Article originally seen on the Nappa Valley RegisterSam Jones


It takes a lot of sweat and know-how to produce a bottle of wine. It also takes a breathtaking amount of paperwork.

Wineries are required to keep detailed records and file endless forms in order to comply with local, state, and federal regulations, pay taxes at all levels, and follow state-by-state direct shipping rules. Handling this pile of paper is what’s know as “compliance.”

“It’s one of those services that no one wants to get into, but everyone needs,” said Timothy Allen of the Allen Group. “Behind every glass is 12 hours of paperwork and 50 tax returns.”

The Allen Group has a history of doing accounting, bookkeeping and financial advisory work for wineries and construction companies, and recently added compliance to their services out of necessity. When Allen’s clients needed compliance work done, he needed an answer — even if compliance firms weren’t taking on new accounts.

Thus, they learned how to do the work themselves, brought on compliance experts, and in January, added a new compliance division to the company.

Due to the complex and fragmented nature of alcohol laws in the United States, “compliance” means managing rules and regulations for the state of production, at the federal level, and individually for each state that receives shipments.

“One thing that was important to us is that we will do it all,” said Allen.

This meant hiring folks like Jeff Balch as a compliance associate. With six years of experience in wine reporting, bookkeeping and accounting, Balch had to learn as he went, as there weren’t and still aren’t any specific courses for vintners and winery staff to acquire the skills needed to properly track and report vintage data.

What is compliance?

What is the difference between bookkeeping, accounting and compliance?

“Bookkeeping is the function of getting your bills paid and your employees paid, and maybe getting your tax info,” said Bach. “Accounting is more of the higher level, cost-per-case strategy, pricing, forecasting … and then compliance is government reporting, and government regulation.”

“Generally speaking, there’s no professional certifications or classes at the junior college, so you can’t really get any type of education or preparation for it other than on-the-job training,” said Balch. “It’s just changed so much in the last 10, 15 years because of the rise of direct-to-consumer shipping, changes in technology as far as online reporting and communications with different state agencies, that this is all sort of happening as we see it now.”

“Without having that professional certification available or some courses or something like that, there really is no background for people other than going in and doing trial by fire.”

The Allen Group takes on both new businesses and existing companies that found themselves in too deep, as their business model allows them to “fold in” new clients rather than an in-house department needing to start from scratch. So whether wineries have gotten in trouble with a federal or state agency, are overwhelming their staff with paperwork, or want to set up a system from the ground up, Allen Group tries to adapt their services accordingly.

“It is difficult for a winery to have a dedicated staff member because it is basically a full-time job for any winery, but once you get a firm like this you get an economy of scale,” said Balch. “For us, we can get it done a lot more efficiently and we know exactly what to do without having to cost a winery $50,000, $60,000, $80,000, whatever it may be a year to pay a full-time staff member for this.”

Another local player in wine compliance is Ann Reynolds, who recently decided enough was enough when it came to these lacking resources for folks attempting to do their own, in-house compliance work. Reynolds started working in wineries in 1993, and started doing compliance work — although it wasn’t called that yet — in late 1997.

“My job responsibilities were reconciling the winemaking records and entering all of their activities into the software and database to track that, and that’s when I started having all sorts of questions about the records and numbers and alcohols,” she said. “I looked around and couldn’t find anything more than little drips of trainings, like a half-day course at Sonoma State, for example, and there is still no formal training for compliance.”

Attempting to change this, Reynolds recently launched a suite of courses running folks through the tasks and reporting that need to be completed in the pre-, mid-, and post-harvest stages. The first of these courses was launched during the current harvest season, and details the necessary steps required for the TTB, or federal Alcohol and Tobacco Tax and Trade Bureau.

“We decided for that course for this harvest because that’s all U.S. wineries, so nationwide somebody could sign up for this course,” said Reynolds. “The pre-section is about informing them about what they need to start organizing as far as the grapes that are going to be coming in, and then the during section goes over what they need to be tracking, what the records look like, and then how to report receiving grapes on the primary federal report.”

The post-harvest section then takes place after fermentation is complete, which Reynolds says is an extremely important step since it ties directly to their labels and federal excise taxes.

“The most common thing that I’ve seen over the years is that most people just have no idea that this stuff is tied to their labels,” she said.

Reynolds said that the next course will be released soon, and will detail the steps necessary for California agencies during harvest. Of the curriculum, Reynolds and her colleagues also included self-guided quizzes, live Q&A sessions, and a certificate of completion for the end of the course.

“A lot of the reason for doing training courses and teaching compliance over the years has directly to do with my original experience of having no training and having to figure it out the hard way,” she said. “It’s just so specialized, and intuitive is definitely not a word that comes into play, and that’s a lot of the reason for its lack of popularity.”

“When you say compliance, most people make a face — It’s the unglamorous part of the winemaking world.”