Why Do You Need a Bookkeeper for Cannabis Business?

Posted by Mark Will on January 28th, 2020

The cannabis business needs a bookkeeper who fully understands how the industry works. The increasing complexity of tax laws, and state regulations, and increased scrutiny requires that businesses place a high priority to accounting practice.

A cannabis bookkeeper who specialises in the cannabis industry and has good knowledge about the advanced accounting standards can keep your business compliant. When the industry is becoming competitive, a robust accounting system offers even more benefits.

Better Compliance

Any compliance with IRC 280E needs the Marijuana touching business to follow strict regulations while reporting the taxable income. The compliance should be consistent and throughout the year and must be incorporated in the overall accounting process.

The section limits the deductibility of expenses for income tax purposes, but the exception is the cost of goods sold. When you work with a professional bookkeeper and a CPA who specialises in this industry can help you achieve this.

The implementation of the record-keeping, the cost of the allocation methods and host of the other practices are needed to comply with 280E.

Inventory reconciliations are especially essential to support the correct inventory value. The cost of goods sold amounts have to be reported correctly.

Finance compliance is needed by the state licensing departments for operating the cannabis business, whether for medical or adult use.

Cost and Time Savings

The outsourced professional bookkeeping and CPA services come at lower prices than an internal bookkeeper. Those bookkeepers who don’t have any experience in the cannabis industry accounting often are unable to apply the right accounting standards. Non-industry professionals don’t know much about the detailed record keeping. It can cause a risk of non-compliance and additional costs at the year-end to reconcile the accounting information into the correct format. It may cause the business to face significant additional taxes and penalties that could otherwise be avoided. For a small business, the outsourcing of professional bookkeeping and the accounting services gives them peace of mind that ensures that their books are in order.

Ready to Use Financial Information

Business owners have to make decisions daily, and most of them are financial. However, in the absence of proper accounting and reporting, financial decision making is not possible.

Finally,

When you have a cannabis bookkeeper, you can remain assured that the business meets the compliance. There are enough savings, and financial information is readily available for decision making.