If you own a legal cannabis business, you need a bookkeeper specializing in cannabis accounting services to help grow your business and maximize your profits. With many laws and red tape in the cannabis industry, you need a partner that understands the laws, regulations, and tax codes.
It’s no secret that cannabis is a booming and lucrative industry. Medical cannabis is legal in over 30 states, and ⅓ of those states have legalized adult recreational use. The resulting billions of dollars in sales will only continue to grow as more states propose legalizing its use.
Decoding the Tax Code: IRC 280E
Let’s talk more about the laws and red tape that can be an obstacle for a cannabusiness. While the support for cannabis legalization grows, it’s still not legal under federal law and is considered a Schedule I drug. This can complicate taxes and accounting services for your cannabis business. IRC Section 280E forbids businesses from deducting any expenses involving trafficking Schedule I and II controlled substances. Translation: many of the expenses incurred for your cannabis businesses cannot be used as tax write-offs.
Cannabis business owners can end up paying significantly more in taxes than business owners who are not in the cannabis industry. There’s room in the tax code for growers and farmers to deduct some expenses while the hands of dispensary owners are tied.
Properly recording the cost of goods to reduce taxable income is the number one concern of my clients. Further complicating matters is that each state has individual regulations and tax codes surrounding cannabis. The good news is you don’t have to do it alone. It’s essential to find an expert that can help you navigate federal and state tax regulation, so you aren’t leaving any money on the table or starting a big tab with the government.
With the complications of cannabis business and the necessity of precise accounting, finding a professional that knows this industry and is trained in the federal and state regulations surrounding cannabis is crucial. The tax codes aren’t in your favor, so get someone in your corner who is!
An accountant can help you navigate through complicated tax laws, allowing you to maximize deductions, determine tax liabilities, and grow profit. Having a specialist in cannabis accounting services is an integral part of strategic business growth in the cannabis industry.
The Key to Cannabis Business Growth
But wait, there’s more! Accountants can place systems and processes in place to prevent the risk of financial fraud and theft. Having a firm grasp on cash, inventory, and tax compliance are all important for a business’s success. An accountant that specializes in cannabis can also help facilitate business growth by maintaining clear and thorough records. Proper recording and financial management allow you to make educated decisions for the future of your business and keep you looking like the professional you are.
As the industry grows, I see more money on the table with a greater potential for mergers, acquisitions, and selling of businesses. When faced with the decision to sell or continue to grow the business, proper accounting can make that decision easier. You’ll have all the facts you need to know if it’s deal or no deal. Additionally, proper cannabis accounting systems make the business more appealing to buyers, ensuring you’ll get the best deal possible. Because of the complications of tax codes, many buyers won’t consider purchasing if the accounting is not perfect. Messy books are a no-go.
Accountants Specializing in Cannabis Are More Important Than Ever
Tax laws aren’t the only hindrance to business owners dealing in cannabis. Cannabusinesses face regular financial audits, and those found to be non-compliant can deal with litigation, legal fees, and back taxes. No one wants that! This can be prevented with the right partner on your team. An accountant specializing in cannabis accounting services will make sure your financials are compliant and accurate, which will save time and money in the event of an audit…and don’t we all want to save more time and money?
As the country moves to full legalization of recreational cannabis, this could mean huge changes coming down the pipeline for your business. If your accounting is already compliant and efficient, you’ll be ahead of the curve and in a better financial position when that time comes. It’s important to have a partner that will navigate those changes with you and use them as a tool for business growth.
If you’re ready to have a partner to help grow your business and ensure it remains in compliance with all the complicated laws and regulations, I’d love to help. All you need to do to start is, book a call, and we can discuss your cannabis business and how I can help with your accounting needs. We’re ready to use our expert accounting strategies to usher your cannabis business into a new era.