The page notes that although many cannabis industry businesses conduct operations with cash, these transactions must be reported like any other form of payment. It also provides information about income reporting, cash payment options for unbanked taxpayers, estimated US federal income tax payments, and the importance of robust recordkeeping (i.e., cash sourcing and tracking). With most big accounting firms still avoiding the cannabis industry, CPAs who are considering the shift into cannabis are undoubtedly in the right place at the right time. One of the biggest questions potential clients ask me is, “What do your cannabis accounting services cost?

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According to one estimate, US cannabis businesses could bring in a yearly profit of $130 billion by 2024, which means both you and your client have a lot of earning potential. No longer will cannabusinesses have to jump through hoops and hurdles and pay crazy expensive fees to secure their money at a reliable financial institution. For this reason, small business owners tend to accept tax inefficiency and lean toward C-corp entity structures designed for larger businesses.

Banking considerations in the cannabis industry

Cannabis and CBD/hemp accounting professionals need to be aware of these challenges and must be able to help their clients navigate and find solutions so that they can properly operate their business. Welcome to Puff Puff Accounting, a leading https://www.bookstime.com/ firm specializing in tax accounting for the cannabis industry. We understand the unique challenges that cannabis businesses face when it comes to compliance and tax reporting, and we’re here to help you navigate these complex issues with ease. Our nationally recognized cannabis accounting and consulting team has supported dozens of large cannabis companies with a full range of services. Beyond compliance, our trusted advisors have helped cannabis companies transform their businesses with innovative solutions for growth.

Cannabis Industry Accounting

Once you’ve shown them the landscape, it then becomes about what you can do to help them build a profitable business structure. Also think about how crucial it is to use the right time-tracking software that differentiates between tax-deductible vs non tax-deductible tasks? Frameworks such as PPA requiring shrewd judgments are dependent on the formulation of a clear, legally compliant methodology. Maximizing the performance of cannabis-oriented businesses hinges on accurate legal and financial information, a topic you can learn more about at the AICPA & CIMA Cannabis Industry Conference in August.

Is Your Lack of Cannabis Accounting Knowledge Damaging Your Business?

If your potential client would have had the proper accounting in place, they would have been paying a higher monthly rate all along. It would have cost this example client $45k to complete the accounting work if they engaged you from the beginning. So, we are cutting them a little break because we can condense the timeframe. However, make sure your client understands how much they are SAVING when you reveal this offer.

• You’ll also track all invoices and receipts, organize historical data into financial statements, prepare historical tax returns, and implement accounting systems and software.
• Maintaining proper accounting records is arguably the most important part of operating a cannabis business in the United States.
• Moreover, your COA is a living document that should evolve with your business.
• Working effectively with newly established cannabis operations sometimes requires knowing how to help them enhance business functions.
• Effective regulation and auditing of cannabusinesses contributes to a better social climate too, with one study finding that medical marijuana laws directly reduced violent drug-related crimes.

• Our use of the terms “our Firm” and “we” and “us” and terms of similar import, denote the alternative practice structure of Cherry Bekaert LLP and Cherry Bekaert Advisory LLC.
• We’ll help you minimize your tax liability, optimize your financial performance, and keep your business running smoothly.
• Pursuant to the Cannabis Law, the Cannabis Control Board is charged with the creation and implementation of a social and economic equity plan in consultation with the Chief Equity Officer and Executive Director, and after receiving public input.
• So, for example, “no” to deducting advertising costs, but “yes” to deducting COGS.
• While state laws and reporting requirements fluctuate and impact this booming and relatively new business industry, our professionals maintain acute awareness of regulations put in place and how they affect our clients’ businesses.
• Marcum is one of the largest independent accounting and advisory firms in the country, ranked among the top 15 nationally.

However, they do not come equipped with a cannabis-specific template, further emphasizing the need for professional services. While the concept of a COA is universal across industries, the cannabis sector presents unique challenges and considerations. These include complex regulations, tax implications, and industry-specific factors, all necessitating a cannabis-specific COA. Dext Commerce – saves you time by automating your client’s sales data retrieval from online eCommerce marketplaces and digital payment methods. Get an overview of their sales performance and ensure sales tax compliance, no matter where they sell in the world.

• Additionally, expect to conduct account reconciliations, prepare financial reports, organize the books and records, and more.
• However, as of this blog, 33 states have laws permitting the growth, sale, and processing of cannabis in different forms.
• We are the #1 US network of over 500+ CPAs, CFOs, Accountants, Tax Attorneys, Enrolled Agents, and Bookkeepers, that are the leading experts in providing GAAP compliant, cost-saving, strategic, accounting and tax services.
• While this opportunity is now closed, consumers can access more than 400 safer, tested cannabis products at their local dispensary or through delivery at the link below.
• For example, if you name your total fee at $2,500 per month and cleanup will take 18 months, you’d charge them $1250 per month or $22,500 total.
• These factors create an enormous need for CPAs who are excited about entering a fast-growing and intricate niche, which consists of farming, chemical manufacturing, food production, and retail.

There are many varied sub-niches, which can be very complicated to serve effectively. These sub-niches include farming, processing, manufacture, labs, distribution and retail, and many times all of those will fall under the same company. On top of that, there is a lack of Big 4 industry guides or training, no GAAP guidance, and almost no tools or workpapers outside of our program, making it extremely difficult to serve these clients well and maximizing your time! From banking to transportation of goods; from seed to sale; from payroll to paying bills, there are challenges that most businesses do not have to deal with that hinder day-to-day operations.

2) Ready to service your existing Cannabis and/or CBD/hemp accounting client? We help you understand how to provide world-class service, as well as give you the downloadable tools that you can use immediately cannabis accounting on day one to serve these clients. Everything from properly on-boarding your Cannabis/CBD/hemp client, setting up a perpetual data room, month-end tie-outs, day-to-day bookkeeping, etc.

This program is meant to be DIY and plug and play, so you can go through the different modules at your own pace. Our hope is that you’ll be proficient in providing Cannabis and CBD/hemp accounting services within 90 days, which is totally possible if you invest on average at least an hour a day into learning and implementing the materials. Regardless of your state’s current laws on cannabis, the industry is expanding quickly. If you want to provide services to cannabis businesses, you’ll want to be prepared. Tax Code 280E is a federal tax code currently preventing state-legal cannabis businesses from deducting most business expenses from their taxes, aside from the Cost of Goods Sold (COGS), since cannabis is classified as a controlled substance. Because so many new cannabis business owners have lots of questions I’ve pulled together the common ones I hear so you can help prospective clients understand the ways accounting professionals can support their businesses.