CannaCFO Magazine Issue 1 | Page 20

Fixed Assets: Fixed Asset is a large component of the accounting books that are maintained for your Company. Having details about what was purchased, how it was used in your business is a key part of the accounting books and records. Income tax auditors will require these details and an understanding of current year asset acquisitions and dispositions as well as depreciation calculations.

Liabilities: The Accounting Books should have a detailed ledger of all activities occurring within the Liabilities of your organization. At any time, anyone should be able to see within the accounting books what the Company owes to its vendors and lenders.

Equity: Ready to sell or add investors? The accounting team should provide you access to a “perpetual data room” that contains all financials, records, tax returns, legal documents, leases, insurance, and board files.

Sales: On a daily basis, many State Agencies require that daily entries in the accounting books and records record the sales, refunds, payouts and sales tax liabilitiesincurred each and every day. The Accounting Department should reconcile the POS system to various other reports including cash counts and merchant service reports. Having this details within your accounting books will support your exit valuation as it tends to be mostly based on revenues, your specific area and the licenses your Company holds.

IRC 280E: IRS is all over this item. Do not get short-sited in trying to side-step 280E rules and regulations. It will catch up to your Company. It is complex and professionals need to advice. The IRS is aware of most of the “tricks” being utilized and it’s not worth paying the penalties or have a hidden liability if you are wrong. Instead, work with an accounting professional that provides appropriate guidance.