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Some accounting tips for the craft brewer


We will be showcasing local breweries, brews and sharing new information about everything RMBR.  Hope you enjoy!

Some accounting tips for the craft brewer

Rocky Mountain Brew runs

The following post is from Forrest Rose, owner of Grey CPAs. Forrest is a beer drinker with an accounting problem, and wanted to share some tax and accounting advice for all the craft brewers out there.

Long after the suds are poured into your patrons bellies, and all the barrels have been emptied into cans or bottles and shipped off to your distributors, craft brewers have to, unfortunately, account for all their expenses and pay Uncle Sam their fair share. You know, the same uncle that may or may not pay you back depending on how he feels during a fiscal year? Yeah, we have an up and down relationship with that uncle as well.

Whether you are a budding business with small barrels in your basement, or a large outfit pumping out more than 100 barrels a year, there are some things to think about before you file your taxes for 2016.

1.  Cost of Goods Sold:
If you are selling beer to your fellow beer drinkers, make sure you are accounting for Cost of Goods Sold. Pretty simply, this is the cost of all the good stuff that goes into making your deliciousness. Yeast, hops, barley, water, and anything else that goes into what you or someone else consumes can be itemized as a deduction. Cost of Goods Sold can be broken down into three categories: Materials, Labor, and Overhead.

2. Direct Materials: 
This is all the ingredients that we mentioned above. One way to simply keep track is to use a spreadsheet (Excel or through Google docs), and track the total amount of money you are spending on each ingredient, how much each ingredient is being used in each batch, etc. Brewery software can also be used, or contacting a certified public accountant is recommended.

3. Direct Labor:
 This is the blood, sweat, tears (and tasting) that go into the process of brewing beer. Three separate labor activities should be accounted for. These are – production, cellaring, and packaging. Some small brewers may not be packaging in cans or bottles, so replace with kegging if you are selling to bars, restaurants, or through other avenues.

4. Direct Overhead:
Basically, anything that is not materials and labor can go into this category. Are you brewing beer at your home? Great! A portion or all of your rent may be deducted from your income at the end of the year.
Clearly, some of the above is more than enough scramble any craft brewers brain. For any breweries that are producing less than 1,000 barrels a year, you might have a much more simple calculation. For those of you who want to maximize deductions, every little bit helps, especially when you are trying to get your fantastic beer out to your thirsty patrons.

Our advice: Leave this up to the professionals. Just like you are the king of craft, the meister of beer, and the saint of saison, accountants are the ones who can make your lives easier.  They will save you money, time, and most of all, allow you to drink more of the happy concoction that you are making!