This article was largely written by Chris Farmand, a CPA who helps breweries with several accounting and accounting-related issues (view his full bio below). This is the first article in a continuing series of articles Ask a CPA where Chris provides a few basic tips for breweries to establish and maintain effective accounting systems.
Daily Record-Keeping Tips
For every brewery, daily record keeping must be top of mind. Not only does the TTB require a number of documents to be readily available at all times; state agencies expect the same. The following is a list of some of the records the TTB could ask you to produce upon a site visit:
- Amounts and types of ingredients used;
- Amount of beer produced;
- Amount of beer transported for packaging, or removed from brewery;
- Beer used for laboratory samples;
- Beer consumed at the brewery;
- Beer returned to the brewery;
- Beer received from other breweries;
- Beer lost due to breakage, theft, casualty, or otherwise;
- Ingredients sold or transferred to others (as well as identification of others)
- Record of tests of measuring devices;
- Flowmeter readings;
- Previously filed TTB & state reports; and
- Beer purchased from or sold to other brewer’s.
How to keep these and other documents organized?
I have come up with three suggestions on keeping vital brewery documents organized.
Self-Managed Paper Database (file cabinet)
Yes, a file cabinet. With this suggestion you are free to organize the file folders as you see fit. Of the three suggestions, I believe this is the least effective option. Paper documents are much harder to access than digital records. They are harder to secure and paper backups only mean more paper copies. While this is not my favorite, it is an option.
Self-Managed Online Database
For this suggestion I recommend using an online document management system. Some of the more popular systems out there are DropBox, Box.com, Smartvault, and Google Drive. The good news about these services is that they are typically either free or low-cost and can be set up to synchronize with documents on your office computer. Another super important feature is these services automatically backup your data in the “cloud.” The bad news is that, in order to make these systems work, you will need to set up effective operating procedures. An example of an operating procedures would include scanning and uploading vital documents to their respective folders you create. The advantage of this suggestion is your documents will be available from anywhere there is a internet connection, which would make document lookup and sharing a breeze if everything is organized. On the flipside, if you subscribe to one of these services and have not implemented a careful plan of document management you will end up with a disorganized mess that may, at worst, get you into trouble with the TTB or, at best, make you miss out on possible tax-breaks.
Brewery Management Software
My last suggestion is to invest in brewery manufacturing software. This will allow you to organize the entire brewing process and keep your team accountable. One common feature I have seen with these packages is the ability to scan and upload source documents (i.e. PO’s, bill of ladings, invoices) directly into the system. This adds deeper level of organization that brewers/owners can benefit from. A deeper level could mean being able to compare grain bills over a six month period to analyze cost for strategic planning purposes. Staying on the document management topic, this would be the most robust option for organization.