The whole business sector is still suffering from the pandemic. If decade-old firms are closing or facing bankruptcy, where does that leave newly established cannabis dispensaries and businesses?
Cannabiz Accounting: Why is it important?
Cannabis is a booming industry and a very lucrative one we might add. Today, medical cannabis is legal in more than 30 states and 15 of those states have legalized adult recreational use.
Whether you’re a newly established company selling cannabis, or you have some years of experience up your sleeve, you need to monitor your expenses and budget, analyze your financial performance, watch out for hefty back taxes, and ultimately increase profits while keeping everything legal and compliant.
The need for professional cannabis CPA’s to maintain a successful and thriving cannabis business is bigger than ever, and here’s why.
The exponential growth happening in the cannabusiness comes with many laws and red tapes.
For example, the Tax Code: IRC 280E that denies cannabis firms from tax deductions does not apply in California (as of 2020), but that also comes with specific conditions and regulations.
A cannabis accountant specialist knows all the ins and outs of the industry and can help you navigate through all the complications of a cannabis business with precise accounting.
Cannabis businesses are being audited on a regular basis. Non-compliant cannabis companies are facing mountains of legal fees and years of litigations.
To make sure your business is compliant, all your taxes are being filed accurately, and avoid any penalty, you need trained CPAs like 420 accounting services to handle your books and records.
All your financials need to be recorded and every figure in your books needs to be thoroughly documented to lower your risks.
All the laws and regulations that we mentioned make banking for marijuana businesses a challenge. Paying wages, insurance and taxes are not easy.
Although in California this situation has opened up slightly and they are giving cannabis operators more banking options, the process remains lengthy and complicated.
Banks conduct quarterly reviews to check on financial statements, they also examine the monthly financials in every quarter. Therefore, it’s crucial to have your monthly and quarterly financial records prepared to avoid any inconsistencies and unexplained fluctuations that might get your account flagged or shut down.
A trained accountant in the marijuana industry will adequately track all your business financials, steering you away from any financial mishaps with the bank that might cost you your business.
As the industry grows, cannabis companies should think about their short-term and long-term plans. An accountant who specializes in cannabis can assist in business growth by keeping accurate and detailed records that allow your company to make an informed decision about future endeavors.
In the near future, cannabusinesses should look into new lenders and investors. Securing funding will become difficult if the records are not clean and the brand is not reputable. As for long term goals, the future of cannabis will include opportunities for mergers and acquisitions where your company should be able to get the highest valuation.
How Can 420 Accounting Services Help My Cannabis Business?
420 Account Services will keep proper cannabis accounting systems and provide you with all the facts and numbers you need to make an informed decision for your business’s ultimate growth.
If you prefer to handle things yourself, our CPA is available for consultations and cannabis training.
Contact us today to speak with a representative.