If you are launching your winery, you are probably excited about your first vintage and the idea of finally selling bottles under your own label. Then reality sets in. Along with vineyard operations, cellar work, and tasting room planning comes something far less glamorous: winery taxes and regulatory reporting.
The wine industry is one of the most heavily regulated businesses in the United States. That means wineries must juggle multiple layers of federal, state, and sometimes local requirements. Many first-year owners are surprised by how much paperwork and compliance work come with the business. Missing a deadline or filing incorrectly can result in penalties that cut into your already tight margins.
The good news is that once you understand what is required, you can create a system to keep everything on track.
Federal Winery Taxes and Reports
At the federal level, wineries are regulated by the Alcohol and Tobacco Tax and Trade Bureau (TTB). If you produce, bottle, or sell wine, you must stay compliant with their rules.
The two main requirements are:
1. Federal Excise Taxes
Excise taxes are paid on the wine you remove from bond, which means wine that is bottled and ready for sale. The tax rate depends on the alcohol content and the volume of wine. For small producers, there are tax credits available that can reduce the per-gallon rate. These credits can make a significant difference in your first years of production, but you need accurate reporting to claim them correctly.
2. Operational Reports
The TTB requires wineries to file regular reports on operations, including production, bottling, and removals from bond. These reports account for every gallon of wine, which is why accurate recordkeeping is so important. Even small mistakes can lead to time-consuming corrections or penalties.
State Winery Taxes and Reports
Every state has its own alcohol control authority, and the rules vary widely.
In most states, you will need to:
- Register with the state alcohol beverage control agency.
- File state excise tax reports that mirror federal filings but may have different rates or deadlines.
- Report sales by channel, such as direct-to-consumer shipments, wholesale distribution, and tasting room sales.
If you plan to ship wine across state lines, the complexity increases. Many states require separate permits for direct shipping, along with monthly or quarterly sales reports. It is common for wineries to juggle a dozen or more separate state reporting systems as they expand their customer base.
General Business Taxes
On top of industry-specific requirements, wineries must also comply with the same taxes as any other small business. That means:
- Income Taxes: Federal and state income tax filings for the business entity, whether it is an LLC, S corporation, or partnership.
- Payroll Taxes: If you have employees in the vineyard, cellar, or tasting room, you must withhold and remit payroll taxes.
- Sales Taxes: Depending on your state, tasting room and direct-to-consumer sales may be subject to sales tax. Reporting requirements differ, so this is another area where confusion is common.
Common Mistakes New Wineries Make
The most common compliance mistake is underestimating the time and organization required. Many new winery owners try to piece things together at the last minute, only to realize that they have not tracked inventory correctly or missed a filing deadline. Others assume that a generic bookkeeper will handle these specialized reports, only to discover that winery accounting requires a very different skill set.
Another frequent issue is misclassifying inventory. Wine in production, bulk wine, and bottled wine all have to be tracked separately. If these records are not accurate, your excise tax and operational reports will not reconcile.
How a Winery Accountant Helps
A winery accountant understands the unique compliance landscape and builds your recordkeeping system around it. Instead of scrambling at the end of the quarter, you will already have your production and sales data organized for reporting.
At Llamas Financial, we help wineries set up systems that capture the right information at every step of the process. That means your vineyard costs flow into production records, your bottling numbers tie into excise tax filings, and your sales channels are reported correctly for both state and federal purposes.
By having everything set up properly in year one, you avoid the costly clean-up that so many new wineries face. More importantly, you can focus on running your winery with confidence that the compliance side is under control.
Takeaway
Your first year as a winery owner is exciting, but it is also paperwork-heavy. Between federal excise taxes, TTB operational reports, state filings, and general business taxes, the list of requirements can feel overwhelming. Missing any of them can cost you money, time, and peace of mind.
The key is not to go it alone.
With the help of a winery accountant, you can navigate these requirements smoothly, avoid costly mistakes, and stay focused on making and selling wine. Taxes and reports may never be the fun part of owning a winery, but with the right support, they do not have to be the stressful part either.
At Llamas Financial, we guide wineries through the maze of compliance so you can spend more time in the vineyard and cellar and less time worrying about deadlines and penalties.
