Liquor Stores, CPA & Tax Services

Why Liquor Store Owners in Dallas Need a CPA Who Knows This Industry

Running a package store in Texas means managing a business where the Texas Alcoholic Beverage Commission (TABC) dictates everything from your store hours to your ownership structure, and every one of those regulatory requirements creates tax and accounting implications that a general CPA is likely to miss. Between high-volume cash transactions, thousands of SKUs turning over weekly, and license costs that can reach five figures, liquor stores carry a unique financial profile that demands specialized attention.

At AG Freideman, we work with liquor store owners across Dallas, Plano, Frisco, and the broader DFW area who are tired of explaining their business to accountants who don’t understand TABC rules, inventory shrinkage, or why their cash-to-sales ratios look different from a typical retail store. Al Freideman has spent 30+ years handling complex tax situations across multiple industries, and he personally manages every client relationship. No hand-offs, no junior staff guessing at your numbers.

How Do TABC Licenses Affect Your Tax Return?

Your TABC Package Store Permit (P permit) and any associated licenses represent a real, amortizable business asset that directly reduces your taxable income when handled correctly. Under IRS Section 197, intangible assets like liquor licenses acquired as part of a business purchase are amortized over 15 years, creating a deduction that many general tax preparers either miss entirely or apply incorrectly.

Here is where it gets specific for Texas package store owners:

• Purchased licenses: If you acquired your TABC permit as part of buying an existing store, the portion of the purchase price allocated to the license is amortizable over 15 years under Section 197. Proper purchase price allocation at the time of acquisition is critical. If your original CPA didn’t break this out separately, you may be leaving thousands in deductions on the table.
• Original application costs: Fees paid directly to TABC for an original permit application (which can run $2,500 to $7,500+ depending on permit type and location) are generally not amortizable under Section 197 because they weren’t acquired from another party. However, these costs may be deductible as ordinary business expenses in the year incurred.
• Renewal fees: Your biennial TABC renewal fees are fully deductible as ordinary business expenses in the year you pay them.
• Compliance costs: Money spent on TABC-mandated training, required signage, and compliance audits are all deductible operating expenses.

We review your license history, purchase agreements, and prior returns to make sure every dollar of TABC-related cost is properly categorized and deducted.

Why Is Inventory Control So Important for Liquor Store Taxes?

Inventory is typically the single largest asset on a liquor store’s balance sheet, and the IRS pays close attention to how you account for it. For package stores carrying 2,000 to 5,000+ SKUs with constant turnover, your inventory method directly affects your cost of goods sold (COGS) and, therefore, your taxable income for 2026.

Most liquor stores should be using a specific identification or FIFO (first-in, first-out) method, but the right choice depends on your store’s size and product mix. What matters most is consistency and accuracy:

• Shrinkage tracking: Breakage, theft, and spoilage (yes, wine and some spirits can spoil) must be documented and written off properly. The IRS expects you to have a system for recording inventory losses. Without one, you’re overstating your inventory value and paying more tax than you owe.
• Physical counts vs. POS data: Your point-of-sale system tracks what you sell, but it doesn’t catch what walks out the door or breaks in the stockroom. We help you establish quarterly or monthly physical count procedures that reconcile with your POS reports, creating the documentation the IRS requires.
• Vendor rebates and volume discounts: Distributor incentives, volume discounts, and promotional allowances must be properly accounted for as reductions to your inventory cost, not as income. Misclassifying these inflates both your revenue and your COGS incorrectly.

Our monthly bookkeeping services ($300 to $600/month) include bank reconciliation and inventory account maintenance so your books are clean when tax time arrives.

What Are the Texas-Specific Tax Requirements for Package Stores?

Texas has no state income tax, but that doesn’t mean your liquor store escapes state-level tax obligations. Texas imposes several taxes and filing requirements that are specific to, or especially complex for, package store operations.

• Texas Franchise Tax: If your store is structured as an LLC, S-Corp, or partnership, you owe the Texas Franchise Tax (margin tax) annually. For retail and wholesale businesses, the tax rate is 0.375% of your taxable margin for 2026. Businesses with total revenue under $2.47 million owe no franchise tax but must still file the Public Information Report. We handle franchise tax filings for $250 to $500.
• Texas Sales Tax: Liquor sales are subject to the standard Texas sales tax rate of 6.25% state plus up to 2% local, for a maximum combined rate of 8.25% in most DFW locations. Unlike some states, Texas does not impose a separate excise tax at the retail level (that’s collected at the distributor/manufacturer level), but your sales tax collection, reporting, and remittance must be airtight. High-volume stores often file monthly.
• Mixed Beverage Tax distinction: If you hold only a Package Store Permit (P permit), you sell for off-premises consumption and collect standard sales tax. This is different from the 6.7% mixed beverage gross receipts tax that applies to bars and restaurants selling drinks for on-premises consumption. Confusing the two creates compliance problems.

We handle Texas sales tax filing and compliance for liquor stores throughout Dallas and the surrounding suburbs, making sure you’re collecting the correct rate and remitting on time every period.

Why Does Cash Management Documentation Matter So Much?

Liquor stores are classified by the IRS as cash-intensive businesses, which means you face a higher probability of audit scrutiny around your cash handling procedures. The IRS specifically looks at cash-to-sales ratios, unexplained deposits, and gaps between reported income and bank activity in industries like yours.

Proper documentation isn’t optional. It’s your defense against an audit adjustment:

• Daily cash reconciliation: Every register should be counted at close, and the count should match your POS report. Variances need to be logged and explained, even small ones. A pattern of unexplained overages or shortages is an IRS red flag.
• Deposit documentation: All cash should be deposited intact (not used to pay vendors or employees off the books). Bank deposits should match daily sales records. We help you build a paper trail that withstands IRS review.
• Bank Secrecy Act compliance: Cash transactions over $10,000 trigger Currency Transaction Report (CTR) requirements. Structuring deposits to avoid the $10,000 threshold (even unintentionally) can trigger a Suspicious Activity Report. We make sure your deposit patterns don’t create unnecessary federal scrutiny.

Common Liquor Store Tax Mistakes We Fix

After 30+ years of working with small business owners in Dallas, we’ve seen these same errors repeatedly on returns prepared by general accountants or DIY software:

• Failing to amortize TABC license costs: Owners who purchased a store (and its license) years ago and never set up a 15-year amortization schedule are missing a legitimate annual deduction that can total thousands of dollars.
• Not tracking or deducting inventory shrinkage: Breakage, theft, and spoilage that goes undocumented means you’re paying tax on inventory you can’t sell. Without a physical count system, you have no way to claim the write-off.
• Misclassifying distributor rebates as income: Volume incentives from distributors should reduce your cost of goods sold, not inflate your gross revenue. Getting this wrong overstates your income.
• Missing the franchise tax “no tax due” filing: Even if your store’s revenue falls below the $2.47 million no-tax-due threshold, Texas still requires you to file the Public Information Report annually. Missing it triggers penalties and can jeopardize your entity’s good standing with the Texas Secretary of State.
• Inadequate cash documentation for IRS defense: Stores with sloppy cash records are easy audit targets. We’ve helped clients who came to us after receiving IRS notices specifically because their prior accountant didn’t set up proper cash reconciliation procedures.

If any of these sound familiar, call us at (972) 893-3481 to schedule a free consultation. Al will review your current situation and tell you exactly where you stand.