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Is There A Pennsylvania “East Coast Red” In Your Future This Holiday?

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This fall while on the Bucks County Wine Trail one of my fond memories of the Buckingham Valley Vineyards was the opportunity I had to experience a tasting of an oak aged dry Chambourcin wine.   This delightful grape is readily becoming known as “Pennsylvania’s Zinfandel”.   This versatile hybrid grape is known to hold up very well in Pennsylvania’s cooler wetter climate.  Its a deep colored wine with full aromatic flavors that I plan to pair with my meal festivities this holiday.   You too may want to grab yourself an “East Coast Red”.   For more information about this grape that is widely becoming known as “Pennsylvania’s Zinfandel”, I enjoyed reading the Times-Tribune.com’s article: Is Breakout Grape Chambourcin Pennsylvania’s Red?

Can A Rose By Any Other Name Still Be A Rose?

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You’ve likely heard the saying “a rose by any other name is still a rose”. Well in a way that can be true in thewine and roses2 business world as well. Especially if you are considering giving your business a “fictitious” name.

Before establishing your winery, wine or hospitality based business, you will want to consider what name to use when forming your new Corporation or Limited Liability Company. While many business owners choose to operate their business under the name they put in their state filed Articles of Incorporation, you may choose for marketing purposes to operate your corporate entity under a name that’s different from the formal name listed in your Articles of Incorporation. Perhaps you have a catchy name in mind for marketing purposes. Or your own name is too long or not savvy enough for purposes of building your brand. If so, consider a “fictitious business name”.

For example, your may be planning to operate a wine event planning business under the name “John Rose Wine Events, LLC and subsequently plan to do business under that name. Alternatively, some business owners like to operate their corporations under a name that’s different from their individual name or formal legal entity name identified in their Articles of Incorporation. This is what is known as a “fictitious business name” or “dba” doing business as name.

For marketing purposes you may prefer to identify your business as “My Wine Sommelier”. Thus, you might alternatively establish your business name as “John Rose Wine Events, LLC, dba My Wine Sommelier.” You could then market your business as “My Wine Sommelier”.

In order to do so, most states require your corporate entity to file a “fictitious” or “assumed” business name and pay a fee. This legal filing allows creditors, customers, and vendors to know that your business operates under a “fictitious name” yet they are still able to identify you as the business owner. In order to protect your chosen name and establish exclusivity, you may consider registering your chosen name as a trademark.

So now, can a rose by any other name still be a rose? Well yes it can. Consider a “fictitious business” or “dba” name and you too could be the next “My Wine Sommelier”.

What Wine Or Hospitality Business Are You Creating? Forming A Limited Liability Corporation

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Do you dream of opening your own winery, vineyard, restaurant, bed and breakfast, catering, wine-based or hospitality business? If so, it is important for you to choose the correct legal structure that’s right for your business.type of business formation

In this series on forming your business entity, we previously considered the “Sole Proprietorship” , “Partnership” and “Corporation” as business entities. Knowing and understanding how each of these legal structures work enables you to carefully decide what legal structure is right for your dream business. In today’s post, we will consider forming the “Limited Liability Corporation”.

Limited Liability Corporation

The Limited Liability Corporation or LLC is a hybrid flexible form of business entity often recommended for a new winery, wine based, or hospitality business. How LLC’s are treated for federal and state tax purposes typically depend on the entity’s classification as either partnership or corporation. The properly structured LLC offers the combined benefit of both the liability protection of a Corporation and the favorable tax treatment of a Partnership. The owners of a LLC can report business income, losses, credits and deductions on their individual income tax return. Thus, the business entity itself does not pay income tax. This can be a tax savings where the owners rates are lower than the corporate income tax rate. Because there is no entity level tax, the LLC owners avoid the double taxation on monies that are distributed to its owners that often occurs with a C-Corporation.

A LLC owner is provided limited liability for its debts and obligations. Much like the Corporation, the LLC owner is generally limited with respect to tort liability. Each member is allowed to manage and control the business without risking loss of the member’s limited liability.

