By Maria Young
For the Oregon Beer Growler
Some of the most important professional meetings in our lives are the ones we look forward to least: the dentist, the attorney, the tax professional. But imagine finding a professional service provider who feels like an integrated business partner. How could it change your experience? Could it help you feel empowered rather than intimidated? I don’t know how to give advice on finding other great professionals, but as a CPA I can share thoughts on how to find an accountant best suited for your needs and personality.
First, consider the size and scope of your business. When new or very small, it's hard to decide how to handle the accounting. Do it yourself? Hire an in-house bookkeeper? Outsource it? The best investment a small business can make is in a good bookkeeper. In the early stages, a solid bookkeeper can handle the day-to-day business. Then find a CPA to do your taxes and with whom you can consult on a quarterly basis. There's no widely accepted credential for bookkeepers, so you have to vet them rigorously to make sure you are getting someone worth his or her salt.
Finding a CPA is also a bit of a process, but at least there's a state-regulated license that allows you to feel a certain level of assurance about the individual’s skill set. That being said, you can count on bigger firms costing more than smaller firms, but bigger isn't always better. Ask around and talk to other people about their experiences with CPAs. In my opinion, technical skills are par for the course, but what really sets a good accountant apart from a mediocre one is communication skills. The individual you hire should be able to clearly tell the story behind the numbers. Does he or she explain concepts in a way that makes sense and feels approachable? Are they responsive?
Additionally, find someone who understands your circumstances. Are they interested in your business? Have they helped companies of a similar size and do they understand what growth looks like for a company like yours? How well does your prospective accountant understand your industry? The individual’s deep knowledge of your professional landscape will yield greater insight into your finances. When interviewing a CPA ask questions about how that person has helped companies like yours. Pose business questions and consider the answers offered. Ask the CPA to consider not only the financial advantage of a proposed course of action, but also the tax consequences or operational ramifications.
Hiring an accountant who can be a partner to your business can elevate your operation and empower you to achieve your goals. But finding the right fit is a two-fold effort that includes getting the right personality match and the right industry expertise. Always keep your eye out for the right fit, and when it comes along you’ll actually look forward to those financial conversations!
Maria Young is a CPA with Radix Accounting, which offers bookkeeping, payroll, contract controller services, and tax preparation for breweries.
By Scott Pillsbury
Begin and End Right With Your Beer Labels
Bottling your beer is a huge step for most craft breweries. It provides a much wider audience for your beer and helps to build brand awareness that supports the draft and keg business. You can also easily expand your geographic footprint with distribution in bottles, but it has to be done correctly.
Begin With the Brand
Based on the thousands of label designs we have seen, people are always asking for our input about label designs. My answer is always the same: It has to match your authentic brand. Your entire business needs to have a cohesive and unified brand image -- really the DNA or the “soul” of the business. Every business has one, and it is up to the leader to closely guard, protect, and cultivate that brand. Once this brand is clearly defined, the website, the on-premise decor, the signage and the labels should all flow directly from this core. That is what makes a great label design — a consistent look and feel that replicates the feeling of being in your pub in person. Some are upscale and polished. Some are hand-crafted and rustic. Neither of these is right or wrong, it just has to be consistent to reinforce your brand image.
End With the Retail Cooler
As important as the design is, the execution of that design is just as important. Make sure your label vendor is familiar with your labeling equipment (if you own your own line) or has worked directly with your mobile bottler. And make sure they are very familiar with all the requirements for cold storage, proper adhesive, scuff protection and condensation. The job isn't really finished until the label is applied to the bottle, delivered to the store, and taken home to drink by your consumer. Design is critical to a successful label project, but there are many other practical and technical requirements that really don't add to the finished label. However, they can certainly detract from it if they aren't done correctly.
Ask for references and talk to other brewers. Most are willing to share their success stories and point you in the right direction. Bottling your beer is an exciting step. Make sure you begin and end the process correctly, and you will be on your way to building your brand and growing your successful brewery.
Scott Pillsbury is President of Rose City Label in Portland. They print for 45 breweries and are the only Project L.I.F.E. eco-certified label printer in the Pacific Northwest. Learn more at www.rclabel.com.
By Matthew Diment, CPA
As breweries work to put out a wider variety of beers while increasing production, some questions
should arise: Am I costing these products correctly? Is my inventory valued appropriately? Do I know my margin by product lines? Am I losing money on every bottle sold of my best-selling beer?
There are three main components to the cost of product and inventory - raw materials and packaging, labor, and everything else, which falls under the heading of overhead. Raw materials and packaging are typically the easiest pieces to quantify. There is a standard recipe and the price of malt, hops and any adjuncts is known. Crop prices can impact this, but again it is a known amount and often these crops are locked in for the year at a specified price.
Labor can be a little trickier but is still a fairly easy number to grasp. If the quantity produced over a specified time period and the number of production labor hours is known, it should be a simple equation to figure out the allocation of labor to each batch. However, different beers should probably not have the same labor hours allocated to them. A 90-minute boil will have a higher labor allocation than a 60-minute boil. A cellared beer may have additional labor hours, etc.
