes. If you can’t find something, you could be heading towards mistakes, such as incorrect calculations, incorrect payment amounts, and misapplied bank credits.

If you are experiencing issues, you may need to re-examine how you store data to find what you need when needed quickly. Organize your data to ensure that information is easily accessible and can be understood.

There are many ways of organizing data, so choose an approach that suits your organization. Some standard methods include data tables, dictionaries, and architecture models. Data tables are simple tables that show how data is used. Data dictionaries are more prescriptive and indicate what data should look like. Data architecture models show how information is delivered and consumed.


Automate Processes Where You Can

Many month-end processes can be automated to save time and reduce human error. For example, you might have a process to check your customers’ payment terms. This process might involve a person looking up the details for each customer.

You could instead automate this process and use data tables to select the customer details from the data table and have the system look up the payment terms automatically. You could use automation to schedule the payment or even generate the payment and send it to the customer.

It could save significant time and effort in areas where automation is available. Some processes may be more challenging to automate. If so, consider if they can be simplified. A more streamlined process will be easier to automate and more efficient when completed manually.


Use Checklists to Ensure Nothing Gets Missed

As part of the process of ensuring all data is correct, you might need to check each account. This could be a time-consuming task if you have a large number of accounts. A more efficient approach is to use checklists to ensure you have checked each account correctly.

Checklists can also show that every step in the month-end process has been completed and is accurate. This can be particularly useful in team environments. Using checklists for account reconciliations can demonstrate the company’s level of due diligence, which can be particularly important if your organization is audited.


Establish Clear Processes and Timing

If each team member has clearly defined responsibilities, they will know what to do and when to do it, reducing confusion and allowing everyone to focus on their own tasks. For example, you might have one person responsible for checking the payment terms for all accounts within a particular time frame. Another person could be responsible for monitoring payment dates for these accounts and bringing any issues to the attention of other team members.

It is also essential to ensure that all team members are aware of the company’s payment terms. You might have team members who are unaware of the payment terms but who are responsible for checking accounts.

Protea Financial Making Your Month End Close Process Easier

Define a Clearing Date and Vendor Date

A common cause of issues at the end of the month is accounts that are inadvertently paid too early. This typically happens due to a misunderstanding of the company’s payment terms. For example, if your customers generally pay 30 days after the invoice date, but your payment terms are net 10 days, you must ensure that your accounts are only paid 10 days after the invoice date.

Some organizations use the last day of the month as the clearing date. However, this is not always ideal because it may mean you must wait until the next month to pay some of your essential suppliers. A better approach is to use the first date on which you plan to pay suppliers each month as the vendor date. This will give you a more realistic time frame for paying suppliers.


Lock Down Permissions

You might have been using your month-end processes for years with no issues. But, as your business grows and the team changes, it can be easy for someone to make a change to a process inadvertently, potentially resulting in a process that no longer works properly.

It is essential to lock down the team’s permissions to prevent errors from happening. It is even more important to do so at the end of the month when processes are more tightly controlled. Permissions are often set up based on the functions and roles of team members. You may want people in accounting to have complete control over payment terms and dates, while other team members may only need read-only access.


Protea Financial Can Help Keep Your Month-End Processes Going Smoothly

Month-end processes can be challenging, particularly for large teams or organizations with many customers. However, if you take the time to prepare and put processes in place, they can be much easier to manage.

Organize your data, automate where you can, use checklists for account reconciliations, and establish clear processes. These simple steps can help reduce the stress and errors associated with the end of the month.

If you simply want to hand over the month-end responsibilities, reach out to us here at Protea Financial. We will do whatever we can to help make your business successful.

Protea Financial Can Help Make Your Month-End Close Processes Easier

If you need help to make your month-end close processes easier, then please reach out to us here at Protea Financial. Our experts can help guide you to a smoother month-end close so you can focus on the next step for your business. 

What is a W-9 and What You Should Know About It

What is a W-9 and What You Should Know About It

A W-9 is an IRS (or Internal Revenue Service) form used to collect the correct tax identification number from all third parties that the business pays during the year. You will usually be required to fill one out if you become an independent contractor, a vendor, or are brought on for a contractor position.

The W-9 should be provided to the hiring company at least once annually, so you have it on hand in case you need it for any reason. It is meant to provide information for both the company receiving it as well as the person filling it out. You should create your own if you don’t receive one after asking for it. It helps the IRS ensure that all businesses and individuals are paying the right entity for income, rent, services, and other payments.

