Ask any cannabis entrepreneur what their biggest pain point is – would it surprise you that for most of the canna-biz, the answer is money management? The cannabis industry is at a critical juncture now that the industry is entering the mainstream of the US economy. The industry is moving fast, and many finance professionals are new to working with cannabis. The result is that many financial managers for new cannabis-related businesses (CRBs) rely on accounting controls from another industry that have been adapted to fit cannabis – and discovering that this approach doesn’t benefit the business.
To keep your dispensary or ancillary cannabis business in compliance with laws and regulations that change quickly, you need not just an organized approach, but an experienced industry professional. From internal controls to daily cash counts, large-sum cash deposits, and tax preparations, your canna-biz can’t afford to take unnecessary risks. To ensure that your cannabis business stays compliant and minimize the chance of an IRS audit, a cannabis-specific accountant with experience managing the finances of businesses just like yours.
Cannabis Bookkeeper vs. Cannabis Accountant: What’s The Difference?
The first thing you’ll need to understand is the difference between a bookkeeper and an accountant, what they do, and how each could benefit your CRB.
A cannabis bookkeeper is responsible for processing and recording daily transactions. This includes invoices, payments and receivables, expenses, and other essential functions. Bookkeepers don’t always handle business payroll, but some may perform these services.
A cannabis accountant or cannabis CPA provides more services than a bookkeeper, and often has deeper proficiency in more complex areas of financial accounting and management. Budgets, financial reports, and most importantly, tax preparations. CPAs are legally allowed to provide tax services above and beyond what other accounting professionals can do.
7 Things Your Cannabis CPA Delivers
1.Organization Your cannabis CPA’s whole job is to monitor your financials and make sure that your compliance documentation is accurate and complete.
2.Personalized attention Whether you’re preparing taxes or getting ready for a round of funding, when it comes to money matters, time matters. Your business will need someone responsive and available to support your CRB with short turnarounds, requests for financial reports, and other urgent situations.
3.Cannabis accounting systems Modern cannabis businesses can’t rely on manual bookkeeping – your cannabis CPA can help guide you towards cannabis payment platforms and modern cannabis accounting software that you can set up to automate core functions and ensure accurate transaction reports.
4.Cannabis tax preparation Cannabis businesses cannot afford to take chances when tax time rolls around. Not only do cannabis businesses face greater IRS scrutiny than other industries, they also face higher instances of IRS audits. Don’t miss out on available tax credits, or worse – face IRC §280E alone.
5.Compliance Tax compliance has become increasingly important in the later stages of due diligence and M&A diligence. Cannabis CPAs are experienced in the financial language required to present compliance documentation to cannabis venture capitalists and prospective acquirers before signing cannabis funding round agreements and/or stock purchase agreements.
6.Due diligence If your cannabis business is considering venture capital investments (VC) or a mergers and acquisitions (M&A) acquisition, you will need a financial professional to conduct in-depth due diligence with a team of experts. In these situations, a dedicated cannabis CPA is invaluable for negotiations that are often in the million-dollar range.
7.Qualified financial advice You can learn a lot of things on the internet, but there’s no substitute for the advice of an experienced cannabis accounting professional. Budgets, business models, cash-out dates, burn rates, KPIs, and more are all part of your business. Your cannabis CPA is there to help you see the bigger picture, set goals, and map your business growth.
Accountabis Is Your Best Ally In The Canna-Biz
But the biggest convenience your cannabis accounting professional can deliver is time. Cannabis bookkeeping and cannabis accounting are both complicated and labor-intensive, taking precious time away from your actual cannabis business. With an Accountabis advisor as your ally in the industry, you’ll have more time to focus on the business of your canna-biz.
As the US edges closer to federally legal cannabis, every cannabis business owner will face new changes (and growing pains) as the industry enters the mainstream. Established, compliant cannabis businesses will enter the new cannabis market with the advantage of industry experience and functional tools for industry growth.
If you’re ready to build a lasting partnership with a cannabis accounting firm, there’s an Accountabis agent ready to help you grow in the canna-biz. Contact us today to schedule a free consultation, and get ready to have your best year yet.