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.
- 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.
- 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.
- 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.