The W-9 form provides the hiring company or vendee with your correct Tax Identification Number (TIN), serving as one form of documentation that proves you are eligible to work in the United States through citizenship or by being a tax resident. Through the certification that this person is U.S. based, it also means the company is not required to withhold or report payments to people who are not U.S. based.

The W-9 form allows the IRS to estimate the taxes an independent contractor or freelancer would owe, while also allowing businesses to be exempt from withholding and paying taxes on their behalf. If you are working for any company as any type of contractor or vendor, no matter if they are an individual or corporation, many will ask that you fill out a W-9 form. If you don’t know what this means, read on to find out more!


What is a W-9?

A W-9 is a form that tells the person you’re working for who you are, so they know they are paying the right person or company. When you first start working for someone as a vendor or in a contractor position, they will typically ask you to fill out a W-9 form. It’s basically a form that verifies your name and taxpayer identification number (TIN).

The W-9 form also provides information about you, including your address, your job title, and the type of work that you do. It also tells the hiring company if you are an independent contractor or a vendor. There are different rules for every kind of work, so knowing the difference is important.

Protea Financial What is a W-9

How Do You Fill Out a W-9 Form

Ideally, the company’s W-9 form should be provided to you so you can follow its instructions. You can also download a blank form from the IRS website for your own use if you do not get one from the company directly. You can find the form by searching the IRS website for the “W-9’’.

With the W-9, you need to give your name, address, Taxpayer Identification Number (TIN), the name of the business you are providing services for, along with the type of work you do. You also need to sign the W-9 and keep a copy for yourself.


When Should You Submit a W-9?

You should give the company your W-9 form as soon as you start working for them, if not prior to your start date. Some companies, like payroll services, will specifically ask that you send the form before you start working for them.

You should also submit the W-9 when you are hired as an independent contractor. The person hiring you will often ask you to fill out a W-9 and should also be able to answer any questions you may have during the process of filling it out.


What Required Information is on a W-9 Form?

There are two main sections on the W-9 form: The “Name’’ section and the “Taxpayer identification’’ section. Each has different information you need to input.

  1. The “Name’’ section includes the name of the individual filling out the form as well as the name of the person or business they are providing services for.
  2. The “Taxpayer identification’’ section includes the individual’s TIN, address, and the type of work they are doing.


Who Receives the W-9 Form?

The company that hires you receives the form. It is the company’s responsibility to ensure they are paying the correct person or company, whether that be as an independent contractor or as a vendor. The W-9 also verifies that you are eligible to work in the United States.

Protea Financial Independent Contractor or Vendor W-9

Why Is It Important to Know the Tax Status of Individuals?

Working with contractors and other individuals can be tricky when it comes to taxes. If someone is declared an independent contractor, they have to pre-pay federal or state income tax out of their earnings. However, they are responsible for paying self-employment taxes, which are often higher than many expect.

Since their income isn’t reported to the IRS, there is no way to know if they are paying their taxes correctly. If they work as an independent contractor, they are supposed to provide their 1099-MISC tax form to the person they perform work for each year. This shows how much they made during the year, and whoever receives this form is supposed to report it on their taxes.


What Do Employers and Individuals Learn from a W-9?

Both individuals and companies can learn information by looking over the W-9 form. The hiring company can learn if the individual is correctly declaring themselves as an independent contractor or a vendor. They can also see if the individual is accurately reporting the amount of taxes that they paid during the year.

The individual filling out the form can learn how much they need to pay in taxes, based on the income they received during the year. This knowledge helps them figure out how much to set aside from each paycheck so they can keep up with their self-employment tax amounts.


Turn to Protea Financial to Keep Your Company’s W-9 Information Organized

The W-9 form is important because it determines if an individual has taxes withheld from their pay. It is essential to fill out the W-9 form correctly and report your income accurately. If you don’t, you could end up owing a lot of taxes at the end of the year.

For help filling out forms correctly or to keep your company’s W-9 forms organized, contact Protea Financial.

Let Protea Financial Help You Understand the W-9 and What Its For

Have you ever needed to fill out a W-9? As a vendor or independent contractor, it tells any company you perform services for a lot about you. To learn more, reach out to Protea Financial today!

Harvest: What Information Your Accountant Needs

Harvest: What Information Your Accountant Needs

Inventory is arguably the most complex accounting function for wineries, starting with harvest. Harvest is the most exciting and demanding time for wineries, requiring a lot of information to be communicated back to your accountant. Still, luckily some information can be provided before this hectic period.


Grown or Purchased Grapes

To provide the appropriate information to your accountant, we first need to ask where you are sourcing your crop from? Are the grapes estate grown? Or do you purchase the grapes?