The hardest item to account for is overhead. Overhead consists of expenses like utilities, depreciation of production equipment, rent, etc. that need to be allocated into product cost and inventory values. Overhead is typically applied using a standard rate due to fluctuations in costs and the total expense is brought to the correct balance at period end. Similar to labor, not every product line will have the same overhead allocation. For example, any beer in an aging program should probably have a higher level of overhead assigned to it during its cellaring process. To add to the complexity of overhead costing, the IRS has different rules for tax purposes as mandated by code section 263A. This code section dictates that additional general and administrative costs not generally included in inventory for financial purposes must be capitalized into inventory at year end for tax reporting.
So, if you are including the correct amount of raw materials, labor and overhead in inventory and since there is no impact to the total bottom line, why should you care about allocating correctly between product lines? Because it is important to know your profit margin by products. It could be that you are making a large margin on one product but losing money on every bottle sold of another. Without knowing your product costs, you are guessing at your sales price, or just following the pricing of other breweries. This assumes that the other breweries have the exact same costing structure and have gone through the process of understanding their product costs. One or both of these is probably an incorrect assumption.
Consider all of the factors of inventory costing the next time you are valuing your inventory for tax and other reporting purposes and think about whether you know your real margin. You may need to consult with your internal and external financial team to retool your costing structure.
This information was provided by Matthew Diment, of Kernutt Stokes, CPAs and Consultants. Matthew and a team of professionals serve the craft brewing industry.
For questions or more information, contact Matthew at 541.687.1170 or email@example.com.
By Jason Jordan
A company hosts an event at your establishment and alcohol is served. One of the attendees overindulges, gets in his or her car, and drives straight into oncoming traffic on the highway, killing a family of four. The surviving relatives sue for damages, naming everyone connected to the event in the suit, including your facility. How do you avoid a tragedy such as this?
When it comes to liquor sales, every brewpub, winery, hotel, restaurant, lounge, and hospitality establishment must follow state and federal laws. Because laws differ from state to state, businesses must follow regional liquor laws.
Intent of the Law
The Dram Shop Act is intended to place responsibility for damages caused by intoxicants on those who profit from the sale of alcohol. And to protect the health, safety, and welfare of the people from the dangers of traffic in liquor. The term “Dram Shop” comes from the 18th century businesses in England that sold gin by the spoonful, called a dram. Dram shop laws hold retail and hospitality establishments accountable for any harm—death, injury, or other damages—caused by an intoxicated patron.
Each establishment must be licensed to sell and serve alcohol. Licenses should be renewed and displayed appropriately. Display proper signage. Signs displaying responsible drinking information, the establishment’s policies, and all legal information must be clearly posted.
Make Sure Your Vendors are Licensed and Insured
If you hire a vendor to sell or serve alcohol for your event, make sure the vendor is compliant with state and local licensing and insurance regulations.
Do background checks, run motor vehicle reports and check references on new hires to determine whether any offenses apply, including past alcohol offenses and previous serving responsibilities.
Ensure Employee Training
All employees who serve alcoholic beverages must successfully complete an alcohol server training course before serving. Different states
may have different laws or recognize various
other agencies or sources or training/certification. Maintain training records, including copies of certificates of the training and date completed for each employee. Ensure that all employees complete training within the time frames by the certificate.
Critical parts of alcohol server training include:
• Checking customer ID and recognizing false ID.
• Recognizing when someone appears to be purchasing alcohol for minors.
• Recognizing signs of intoxication or alcohol impairment.
• Identifying situations that are likely to escalate or lead to extreme intoxication.
• Diplomatically refusing to sell to minors and intoxicated persons, and identifying when circumstances are questionable.
Basic Serving Policies Include:
Alcoholic beverages may not be served at any time by any employee or manager of an insured employee to any individual who is under 21 years of age; who shows signs of being intoxicated; or who is at a point of being likely to become intoxicated.
Consumption of alcoholic beverages by any em- ployee or manager while working is not permitted.
Service of alcoholic beverages by a server who is intoxicated is prohibited.
To avoid incidents, employees should provide:
• Nonalcoholic drinks and food.
• A telephone for contacting a taxi service if a customer is too intoxicated to drive.
Keep a log whenever any of the following occur:
• Identification is not accepted.
• Service is refused or stopped.
• When alternative transportation is offered.
• Any violent action by anyone.
• When police are called to come to the premises.
• Any situation where the manager believes a record may be of value for future reference.
The principles contained in this material are general and, to the best of our knowledge, current at the time of publication. Ross & Associates Insurance Services Inc. specifically disclaims all liability for damages or personal injury alleged to arise from reliance on the information contained in this article.
Jason Jordan is a licensed property & casualty insurance agent at Ross & Associates Insurance Services Inc., in Portland. Contact him at firstname.lastname@example.org.