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SPECIAL EDITION VODKA BUYERS GUIDE 2008 HOLIDAY SEPTEMBER 2008 www.binonline.net BEVERAGE INDUSTRY NEWS BINSERVING CALIFORNIA’S BEER / WINE / SPIRITS INDUSTRY SINCE 1934 CANADIAN CLUB Unapologetically and fashionably old school, yet very much on the cutting edge of mixology trends and consumer tastes. HIRAM WALKER LIQUEURS • MOSCATO D’ASTI WINE SHOWCASE • NEW PRODUCTS • INDUSTRY NEWS • MARKETING INFO 40 20 Inside 14 BINBIN 2 INDUSTRY INSIGHT 28 INDUSTRY EVENT By Alan Forester, CPA, Attorney THE 5TH ANNUAL DIAGEO GOLDEN BAR AWARDS 6 INDUSTRY NEWS 30 PRODUCT PROFILE 10 NEW PRODUCTS & PROMOTIONS MIGHTYPINE SHELVING 12 WHAT’S BREWING 32 MOSCATO d'ASTI BUYERS GUIDE 14 BRAND PROFILE 40 CATEGORY FEATURE 32 HIRAM WALKER LIQUEURS VODKA: STILL THE CLEAR CHOICE 18 POUR OF THE MONTH 32 2008 HOLIDAY VODKA FINEST CALL MIXERS BUYERS GUIDE Petar’s Restaurant A Lafayette Landmark 20 COVER FEATURE NORTHERN (DOUBLE) EXPOSURE Canadian Club was your father’s drink…but there’s more to the story than that! 28 INDUSTRY INSIGHT BIN Beverage Industry News BY ALAN FORESTER, CPA, ATTORNEY VOLUME 92, ISSUE NUMBER 27 WWW.ABCLAWYER.COM 1-877-LIQUOR-8 FOUNDED IN 1934 www.binonline.net ORGANIZING YOUR BUSINESS: COMMON BUSINESS ENTITIES Southern California Business, Production and Editorial Office There are a variety of ways to organize your business in order to limit your liability. This 160 W. Foothill Parkway, Suite 105-95 article will briefly discuss the advantages and disadvantages of five common business Corona, CA 92882 951 272-4681 Fax 951 272-4816 entities: C Corporations (C-corps), S Corporations (S-corps), limited liability compa- nies (LLCs), limited partnerships, and general partnerships. These entities all provide PRESIDENT limited liability, but the extent to which liability is limited varies depending on whether Michael Chu one is an officer, member, director, or shareholder of the company and the way corpo- E-Mail: [email protected] rate formalities are observed. EXECUTIVE EDITOR However, though the shield of limited liability is attractive, just because a compa- Kim Brandi ny has been incorporated does not mean that the shield is always impenetrable. A 626 377-2510 E-Mail: [email protected] doctrine called “piercing the corporate veil” allows for the plaintiff, someone suing the corporation, to personally hold a shareholder or director liable for the debts or liabili- CONTRIBUTING EDITORS ties of a corporation. Depending on which state has jurisdiction over the corporation, Juan Alverez there are different factors that courts will look at to determine whether piercing the veil Kristen Wolfe Bieler is warranted. Generally, the plaintiff must prove that the corporation was a mere alter- Dale DeGroff ego (i.e. using the corporation as a façade) and did not observe corporate formalities, Jeffery Lindenmuth that funds were commingled, that corporate books are absent or kept in an inaccurate Ed McCarthy manner, and that minutes of meetings held were not kept. Gregg Glaser One factor in deciding which business entity to organize as is the tax treatment of Wilfred Wong the entity. Since the tax treatments for each of the entities differs, it is important to EDITORIAL DIRECTOR evaluate the advantages and disadvantages relative to your own situation. Victoria Vann 951-272-4681 E-Mail: [email protected] CORPORATIONS Corporations are separate legal entities and can do many things that a natural person ADVERTISING John Muldoon can do—enter a contract, own property, and incur debt. Thus, an owner of a corpo- 951-272-4681 ration can generally avoid having personal liability for the corporation’s debts or law- suits filed against the corporation. A shareholder-employee of a corporation, unlike a Northern California Office partner, does not have to pay self-employment tax, but will have to pay income tax on Industry Publications Inc. dividends or distributions. 171 Mayhew Way, Suite 202 Pleasant Hill, CA 94523 925 932-4999 Fax 925 932-4966 C CORPORATIONS: A traditional C-corp leaves its owners with little or no personal liability. The main differ- PUBLISHER David L. Page ence between a C-corp and an S-corp are that C-corps are subject to double-taxation, E-Mail: [email protected] once at the corporate level (taxing corporate profits) and again at the personal level (taxing income of shareholders). Therefore, dividends paid to shareholders are essen- EDITOR-AT-LARGE Elyse Glickman tially taxed twice. In the C-corp structure, shareholders have no direct control over the 310 497-7157 company’s actions. However, a group of shareholders can bring a lawsuit to control E-Mail: [email protected] the corporation or change its directors or officers by a derivative lawsuit. A C-corp can CIRCULATION / PRICE EDITOR easily set up a reserve and defer reporting its profits until the corporation actually uses Manfred Schaffler the reserve for the purpose the money was set aside for. Also, closely held corpora- tion owners