Beer Business Finance: How to Set Up Taproom Financial Reporting

And finally, we get to bottling and aging, where the beer goes into cans, bottles, or kegs, sometimes with artificial carbonation. If there’s no artificial carbonation, then it may be aged for a while, to give it time to naturally carbonate. At this point, the beer production process is brewery accounting complete, but there’s also a lot of waste, which is called spent grain. Most breweries donate their spent grain to farms for animal feed, but it can also be used as compost, or as ingredients in baked goods, or even used to produce methane, which is then used to power the brewery.

Tracking Inventory From a Financial Perspective

Our team of strategic advisors will help you develop a plan to keep you on the road to financial success and profitability in today’s constantly changing business environment. You’ve nominated a local bookkeeper to help out a day a week, they know what they’re doing so you can leave them to get on with it. If they’re just recording and tracking everything in a library of local Excel spreadsheets, controlled and understood by them – that’s a big risk. What if their laptop crashes or the person leaves your business without warning.

Minimizing Potential Accounting Pitfalls in Daily Operations

• In short, ending raw materials are valued at their most recent purchase costs, while work in process and finished goods are valued using a standard cost.
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• It requires you to track exactly how much alcohol you’ve sold, and the revenue you’ve gained from that alcohol, while also keeping inventory figures in mind.
• For example, when you make a taproom sale, the transaction is recorded in the general ledger.
• This report is used to track the amount of beer flowing through the brewery, and to impose the federal excise tax.
• From this list, you can create a separate sales or expense account for every relevant item you want to track.
• Losing track of these measurements for even a day can lead to costly decisions based on flawed data—and it can also lead to delays and decreased brand reputation.

With that disruption comes new opportunities, new ideas and new ways of conducting business. Many small breweries grow too quickly and lack a well-polished financial plan. Beyond cash flow, it is important tounderstand and consider all of your financials when determining your strategyand planning for the future of your brewery. A good rule of thumb is todesignate an amount equal to 10% of revenues for “other expenses” under uses ofcash — so you’ll have some cushion when unforeseen costs arise.

What did Cohen say?

It’s the area within a brewery where it serves beer to its customers. This can be a seriously profitable area, so it needs separate reporting. If you transfer https://www.bookstime.com/articles/cannabis-accounting beer from the brewery to the taproom at cost, then the taproom is going to report massive profits, while the brewery doesn’t get to report any profits at all.

Better Brewery Production Planning

• This includes recording transactions, creating reports, reconciling accounts, and other tasks necessary for proper management of finances.
• In this article we’ll clear up the confusion and provide clear guidance so that you can confidently measure your brewery overhead costs.
• And if you need to power up your business's accounting software as your company grows, you can do that.
• Accounting software and automation tools for breweries allow businesses to generate custom reports, giving them greater insight into financial performance over time.
• The list includes what needs to be done, when it needs to be completed and who will do it.
• You can choose a lower-cost "light" version of accounting software that gives you just what you need, without all the advanced features.

But most small business owners should consider getting accounting software. Stop suffering and start saving time (and money) during tax season and throughout the year. And even if you, like me, love your spreadsheets and feel like you've got a good system in place? A key starting point is to set up the chart of accounts so that you can track the results of the taproom separately from brewery operations. This will give you a clear visual of the financial results of the different cost centers of the business. The income statement, balance sheet, and cash-flow statement make up the “big three” financial reports.

Brewery overhead costs simplified: expenses to include and exclude and beyond

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• Using digital invoices makes this process much easier, as they are less prone to errors than physical invoices because the data is entered and processed electronically.
• It can dynamically account for all your sales, tracking through individual recipe and revenue streams as well as combining them for more comprehensive reporting.
• This involves entering data accurately while keeping track which account each transaction belongs to, in order to ensure accuracy throughout reporting periods down the line.
• You’ll need to adjust for theseunexpected changes as you move forward month to month.

Optimizing Your Financial Reporting Practices for Reliable Compliance