As the cannabis space develops, it is becoming increasingly populated with service providers from a wide range of auxiliary sectors. Among them, bookkeepers and accountants have become some of the most sought-after specialists in the industry. Along with banking, tax and regulatory problems evolving too fast for cannabis businesses to keep track, they are seeking professionals to help them navigate. Let’s take a look into cannabis accounting today.
What are the Roles of Cannabis Accounting Services?
The stakes are quite high for a cannabis CEO, along with the fate of their business relying on maintaining the company’s full compliance. A highly-nuanced industry with complex regulations that can render shutdown or penalization. With a striking bridge in the industry for qualified specialists equipped to support business owners in directing the risky regulatory space., bookkeepers and accountants are finding major shifts in the number of people requiring assistance in opening up shop in this encouraging new cottage industry.
How is Cannabis Accounting Different from Others?
With small exceptions, cannabis accounting is no different for any other business. You see: running a grow facility is very similar to running a farm. Generating edibles and other infused goods is very much like operating a manufacturing facility or a bakery. Running a dispensary isn’t too different than running a simple retail business.
Throw in some state regulatory compliance, and top it off with federal tax laws and you got a whole new ballgame.
Common Accounting Issues Faced by Cannabis Business
- Not understanding the cannabis industry, tax law, and state laws -– A good finance and the legal team must understand what entities are allowable in this industry, and they should be acquainted with the laws of your specific state.
- Not being acquainted with cannabis-friendly business merchants – Use your CPA to help steer your business to cannabis-friendly providers. It includes insurance, payroll, and merchant processing. If you can be more knowledgeable about your network, the safer your business will be in running legally and smoothly.
- Not knowing essential business software – Your CPA should walk you through software’s utilized in the cannabis accounting industry, especially the point-of-sale systems. They can tell you the benefits and drawbacks of different industry-specific software’s which might further help your business.
- Not keeping track of accounts -– It is essential to keep track of the different accounts your business has for appropriate tax and reporting purposes, particularly those which are subject to 280E “No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted. Understanding this law and your requirements are fundamental to running a legal operation.
- Not acknowledging any significant business consultants – Did you know that for most entrepreneurs, the road to success includes a lot of mishaps, and that rocky road is true for cannabis businesspersons? Having proficient business consultants like Unchained Financial Services can help you guide towards triumph.
With sufficient experience and time, running a cannabis business won’t be a headache to you anymore. However, until that time comes, it is important to invest in an expert legal and accounting team from Unchained Financial Services to help keep your cannabis accounting legal, organized, and fruitful.