Forming a LLC involves filing Articles of Incorporation with the Corporation Bureau of the Pennsylvania Department of State. A formal written Operating Agreement is recommended which sets forth the LLC’s corporate governance provisions, including but not limited to, voting rights, shares, profit distributions, management structure, ownership and buyout schemes.

As discussed in the earlier posts of this series, different business structures provide different risks, protections, and ease of administration. What wine or hospitality business are you creating?

Pennsylvania’s Wine and Grape Industry Strengthens The State’s Economy

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Pennsylvania’s wine and grape industry continues to be a major contributor to the economic strength of the State. The results of the latest update of the MKF Research Study, an independent study commissioned by the Pennsylvania Winery Association indicates increased growth in the industry during the two year period between 2005-2007. Pennsylvania’s rank in wine production moved from eighth to seventh place among wine producing states in the United States. For more information read: Wine and Grapes Enrich Pennsylvania’s Economy.

What Wine Or Hospitality Business Are You Creating? Forming A Corporation

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Are you considering starting a winery, restaurant, bed and breakfast, catering, wine-based or hospitality business? If so, when forming a business it is important to choose the legal structure that’s right for your type of business formationbusiness circumstances.

In the earlier posts of this series, we considered the “Sole Proprietorship” and the “Partnership” business entities. Knowing and understanding how each of these legal structures work will enable you to decide what legal structure is right for you. In today’s post, we will consider forming the “Corporation”.

Corporations

Incorporating your business can be complex and expensive. Forming a corporation is a way for you to limit your personal liability (with some exceptions) for the debts of your business that you do not personally guarantee. A corporation is a separate entity from the person(s) who own or operate it.  There are two types of corporations that are distinguishable based on federal taxation laws.   A “C-Corporation” is a business entity that is separate from its owners and must pay federal corporate income tax. Conversely, a “S-Corporation” is a business entity that does not pay federal income tax. Taxes for the “S-Corporation are paid by the corporation’s owners.  To form a corporation in Pennsylvania, Articles of Incorporation must be filed with the Corporation Bureau with the Pennsylvania Department of State.

S-Corporation

Electing to establish your business as a S-Corporation allows you to limit your liability as a corporate owner but requires you to pay income taxes the same way one would if they were a Sole Proprietor or Partnership.   For purposes of income tax, the income is considered earned by the corporation but is passed through the corporation to the corporate owners or shareholder’s personal income tax return.   To elect to operate as an S-Corporation, the corporate owner must sign and file IRS Form 2553.  Unlike the C-Corporation, which has a two tier double taxation structure, an S-Corporation tax bill is likely to be less and may therefore be a more suitable option for a start up business entity.   Additional restrictions apply regarding citizenship and shareholder size that may also need to be considered.

C -Corporation

A C-Corporation is a regular for profit entity that is separate from its owners and taxed under IRS corporate income tax rules.   The corporation files its own tax returns and pays corporate taxes on the profits accumulated in the business.   If the profits of the corporation are distributed to its owner(s), then the owners must pay individual taxes on the salary, bonuses, or dividends they receive.   This is known as the C-Corporation’s double taxation structure. When forming a corporation, you must follow certain corporate formalities. You will need to hold annual directors and shareholder meetings.  You will need to keep minutes of your corporate meetings and maintain good record-keeping systems.

As discussed in the earlier posts of this series, different business structures provide different risks, protections, and ease of administration.  In the next post of this series, we’ll consider the Limited Liability Corporation.   What wine or hospitality business are you creating?

What’s Love Got To Do With It? A Winery Empire War Comes To An End.

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A couple of months ago, I featured a post on Intergeneration Transitions And Succession Planning for Wineries. The centerpiece of the post related to the Korbel Champagne Cellars Winery family feud and the importance of creating a succession plan for your winery or wine based business. Living-Trust

Well folks, it appears the family factions within the Korbel Champagne Cellars Winery empire have settled their dispute. Its been a “sad and sordid” family battle played out publicly by the 12th largest winery in the country.

For more details, read San Francisco Chronicle’s Kevin Fagen’s article: Korbel Family Heated Battle Settled In Secret.

What’s Your Plan For Starting A Winery, Wine Or Hospitality Business?