Estate Grown Grapes

If you grow your grapes, many vital pieces of information can be provided to your accountant well before harvest and will make the process during and after harvest much more streamlined. First, total acreage is needed for yield confirmation. The total tons harvested are compared to total producing acres to check for reasonableness. Likely the easiest way to provide this information is with a vineyard map.

The vineyard map should include block and varietal information. In addition, when not all vineyards are in production, it’s necessary to let your accountant know which vineyards or vineyard blocks the development relates to. Typically, it takes three years for a vine to produce a viable crop. With this, it’s essential to let your accountant know the date when the vineyard development began. Accounting-wise, this means that all costs associated with developing that vineyard, things like irrigation, vines, and trellising, will be accumulated for those three years.

This accumulated amount will then be depreciated over 20 years. This depreciated amount will be added to the annual cost of maintaining the vineyard. The price of estate-grown grapes is 12 months’ worth of farming and vineyard maintenance costs. Many wineries account for the 12 months based on a harvest year, with usually November through October of the harvest year. Other wineries for ease of reporting take 12 calendar months (January through December). Like all accounting though, consistency is the most important factor for accumulating farming costs. Whichever method is chosen, keeping that selection year over year is crucial to maintaining comparable financial information. Related to this, it’s also helpful to have an annual vineyard management budget to ensure all costs have been considered and the accumulated costs align with projected costs.

Protea Financial Harvest Accounting

Grape Sales

It’s common that wineries that grow their own crop sell a portion of those grapes to different buyers. Your accountant needs the following information for grape sales: customer information including legal name and address, billing email address, payment terms, and expected tons. This is an excellent example of information that can be provided before harvest begins. Providing information beforehand improves the turnaround time of final invoicing, increasing your opportunity to be paid promptly. Once harvest is complete or well underway, buyer weigh tags, or a weigh tag log will need to be provided to complete the final invoicing to the customer.


Weigh Tags

Once harvest begins, tonnage information needs to be provided to your accountant. This is usually provided via weighmaster certificates, commonly referred to as weigh tags and/or a weigh tag log. Weigh tags include harvest date, owner, grower, tonnage, vintage & varietal. This information will be used in the ending cost calculation for your wine. It’s important to note that all weigh tags are needed, including grapes sold to other parties, as mentioned in the prior section. It’s helpful to provide additional information than what is provided on the weigh tags, such as corresponding bulk wine SKU because wines are often blended, or a rosé is bled off.


Cash Flow Considerations

If you purchase grapes, you likely have grape purchase contracts with the grower. These contracts usually contain payment terms, varietal, and estimated tons. Having this information before harvest is helpful for inventory costing purposes and forecasting cash flow. Managing cash flow for wineries is always a challenge, especially after harvest. Having information early on can help prepare and allow enough time to take corrective action against future potential cash constraints.

Protea Financial Grape Purchases After Harvest

Grape Purchases

The same weigh tag information mentioned above for estate-grown grapes should be collected for purchased grapes. In addition, invoices need to be provided. Something to note is that many farming invoices have payment terms that break the payments into different calendar years. For example, 50% being due 30 days after the pick date, and 50% is due 1/31/23. Even with these split payment terms, all costs should be recorded at the harvest date. This is because the amount is owed to the grower at the time of harvest and is due at different dates, but the entire amount is due. There are times that invoices are not received by period end. When this occurs, the tonnage received times the contracted price will be accrued, which means being recorded as a liability by the winery. So even though a bill for the grapes was not received, they still need to be recorded as owed to the grower.


Natural Disaster or Event

In recent years, nature has shown us many ways in which harvest can be affected, both good and bad. Some harvests yield more than expected, some less, including none which has been seen lately. What’s important is to share all relevant information with your accountant if you are affected by a natural event or disaster. Some examples of this are larger than anticipated yields, vines affected by smoke taint, vineyard damage, and any insurance payouts for vineyard or grape-related damages.


Never Too Much Information

To summarize, too much information is always better than not enough. When in doubt, provide the information to your accountant and provide it early. Prompt information makes timely reporting possible, allowing for well-informed and better management decisions.


Let Protea Financial Help You with Your Next Harvest

Are you looking for more information? Contact Protea Financial today and let us help you organize your finances, streamline your inventory costing, and be ready ahead of the next harvest.

Protea Financial Can Help You Get Ready for Harvest Accounting

Call Protea Financial for help with getting ready for harvest time. We can help organize your finances or help you prepare for harvest bookkeeping. We are here to help!