Avoiding an IRS Audit
As a cannabis business owner, the last thing you want is to be hit with an IRS tax audit. Audits can be time-consuming, costly, and stressful, and they can also damage your business’s reputation. Fortunately, by working with an experienced and expert cannabis CPA firm, you can take steps to preclude tax audits for your cannabis company and protect your business in the statistically more likely event of an audit.
Here are some ways that a cannabis CPA firm can help you avoid tax audits and protect your business:
One of the most important things that a cannabis CPA firm can do is ensure that your business is in compliance with all relevant tax laws and regulations. This includes everything from federal tax laws to state and local tax laws, as well as industry-specific regulations. By ensuring that your business is in compliance, you reduce the likelihood of triggering an audit in the first place.
- Accurate financial reporting
Another key factor that can trigger an audit is inaccurate financial reporting. By working with a cannabis CPA firm, you can ensure that your financial reports are accurate and up-to-date. This can help you avoid red flags that might trigger an audit and can also help you address any potential issues before they become a problem.
- Mitigating risk factors
There are certain risk factors that can increase the likelihood of an audit, such as claiming large deductions or having a high volume of cash transactions. A cannabis CPA firm can help you identify these risk factors and take steps to mitigate them.
- Expert Tax Preparation
Having an experienced and expert cannabis tax CPA prepare your tax returns technically proficient can minimize your exposure in a tax audit. For example, including a disclosure statement with the appropriate legal verbiage can corroborate your compliance with IRC § 280E.
- Thorough and Competent Documentation
By ensuring in-depth documentation, including thoroughly documented accounting workpapers, cannabis businesses can back up their tax positions.
- Representation in the event of an audit
Finally, if your cannabis business does get audited, it’s important to have representation from an experienced and expert cannabis CPA firm. They can help you navigate the audit process, provide the necessary documentation and support, and work to resolve any issues in a timely and efficient manner. With a qualitative cannabis CPA firm on your side, you can have peace of mind knowing that your business is in good hands.
In conclusion, working with an experienced and expert cannabis CPA firm is essential for precluding tax audits for cannabis companies and protecting cannabis businesses in the statistically more likely event of an audit. By ensuring compliance, accurate financial reporting, mitigating risk factors, and providing representation in the event of an audit, a cannabis CPA firm can help you avoid the headaches and costs associated with an audit and keep your business running smoothly. At The Canna CPAS, we specialize in providing comprehensive financial services to cannabis businesses.
Contact us today to learn more about how we can help your business grow and thrive at 833-CPA-CANA or 833-272-2262.
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.
