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The state already knows what your bar bought. Your records decide what that proves.

Every case of liquor, wine, and beer your Texas bar buys is reported to the state by the seller — wholesalers and distributors file monthly reports of exactly what they sold and to whom, per the Comptroller's alcohol-reporting program. In a mixed-beverage audit, that purchase data can feed a depletion analysis: an estimate of what your sales should have been, built from what you bought. It's a legitimate estimation method with known blind spots — the Comptroller's own audit manual works through them — and whether it lands anywhere near your reality depends on one thing you control years in advance: records. To be plain about lanes: audit representation and anything owed belong to your attorney and CPA, never to us — we build the books that give them something to argue from.

Published 2026-07-03 · Updated 2026-07-03 · By David Westgate, Founder & Lead Accountant

The method, laid flat

How purchases become an estimate of your sales.

The Comptroller's estimation logic, simplified from its published mixed-beverage audit approach — a reasonable method whose starting presumption (purchased ≈ sold) is answerable by documentation. Audit procedure is the agency's and can change; representation is attorney/CPA work.

Two things make this method feel different from other audits. First, the input isn't yours — the purchase data arrives from your distributors' mandatory monthly filings, so there's no version of events where the state doesn't know what came in the back door. Second, the output is a presumption, not a finding — a theoretical maximum that real bars never hit, because real bars spill, comp, break, get stolen from, and pour heavy on regulars. The entire game is the gap between theoretical and real — and who has evidence about it.

The honest gap

Five places real bars diverge from the theoretical maximum.

Every category is ordinary bar reality — and every one is invisible to an auditor unless it was documented when it happened. A comp log written the night of is evidence; the same story told two years later at an audit is just a story.

The records that answer, concretely: nightly POS close-outs that tie register to deposits (the same instrument that keeps the two mixed-beverage taxes provable — see the definitional page for where each tax lives in the ledger) · a comp-and-spill log with manager sign-off, kept in the flow of service, not reconstructed · periodic physical inventory counts so shrinkage has a number and a date · a written pour policy that makes your drink-size assumptions something better than the auditor's defaults · and four-years-plus retention, since audits reach back. None of this is exotic — it's the daily-sales-summary discipline our Texas bar bookkeeping guide teaches openly, run consistently. A bar that keeps that rhythm walks into any audit with its own data; a bar that doesn't negotiates against a spreadsheet.

Could your bar produce last quarter's close-outs, comp log, and inventory counts by Friday? If that question stings, the free review reads your setup and prices the fix — bar-built monthly bookkeeping, fixed-fee, in writing.

Free books assessment

Run it on yourself first

Monthly pour-cost variance is a depletion analysis you run on yourself.

Here's the reframe that turns audit-defense into ordinary management: the Comptroller's method — purchases, expected yield, compare to sales — is the same arithmetic a well-run bar already performs monthly as pour-cost variance. Take the month's alcohol purchases adjusted for inventory change, divide by alcohol sales, and compare the result to your theoretical cost from recipes and menu prices. When actual runs two points above theoretical, something is happening — heavy pours, unlogged comps, a leak in the stockroom — and you get to find it in week two, on your own terms, instead of hearing about four years of it in an audit letter. The records this post keeps pointing at (close-outs, comp logs, counts) aren't audit insurance that sits in a drawer; they're the inputs to a number that protects margin every single month. A bar that watches its pour-cost variance has, almost accidentally, pre-answered the state's version of the question — because every month's gap already has a name and a piece of paper attached.

Lanes, stated plainly

Who does what if the letter ever comes.

If your bar is ever selected: the response is professional work from day one — a state-tax attorney or CPA experienced with Comptroller audits owns the strategy, the communication, and every argument about what's owed; that's their lane entirely, and going in alone is how reasonable outcomes get missed. The Comptroller's process, for its part, is a published methodology run by an agency doing its statutory job — nothing here says otherwise, and bars with clean records routinely resolve these reviews without drama. Our lane is earlier and quieter: the nightly and monthly discipline that means the records already exist when anyone asks — close-outs tied to deposits, taxes in their two lanes, losses logged the night they happened. Evidence is a thing you build in advance or don't have; that part, a bar controls completely.

And if you're reading this with thin records and a knot in your stomach — the no-fear version of the truth: records begin the day you start keeping them. You can't retro-document last year's comps, and pretending otherwise helps nobody; what you can do is make tonight the first night of the close-out-and-log rhythm, run the first physical count this Sunday, and put the pour policy in writing this week. Every month of real records from here forward shrinks the part of any future question that has to be answered with estimates — and per the Comptroller's rules, mixed-beverage records need keeping for at least four years, so the binder you start tonight is still doing its job in 2030. Starting late beats starting never, by exactly the number of documented months in between.

Industries FAQ · Updated 2026-07-03

The questions this piece raises.

What is a depletion analysis, exactly?

It's an estimation method the Comptroller's auditors can use in mixed-beverage audits, documented in the agency's own audit manual: take the bar's alcohol purchases for the period — which the state can see through distributor reports — convert them into the number of drinks that inventory could theoretically produce at standard pour sizes, price those drinks at the bar's menu, and compare the result to what the bar actually reported. If reported sales sit far below the estimate, the gap becomes the audit's central question. It's not a presumption of wrongdoing; it's arithmetic from the purchase side — and the manual itself recognizes the estimate needs adjusting for real-world losses, which is exactly where a bar's records enter.

The estimate assumes every bottle became a sale — is that fair?

The method's starting point does lean that way: absent records showing otherwise, purchased inventory is generally presumed sold. But that presumption is answerable by design — the Comptroller's approach allows for documented spillage, breakage, comps, theft, ending inventory, and similar real-world adjustments when the bar can substantiate them. Which is the honest heart of it: the same pour of spilled whiskey is either a documented adjustment or invisible revenue, and the only difference is whether anyone wrote it down that night. Fairness, in practice, is something your records purchase in advance. How any specific audit finding gets argued or resolved is your attorney's and CPA's work — with materially better odds when the contemporaneous records exist.

Do distributor reports really tell the state what my bar bought?

Yes — that's not a rumor. Texas wholesalers, distributors, and certain other permittees are required to file monthly electronic reports of their sales to retailers, and the Comptroller's office states plainly that it uses this data to support its sales-tax and mixed-beverage audit programs, tracking retailer purchases through its inventory-tracking systems. Practically: the purchase side of your bar's story is already in Austin, filed by someone else, every month. The only version of events you control is the sales-and-loss side — the daily close-outs, comp logs, and inventory counts that explain how purchases became the revenue you reported. Reporting rules are the Comptroller's and can change; the records discipline doesn't.

The two taxes riding every drink — and where each lives in the ledger — is its own definitional page: Texas mixed beverage taxes, defined.

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Where this thread continues.

Bar bookkeeping in Texas

The full method — the Whose-Money Test, the daily sales summary, and the two-tax ledger, taught openly.

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Texas mixed beverage taxes, defined

The 6.7% and 8.25% pair, who owes each, and their opposite paths through a bar's books.

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