have more tools at their disposal to save for their own retirement. ACCOUNTING Industry Publications Debi Hull S CORPORATIONS: An S-corp also benefits from the shield of limited liability. This organization is not sub- BIN Beverage Industry News USPS 053-880, ject to corporate taxes rates, and is taxed only once, at the personal level, and pays ISSN 1054-0423. Is published monthly by Industry Publications, Inc., except combined in May/June and December/January. an annual fee of $800 to the Franchise Tax Board. The company issues a K-1, a form used to report to the Internal Revenue Service (IRS) each owner's share of income and 171 Mayhew Way, Suite 202, Pleasant Hill, CA 94523. certain expense items. Like the C-corp, an S-corp’s shareholders have no control. The corporation does not pay employment tax for an owner’s income that flows Subscriptions are $48 per year (tax included), through to the shareholder, though it would pay employment tax for a regular employ- single copies are $12.00 each. Periodicals postage paid at Pleasant Hill, California, and additional mailing offices. ee (non-owner). To opt into an S-corp status, the company must conform to certain requirements and must notify the IRS of their decision within a certain period of time. POSTMASTER: SEND ADDRESS CHANGES TO: Some of the requirements include: the corporation must be a domestic corporation, BIN Beverage Industry News have no more than 100 shareholders, no non-resident alien shareholders, and have 171 Mayhew, Suite 202 only one class of stock. Pleasant Hill, CA 94523 2 BIN 2008 • ISSUE 8 INDUSTRY INSIGHT continued BEVERAGE INDUSTRY NEWS LIMITED LIABILITY COMPANIES: An LLC allows owners to have less limited liability. All members of the LLC have BIN ONLINE control. Like a partnership, it also issues a K-1, making it a pass-through organ- www.binonline.net ization, and therefore is taxed only once at the individual level. Additionally, owners of an LLC are responsible for paying a self-employment tax. PARTNERSHIPS: Partnerships, as organizations, do not pay taxes; instead, income and certain expenses are “passed through” to the owners, who must report and pay tax on the income. A partnership must issue a K-1 for the partners. In this pass- through system of taxation, partnerships are taxed once at the individual level. Partnerships are also liable for self-employment tax, which has to be paid by each partner. LIMITED PARTNERSHIPS: A limited partnership has some partners, called “limited partners,” who have less of interest and liability in the company and thus are not allowed to partici- pate in the management of the company. In a limited partnership, there must be at least one general partner, who does not get the benefit of limited liability but makes all management and investment decisions. This structure is popular in the entertainment and professional fields. For example, group of profession- als, such as accountants or lawyers, or a theatre group of actors or actresses. Labor service organizations are often organized as limited partnerships. A common type of limited partnership is the Family Limited Partnership (FLP), which is controlled by members of a family. Again, the partnership itself does not get taxed and instead, the income and expenses are passed-through to the owners of the partnership, in proportion to their interests. In an FLP, the senior family members contribute assets in exchange for a small general part- ner interest, to be held by the senior partners for their lifetime, and a large lim- ited partner interest. Then, they can give portions of the limited partner interest Go online and discover a to their children, their grandchildren, etc. The FLP structure allows the family to protect the assets from claims of wealth of resources at your future creditors and ex-spouses. Creditors cannot force cash distributions, fingertips. vote, or own the interest of a limited partner without the approval of all general partners. If spouses divorce and a limited partner ceases to be a family mem- ber, the partnership documents can require that the asset be kept within the • CURRENT ISSUE family structure. The FLP cannot be dissolved unless agreed to by the general • NEW PRODUCTS partners, and plaintiffs filing suit against the FLP can only obtain a “charge” • WILFRED WONG’S MONTHLY against the partnership, which is a disincentive to many potential plaintiffs. WINE SELECTIONS • BIN PRODUCT OF THE WEEK GENERAL PARTNERSHIPS: • BEVSOLUTIONS A general partnership has two or more partners running the business, carrying • ONLINE GUIDE TO NATIONAL equal weight in responsibilities and liabilities. Movie production companies often organize as general partnerships. There is no limited liability for the part- BEVERAGE COMPANIES ners; however, there is somewhat of a limit to the liability though the existence SUPPLIERS/IMPORTERS/ of the other partners, by spreading risk and liability amongst the partners.

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