Navigating through the laws, requirements, and technicalities can make or break your cannabis business if you aren’t familiar with state and federal rules. Unfortunately, we are seeing a lot of very experienced accounting professionals who do not have canna tax and canna accounting background providing incorrect and unsubstantiated opinions about key issues within your business. Inexperienced accounting professionals, who aren’t familiar with the specific needs of cannabis companies, treat these businesses like every other company and this is getting business owners into trouble.
Our goal is to empower cannabis CEOs, investors, and executives with basic information so that you can hire the right professional and know exactly what to expect from your accounting team. When evaluating current accounting efforts, or when looking to hire a world class accounting team, make sure your accountant, bookkeeper, or CPA is meeting these minimum standards.
Policies and Procedures: Does your Accounting Department have written accounting policies and procedures? Written documentation that lists all procedures and who does what is key. Internal controls and corporate governance are also items to address.
Cash Controls: This is a huge issue for most of our clients. Nearly all of our clients operate in nearly a 100% cash environment. Vendors and taxes need to be paid,regardless of whether cash skimming has occurred. Owners and investors are liable for maintaining appropriate level of cash handling controls.
Inventory: Understanding your inventory balances at least at the end of each month is a minimum best practice.This includes a full and compete inventory. For SKUs that don’t move fast, our clients take sublevel inventories of those items a few days prior to the end of each month. Minimizing your inventory balances as of December 31 will significantly assist the Company will increased Cost of Goods Sold levels with in turn will decrease business 280e and income taxes.