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grand-business-planEvery business should have a plan. Too often, new business owners fail to commit their business goals and objectives to writing.   Whether your dream is to start a winery, open a restaurant, buy a bed and breakfast, or to create your own wine based or hospitality business, you need a plan.   A well thought out business plan helps you to determine where you see your business headed in the future.

Do you have a business strategy? Do you know who your customers are and where to find them? How will you try to raise money? What do you want your business to look like five years from now? A good business plan sets out your goals and tactics in a measurable way to guide you in achieving your dreams.

A good business plan at a minimum will address key elements:

Business strategy – What is the nature of your business? How will you describe your products and services? What are the elements that make your business a success? What is your geographical location? How consolidated or fragmented is your customer base geographically? Why and how will your business have a competitive advantage?

Marketing and Sales Planning – What’s your commercialization strategy? Who’s your target market? How do you plan to reach your customers? How will you gain market share? What trends and changes impact your target market?

Financial Information – How much income will you need? What are your sources of financing? Do you turn your inventory quickly or slowly? What are your sales projections? Do you have audited financial statements, profit and loss reports, balance sheets?

Management – What is the legal structure of your business? Are you incorporated? Are you a partnership? How will your business be managed? What is the biographical information for your directors/officers?  What are the details of the ownership or your company? Will your family members work in your business?

Operations – What is your company’s organizational structure? How much personnel will be required to reach your goals? What functions will your business require and how will they relate to the generation of revenue for your business? What facilities, equipment and supplies will you need? How will your operations change as your business grows? How will your business operate day to day?

Milestones – What factors will determine when you’ve reached and achieved your goals and objectives?  Are your milestones measurable? What are your short and long term goals? How will you overcome challenges and gage your accomplishments? How will you determine if you are on track?

As you can see, there are many factors to consider.  A well written business plan is your blueprint for success.  It will serve as your guide for your business vision months and even years later. A solid business plan can be critical to ascertaining funding and investors for your business.  A banker or loan officer will require you to produce a business plan.  Your business plan is your calling card.

Are you ready to start a winery or vineyard?  Are you ready to open your restaurant or wine tasting business? Do you have an existing business you want to grow?    If so, commit to writing your thoughts in a logical, organized way. The U.S. Small Business Administration has a useful guide to writing your business plan and a tutorial to guide your through the process.

Plan for the success of your business.  Create your business plan.

Ready…Set…Go!!

Wine Law, Wineries and the Yellow Rose of Texas

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Last week, I had the very good fortune of traveling to San Antonio Texas to attend Law Seminaryellow-rose-of-texas International’s Winery and Wine Law Distribution Conference. (You should know right off that I previously resided in Texas for 13 years but have long since moved from the state). While things had very much changed, the best of my memories of Texas still remain the same. I soon realized upon my arrival why it was that of all the places I’ve ever lived (KS, Mo., Oh, TX, NY, PA) I always enjoyed my time in Texas the most. There’s much to be said about “southern hospitality”. I was barely off the tarmac when I took note of how everyone in the airport was more than helpful to assist me in getting to my right destination.

Upon my arrival to the hotel, I quickly discovered that my hotel was conveniently located two blocks away from San Antonio’s famous River Walk and the Alamo.   Unable to resist grabbing some real authentic Texas Mex (hint hint Taco Bell), I quickly tossed my heels aside, donned my nikes and headed straight for the River Walk. There I found a quaint restaurant called The Original Mexican Restaurant.  I ordered my very favorite Tex Mex meal–cheese enchiladas, refried beans, spanish rice and guacamole.   Despite the fact I found myself over dressed and melting from the heat, my momentary discomfort was offset by an extremely attentive wait staff who were eager to please. The congenial waitstaff waited on me hand and foot while a trio of Mariachi singers enticed me to chip in for a song.   A tough negotiation later, we settled on the $5 dollar rendition of a serenade of the “Yellow Rose of Texas”. With a big smile on my face watching the passerby’s and tourists pausing to listen, I quickly emailed a 30 second iphone video of my personal serenade back home to my kids.  Predictably my children responded with giggles and text messages to each other saying “Mom’s down in Texas on a roll”. (Meanwhile I was momentarily kicking myself for at least not extending my visit another day longer). I enjoyed the rest of my evening and planned for my highly anticipated conference the next day.

