Cannabis Business Accounting- A Complete Guide
There is a tremendous increase in the number of countries that are legalizing the usage of cannabis. So far, 33 states have legalized the medical usage of marijuana while ten have permitted the usage of the recreational cannabis. The tax rule for the cannabis business is very hard at the federal level. The state and IRS conduct a lot of scrutiny of the cannabis business and are ready to penalize anyone who does not comply with the rules. You should therefore be watchful when you are doing accounting for your cannabis business.
When you are running this kind of business, it is always vital to make sure that you understand the federal regulation of the business. According to the law, cannabis business is not considered as normal, and consequently you are not likely to get the standard deductions such as the rent. However, business owner is allowed to deduct the expenses that are associated with the cost of sale. Some of the deductible expenses are the packaging, and labeling cost.
Different methods are used in accounting for the cannabis business. The accrual and the cash methods are the most commonly used. However, the cannabis CPAs recommend that you use the accrual method for your business. You will save money when you use the accrual method although it is complicated. The crucial processes ensure that tax is lower because the cost of goods sold will increase.
Bookkeeping is fundamental in the cannabis business. An IR auditor is likely to come to your premises at any time. Ensure that in your business, the records that you maintain are very accurate.
Strong inventory management is very important for your business. It is vital to make sure that you track every product that you are going to handle in your business. The rules that governed the management of the stocks in the marijuana business is very complicated. it is always vital to get the assistance of the cannabis CPA to understand how the marijuana is regulated.
Networking with other people who are in the cannabis business is very important. On the social platform like Facebook there are many groups that you can join to connect with the people. You can also consider getting their emails so that you have a direct conversation.
Accounting for the cannabis business is very important. You will require someone who will provide you with the advice. Many online cannabis accountants can assist you in the accounting and taxation of your business. When you outsource the cannabis accounting services, they will create a plan that will suit your business. it is vital to make sure that you look for a professional who will provide you with accurate, robust, and confidential accounting. Investigate the accounting provider to make sure that they meet your cannabis business needs.