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Avoid tax liability: How to control alcohol spillage and shrinkage
By Carla Harris
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Government auditors suggest that incorporating strong internal controls are the best way to avoid tax liability problems at tax audit time. Here are a few tips to effectively control alcohol spillage and shrinkage.
Always keep good records and have a detailed P.O.S. system or decent cash register for detailed record keeping. When a restaurant is targeted for a tax audit, the auditor could demand to see everything from cash register tapes, sales records, and purchase invoices, to deposit receipts and financial statements. Often, they may even look over the printed menus, check bar prices and examine the glassware and pour sizes in the bar.
Keep a weekly record of spillage and items removed for cooking (i.e. in recipes), as this is part of the inventory. Develop detailed recipes for all drinks sold in the bar and ensure that the bartenders adhere to them. Train your employees to pour accurately - this is important for draft beer and wine, as well as liquor.
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Effective inventory control through an independent service can pay for itself by boosting a bar's profits by 10 to 15 per cent and providing an unbiased view of the operation from an independent source, as employees are not involved in the inventory control system.
Hence, as soon as you hear of an impending tax audit, hire an independent auditing company to help calculate your REAL shrinkage rate that is unique to your establishment. This will be proof that you give to the tax auditor in case their own standards are too low for your business.
Independent auditors, like those at Bevinco, take a weekly on-site inventory and then analyze the usage out of every bottle/keg using a sophisticated software program and a set of scientific scales. The result is a confidential report that shows a restaurant owner exactly how many ounces are missing from every bottle/keg in the bar.
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In recent survey run by Bevinco, it was possible to determine that the average bar was losing over 25% due to over-pouring and theft. These heavy losses are hidden by ordinary pour cost analysis - but Bevinco's reports were able to show where this shrinkage was, and help to eliminate it.
About the Author:
Carla Harris is Vice President, Sales and Marketing, of Bevinco -- a unique alcohol auditing service for bar and restaurant owners. Bevinco has been the hospitality industry leader in beverage auditing and inventory since 1987, and currently have more than 200 franchised offices worldwide. Bevinco consultants and auditors can be reached at 416-490-6266 or 1-888-BEVINCO, or by email: info@bevinco.com. Internet: www.bevinco.com. In recent survey run by Bevinco, it was possible to determine that the average bar was losing over 25% due to over-pouring and theft. These heavy losses are hidden by ordinary pour cost analysis - but Bevinco's reports were able to show where this shrinkage was, and help to eliminate it.
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