Craft Brewery Accounting and Finance - Three Essential Roles for Your Business

"Accounting is the Language of Business" — Warren Buffet

Let’s start thinking of craft breweries in a more mature light, focusing on what it takes to make them profitable and sustainable. Craft brewing is an incredible way to bring your community together and showcase your craft, but success in the industry requires more than just passion—it demands understanding the language of business. Learning that language can be tough, but it’s essential for making your craft brewery thrive and improving your bottom line.

The Foundation: Your Bookkeeper

The foundation of your craft brewery’s financial health begins with a reliable bookkeeper. This individual manages the day-to-day financial tasks, such as recording accounts payable and receivable, maintaining accurate financial records, and even running payroll. Essentially, the bookkeeper ensures that your accounting processes are running smoothly, taking on administrative duties that allow you to focus on growing your brewery.

Bookkeepers also play a critical role in compliance. They can handle your TTB (Alcohol and Tobacco Tax and Trade Bureau) reports and ensure proper registration of keg collars. Finding the right bookkeeper is essential for freeing up your time to concentrate on scaling your business rather than drowning in paperwork.

The Next Step: Finding a CPA

Once your bookkeeper is in place, the next logical step is to hire a CPA (Certified Public Accountant) who can help turn your brewing passion into a profitable business. Ideally, you'll want to find a CPA who has experience working with breweries or restaurants, as the business is a unique combination of both manufacturing and hospitality.

When interviewing potential CPAs, consider asking these key questions:

• Do your systems integrate? A good CPA should have access to your accounting software, TTB reports, and brewery management systems to audit submissions, calculate COGS (Cost of Goods Sold), and help source ingredients more efficiently.
• Are they willing to dig deep? A great CPA will go beyond the basics, working with you regularly to improve margins. Ask them about their approach to COGS calculations and cost optimization strategies.
• Do they offer bookkeeping services? Some CPAs handle both tax services and bookkeeping, which can streamline your entire accounting process.
• Do they have industry experience? Find CPAs who have worked with other breweries or businesses in the beverage/restaurant industry. Their knowledge of industry-specific challenges will be invaluable.

Questions to Gauge Flexibility

Here are some questions to ask a CPA during the interview process if you're concerned about their adaptability to your brewery's specific needs:

1. How have you helped brewery clients with expansion plans? Ensure they can explain how they have supported a client’s growth strategy while keeping finances stable and cash flow positive. If they can’t articulate a solid method, they might not be the best fit for your brewery's long-term growth.
2. Have you reduced manufacturing waste for clients? Ask for specific examples of how they helped a business minimize waste or reduce costs in the production process. This is especially important in breweries, where controlling inventory and resource use is critical.
3. How do you handle audits? Even if they don’t have brewery-specific audit experience, they should have helped other clients through audits and be able to apply that knowledge to your industry.
4. How often will we meet if I have an aggressive growth plan? You need a CPA who is willing to meet regularly, especially if your brewing company is rapidly expanding or facing financial challenges.
5. How have you managed seasonal cash flow for clients? Seasonal fluctuations are common in craft brewing. Make sure they have experience with managing cash flow during slow seasons and can provide reliable projections.

The Value of a CPA

Hiring a CPA may be an added cost, but think of it as an investment in your business. A competent CPA does more than crunch numbers—they interpret your financials, ask insightful questions, and guide you toward better operational decisions. If you're considering expansion—like adding a canning line or boosting production as part of your brewery operations program—a CPA can ensure that your growth is financially responsible.

One of the most important areas where a CPA can assist is understanding your gross profit margins. In the brewing industry, the standard gross margin typically ranges from 60% to 80%. Your CPA will help refine your COGS, aligning these costs with industry benchmarks. This means analyzing everything from water usage and cleaning chemicals to ingredient costs, packaging, utilities, and labor.

By breaking down these costs, you might find that certain beers, especially those with expensive grains or hops, can be managed more efficiently. Gaining clarity on your COGS can boost your margins from 50% to 70%, improving your bottom line, leading to increased profits. Brewing for profitability can feel overwhelming, but it’s essential to keeping your business running smoothly.

When to Hire a Controller

As your brewery grows, you may reach a point where hiring a controller makes sense. A controller brings several advantages to your business, including:

• Managing internal controls: Ensures all departments are accurately recording and interpreting data, improving financial tracking and reporting.
• Cost and cash flow management: Works to keep costs down while helping manage cash flow to achieve long-term goals.
• Tax planning and collaboration: Optimizes tax strategies while working across departments to align goals with the brewery’s financial needs.
• Pricing strategy and financial documents: Helps set pricing strategies to ensure your products have enough margin for distribution. They also prepare essential financial documents for audits and reviews to ensure you stay on track with long-term strategies.

If your brewery is generating $2 million to $5 million in revenue, you might want to consider a contract or part-time controller to manage the growing financial complexities. Once you hit the $5 million to $10 million mark, a full-time controller becomes essential to ensure smooth financial operations and strategic growth.

CPA Availability and Industry Challenges

There is a growing challenge in the accounting world. As of 2020, 75% of CPAs had reached retirement age, and in 2021, only 32,000 people passed the CPA exam. Currently, there are about 665,000 active CPAs in the U.S. The industry is shrinking, which means finding the right CPA might take time and negotiation. In some cases, outsourcing accounting services—even offshore—could be an option worth considering.

Conclusion

When you're looking to take more control of your brewery's finances and get more of your information out to help you make better decisions, look to the flexibility of the GoTab POS to help you, your staff, and your CPA! Our open platform and partnership and integration with leading brewery management systems like Ekos make GoTab the optimal solution to run your brewery operations more profitably. 

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