The marijuana industry’s legality is still just a few years old in many states. Some cannabis accounting firms are still finding their feet and determining the best procedures for their customers.
The cannabis sector is expanding, bringing a new set of accounting issues. As more and more businesses enter the cannabis market, it is vital to be aware of some of the potential traps in cannabis accounting.
This blog post will discuss three of the most common “tricks” to avoid maintaining accurate cannabis accounting records!
Here are the three tricks to avoid in cannabis accounting:
Trusting the CEO to handle everything:
Cannabis is one of the most strictly regulated industries in the country. To keep the doors open, you must follow local and federal regulations. You should not entrust your tax planning and accounting to just anyone with some bookkeeping knowledge. Your firm might face substantial penalties or even closure if you don’t have a skilled, experienced partner on your side. Hiring a marijuana CPA or cannabis accountant will help ensure accuracy and compliance with state regulations.
Trying to Shortcut IRC 280E and IRC471 Codes
One of the critical aspects of cannabis accounting is following the Internal Revenue Code (IRC) 280E and IRC471 codes. These codes are applicable and advantageous for businesses in the cannabis industry, and attempting to shortcut them can lead to increased taxes and penalties from the IRS. Marijuana CFOs need to be aware of these codes and follow them accurately to stay compliant.
Not investing in the latest financial tools and processes
Marijuana businesses, especially those in the early stages, are often strapped for cash. It can lead to a temptation to cut corners regarding accounting and financial management. However, not investing in the latest tools and processes can be penny-wise but pound-foolish. Skimping on these basics will only cost you more in the long run as your business grows.
All in all, by avoiding these three “tricks,” you can stay on the right track when it comes to cannabis accounting. Marijuana businesses have a lot to keep track of, and making sure your books are in order, and you substantially document your deductions is essential for success.
The CannaCPAs is an experienced cannabis accounting firm.
Marijuana businesses are complex and ever-changing, so it’s crucial to partner with an experienced cannabis accountant. The Canna CPAs is an experienced, knowledgeable, and dedicated cannabis accounting firm with expert and knowledgeable CFO’s and tax professionals. We launched our firm in 1997 and we specialize an cater to the cannabis space, supporting all verticals such as growers and processors. Our team strategically counsels and advises owners, managers, and investors in all legal states, aiding them with crucial financial tasks. We optimize cannabis company deductions legally and ethically to save our customers money and assist with compliance to safeguard the cannabis business in the event of a tax audit.
Cannabis accounting can be tricky, but it doesn’t have to be with the help of an experienced professional. Contact us today and help us avoid some of the most common mistakes in cannabis bookkeeping. We can help you in each process, from bookkeeping to tax preparation. With our support, you may be confident that your funds are in excellent hands.
Sandy Suchoff, CPA is the Founder and principal of Lefstein-Suchoff, CPA & Associates, LLC D/B/A The Canna CPAs. Suchoff has been featured and interviewed on MSNBC, FOX News, and Tune In Business Talk Radio as a tax advisor, as well as ONR Oklahoma PBS TV, Chasing News on FOX & WOR, KRQE 13, Cannabis Radio, Purple Haze Radio, and Cannabis Tech & Today as an advisor on cannabis tax and accounting.