Day 1 of the conference was everything I hoped it would be and more. I started my day putting a name with a face with conference planner Bonnie Clark of Law Seminars International. Bonnie and I had previously spoken on numerous occasions from different coasts (she’s in Seattle) with her assisting me with useful information about the conference and the industry players.  Arriving at the registration desk and formally identifying myself, there was Bonnie.   We were like two kids in a candy store. Bonnie and I smiled, hugged each other and delighted in the fact we were able to finally personally meet after many coast to coast emails and phone conversations.

Two hours into the morning session, I was convinced that  Day 1’s agenda was well worth the investment of time, resources and money. Program event co-chairs were Lou Bright, General Counsel of the Texas Alcoholic Commission, and Kimberly Frost, a very able regulation attorney at Jack Martin & Associates.    Attendees at the conference included not only attorneys with interest in wine law, but winery owners and operators as well. Lou proved to be the voice of authority as most everyone in the room seemed to know him. I found him to be very colorful, knowledgeable, and warm.   Lou Bright’s passion about the wine industry and his eagerness to help his regulatory clients through a very complex process was obvious.  The morning’s agenda included modules on Setting Up Business Partnerships, Employment Issues for the Wine Industry, Water Rights, Brands, Trademarks, Labels, Selling Wines Online, and Legislative Updates. Speakers arrived from Texas, California, Illinois and other parts of the country to educate the attendees on the latest hot topics and emerging trends in the industry.   It was great to actively participate in the back and forth exchange between regulatory leaders, winery owners and legal community participants with different points of view and perspectives.

By meal-time, things got even more rewarding as I was invited to join attendees, Ken Feagins, Esq. founder of Gaucho Wines, LLC and Haile do Valle Peixoto Director of Gaucho Wines. The three of us hit the road and ended up on a BBQ mission finding ourselves at the infamous County Line BBQ. (Again, now I know why I missed Texas). Ken, a resident of Oklahoma and Haile a resident from Montevideo-Uruguay were launching an import/export business specializing in wines from Uruguay. We engaged in a lively conversation about the permitting process in the context of the import export process. After our meal, we all agreed to stay in touch. Ken suggested we take pictures of ourselves on our iphones so that when we call, we’d have a face to put with the name. (I’ll remember that tech savvy tip for future reference).   By the end of Day 1, most all the attendees were commenting on how great the conference was going. (Kudos to LSI).

But the best was yet to come. A blind tasting was planned for the evening. Attendees were invited to bring a Texas wine to the tasting. While running out to buy a Texas wine (I bought a Peregrine Hill 2008 Cabernet Sauvignon), I wondered how much fun it would have been if a Pennsylvania wine could have been included in the tasting. Ken Feagins commented on how much he would have liked to have seen a Uruguay or Oklahoma wine in competition as well.   We were just a few of the attendees crossing interstate lines and therefore could not bring our state’s wines.

The Wine Tasting was great fun. Many of the winery owner attendees brought wines from their estates. We each were given a questionnaire to fill out quick facts and points of interest in the Texas Wine Industry. The winner would be announced the following day. Tables were set up across the room with various red and white varietals tucked nicely in brown bags next to plenty of food choices to clear our palettes and spit buckets nearby.  This proved to be a great opportunity to get acquainted with other attendees.  There were awesome stories and great tales being told by some of the attendees on how they made their entree into the winery business.   My favorite story came from Ronald F. Yates, owner of Yates Law Firm. He was a lawyer/winery owner and told his personal story of how he happened into a purchase of a seller -financed winery two years ago.

But the day would not be complete without my having met winery owners Alphonse A. Dotson and his wife Martha Dotson.  Mr. and Ms. Dotson are owners of the AVA Hill Country’s Certenberg Vineyards. To my surprise Mr. Dotson, a 6 foot 4 former professional football player and I soon discovered we had “Kansas City” in common.   I being born in Kansas City and he having signed with the Kansas City Chiefs, we chatted about our love for the infamous Ollie Gate’s famous Gates and Son BBQ chain restaurant.   Of course we got a good laugh out of the fact that he spent time with Mr. Gates, while I was tooling around in high school with Mr. Gate’s kids.

