In many states, the legalization of the marijuana business is still only a couple of years old. Some cannabis accounting services are still trying to find their footing and figure out the best practices for their clients. GJR Consulting is ready to hit the ground running for your company. We already have experience in the cannabis space and the codes that govern how these businesses operate. We can tell you what to avoid and what will serve you well in the future.    

3 ‘Tricks’ to Avoid in Cannabis Accounting

Being a relatively new industry is not slowing the growth of cannabis companies across the U.S. Inexperience in this thriving market has led many organizations to try to find shortcuts or ‘tricks’ around the tax codes and accounting regulations of selling cannabis. Here are three accounting practices to avoid in your cannabis business. 

  1. Trusting the CEO to handle everything.
    The cannabis industry is one of the most strictly regulated in the country. You must comply with local and federal regulations just to keep the doors open. Your tax planning and accounting services should not be left to just anyone with some bookkeeping experience. Without a professional, experienced partner in your corner, your business could be hit with significant fines or just be shut down altogether.

  2. Trying to shortcut the IRC 280E and IRC 471 Codes.  
    Section 280E of the IRS code prevents any business or trade from making tax deductions or receiving tax credits if any part of their business sells controlled substances. Cannabis is still considered a Schedule 1 substance and falls under this federal law.

    Unlike with other industries, this means you can’t claim typical business deductions such as the costs of administration, marketing, or rent. The one thing you are allowed to deduct is the “cost of goods sold” or (COGS). These rules have led many businesses to wildly over-inflate their COGS. They try to move costs around in complicated ways that can backfire. If done incorrectly, this can end up costing much more than if you had not tried to shortcut the system.    
  3. Not investing in the latest financial tools and processes.

    The strict regulations of the cannabis field require software solutions tailored to their standards. GJR Consulting has the cannabis accounting software to perform all the tasks you need. We even offer training for your staff to keep your books more accurately. Trying to save money by not investing in cannabis software like this ends up costing your business more in the long run. 

Cannabis Accounting Services From an Experienced Firm

GJR Consulting is the accounting firm your cannabis business needs. One of our specialties is navigating the intricacies of Section 280E and other regulations like it. We offer a broad range of financial consulting solutions and business tax services. We believe in collaborating with our clients. You can take advantage of our comprehensive services or just come to us for targeted assistance with things like payroll or tax preparation. 

To learn more about the things to avoid in the cannabis industry or the ways we can help your business, contact GJR Consulting today.

person doing accounting

Cannabis growers and sellers face a unique challenge in the business world. They all work in a heavily regulated industry, and they all need dependable accounting services. Whether you just opened a dispensary or own a long-running cannabis company, nothing will kill your business like issues with cash flow and not handling your taxes correctly. You need an accounting firm that understands the regulations of your industry and the details of business tax services. 

Cannabis Accounting Services Are Still a Growing Specialty

With every month that passes, the legal cannabis industry is growing larger. Legalization is spreading throughout California and across the country at a rate that demands attention—and with legalization comes regulation. A single cannabis business might have to comply with regulations for everything from farming and chemical manufacturing to food production and retail sales. A wide swath of laws govern all these activities, and as a business owner, you’re probably not going to have expertise in all of them. 

At GJR Consulting, we see the cannabis space as an opportunity to flex our skills and increase our capabilities. We can help you with tax preparation for all the new laws that are setting the standards of your market. We offer cash flow management to assist your business in planning ahead for when and where your cash needs will occur. The consulting experts at GJR even offer to train your people on bookkeeping services like QuickBooks. We are here to aid your growing business and help you lay the groundwork for a successful future.   

Accounting Issues for Cannabis Could Cost More Than Just Time

Cannabis small business workers might know which strand or edible to recommend for their customers, but few of them are experts in preventing long-term financial problems. Bookkeeping and creating accurate financial statements are a totally different skill set that takes familiarity with the federal level of legal marijuana regulation and knowledge of accounting tax planning. Businesses can make many common mistakes when they don’t have the help of professional accountants or bookkeepers. 

  • Confusing Cash Flow for Profits: It’s easy to understand how those outside the accounting world might confuse terms like cash flow and profits. Cash flow is the movement of your money in and out of the business from the beginning to the end of the month. Profits are the result of your revenue minus the expenses for a given period. Mixing up these two numbers can cause you to spend more money than you have and overextend your business.
  • Recording Transactions in the Wrong Period: Professional bookkeepers, like the team at GJR Consulting, can do what is called ‘closing the books.’ Every month, we’ll figure out your different accounts, prepare financial records, and perform other tasks to close out your books for that month.

    Without these practices, it is a common mistake to put new transactions in a previous period. This mistake will result in total balance adjustments that won’t match your bank reports or financial records. To further complicate things, it will impact your tax records and could cause some harsh penalties from the IRS down the line.  

Cannabis Businesses Are Already Dealing With Heavy Regulation     

Accounting services for cannabis share many of the same challenges as other regulated industries, but on an even larger scale. The cannabis market is already filled with enough sources of stress, and poorly executed accounting can impact an entire staff. Cannabis companies often employ a large number of people, and all of those people need to get paid accurately. You can delve deeper than just our advisory services and have us fully manage your payroll services. Your payroll figures can be made available online for you to access quickly and securely.  

GJR Consulting also offers strategic planning for the future of your organization. We can help you create a long-term business plan for the growth of your business. We go in-depth with predictive evaluations of profits and roadblocks. We research market factors and financial planning. The more time you spend on the foundation of your business, the easier it is to grow. Do yourself and your business a favor: Take advantage of the accounting services at GJR Consulting.    

To learn more about how GJR Consulting can help your regulated business, call us today.