From winemaking to marketing; sales to accounting, every part of running a winery contributes to the success of the business. Part of ensuring success is keeping the business compliant. This is particularly important if you are selected for a TTB audit.
Compliance isn’t a fun or popular topic, but it is a necessary one. You need an organizational system in place that can offer better visibility into your winery. Whether it is a sophisticated software program or a detailed spreadsheet; it needs to be set up in a way that allows you to comprehensively access your data with ease.
We recommend giving yourself a practice audit to see how prepared you are. Here’s how to begin:
- Locate your winemaking files; including work order logs, weigh tags, and bills of lading, etc. – are they all there and in chronological order?
- Find your current TTB bond – is it up to date and current?
- Do you have your TTB basic permit files?
- Be sure you have all copies of reports you’ve filed with the TTB: 5120.17, excise tax (5000.24) and COLAs
Now; test your record keeping – choose a wine and try to find all of the records for that wine from receiving the grapes or juice all the way through bottling.
Did you find any holes in your system? Did it take you longer than you’d like to admit? If so, don’t be surprised, most wineries will find that they are lacking at least some components when it comes to their compliance. even those who consider their system to be highly organized and efficient – they quickly discover that there are a few gaps in their record keeping.
The most common issue found by the TTB (as per their website) was that proper documentation for the Report of Wine Premises Operations was inadequate, or in some cases non-existent. This is an easy fix, write everything down, or put everything into a computerized database in a coherent and organized fashion. The TTB requires that all source records be on premise and easily accessible. This means you need to keep your invoices, inventory, lab results, bills of lading, etc organized and in a central location. Whether you have a giant binderyou keep everything in or you are 100% electronic you need to be organized to avoid the penalties and fines that an audit will cost you!
Either a manual or automated system requires discipline, effort, and organization. I have spoken to wineries who have been audited, and despite their lack of organization have survived an audit with little to no penalty or fines. But the process was daunting and in all cases very time consuming. Being proactive is the key. The more buttoned up you are and appear to be allows the TTB auditor to trust you keep accurate and detailed records and have complete traceability into all of your wines.
I hope this article was educational for you and hopefully eye-opening. Do the practice audit, you’ll be ahead of the game and better prepared from a visit from your friendly government auditor.