As a Day 2 speaker, Mr. Dotson spoke on the challenges of  Texas Agriculture, mother nature’s climate curve balls and how both impact the viability of Texas wineries and the wine industry.  Mr. Dotson shared  a very compelling story of a three days and three nights toil one easter weekend utilizing his entire water reserves to protect his vineyard from an unexpected freeze.  By late afternoon, our guest speakers were covering topics ranging from how to survive a TTB compliance Audit to Finding Money to Finance Your Winery. The day was not complete without Chicago Illinois Director Steve Gross of the Wine Institute covering the hot topics of Shipping Compliance and the State of the Nation.  Director Steve Gross and I later spent some time discussing the fact that Pennsylvania was still one of 18 states in the nation with no direct to consumer shipment laws and where he thought litigation and legislative actions on the issue currently stand.

Finally the day ended with the annoucement of the winners of the Wine Tasting.  That ended up being a tie between the only two attendees who took the time to write about the wines as opposed to drinking them.  Their prize of course was a bottle of Texas wine!

All in all, it was an action packed conference that fulfilled its every promise of providing up to date information from recognized experts in the field of wine law.  It was a vibrant and stimulating exchange of information that left me wanting more.   I met a lot of wonderful folks with whom I hope to forge long lasting business relationships in the future.

As I boarded my plane back to Philadelphia International, I reflected yet again on how happy I was to be in a position to have married my passions for wine and law.   It was hard to think of my experience as work.   And while I was happy to be returning home, I couldn’t help but noticed that I was still humming “The Yellow Rose of Texas” in my head.   So I turned on my iphone and watched those mariachi players once again, taking my Texas memories with me.

As for Pennsylvania winery and hospitality owners, I’m back in the saddle, locked and loaded with new information and emerging trends of interest to post that you may find useful to your winery, wine and hospitality based businesses.  Do stay tuned.

A Winery Gone Green!

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If passed, House Bill 80 has beneficial application for winery owners looking to use the latest technology in solar or geothermal heating.  Staff writer George Mattar of the Bucks County Courier writes an interesting article on renewable energy and its benefits to a local Bucks County winery.   For more information read: Some grapes are purple, but this winery has gone green.

Pennsylvania Wineries: Are You Getting Wine Lovers To Your Wine Or Your Wine To Your Wine Lovers?

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When marketing your winery’s wine this harvest season, you may be creatively thinking of ways toPhiladelphia Festival 2
get wine lovers to your wine, or your wine to your wine lovers.   If your marketing efforts include the latter, you may wish to plan to host or participate in an event outside your winery’s usual business. That said, what are the requirements for a winery to participate in such an event?

In Pennsylvania, participating wineries in such events, should be properly licensed limited wineries in the Commonwealth of Pennsylvania.  Limited wineries are licensed by the Pennsylvania Liquor Control Board that may produce alcoholic ciders, wines and wine coolers (subject to certain exceptions).  Because the sale of alcohol without a license is illegal in Pennsylvania, limited winery event participants would need to obtain a Wine Exposition Permit. A limited winery licensee may apply for and obtain a Wine Exposition Permit from the Pennsylvania Liquor Control Board (PLCB) in order to participate in wine and food expositions off the licensed premises.

The permit may be issued to a licensed limited winery for expositions, not to exceed five consecutive days. The total number of days may not exceed 40 days in a calendar year.   The permit allows the holder to sell its alcoholic ciders and wine by the glass, bottle or case. Tasting samples of one fluid once or less may be provided for free or for sale.

The exposition may be held indoors or outdoors with the primary purpose of educating the attendees of the availability, nature and quality of the Pennsylvania product wines and alcoholic ciders in conjunction with suitable food displays, demonstrations and sales.   The exposition may include arts and crafts, musical activities, cultural and agricultural exhibits and similar activities. The permit fee is thirty dollars ($30.00) per day.

The next time you’re looking for ways to get your wine to your wine lovers, start with a Wine Exposition Permit and get your wine on!!