Federal government still prohibits cannabis and most related operations from conducting business. This means cannabis businesses that choose to accept credit cards for payments, open bank accounts, get loans, and or other financial transactions from the federal government can still at risk of prosecution by the fields.
In fact, there are cases of banks shutting down cannabis business bank accounts and dispensaries getting their payment processors shut down without warning even in the states where both medical cannabis and recreational marijuana are allowed. Cannabis business owners have trouble scaling as they are ultimately forced to operate in cash-only transactions.
The money that would be saved through tax returns could be allocated towards scaling, but without this option, cannabis business operators must either find a workaround or take the loss in stride. This creates another set of problems, especially when cannabis companies want to reinvest their profits.
Not All Expenses/Adjustable are Tax-Deductible
Marijuana-related expenses In the United States aren’t always deductible as business expenses. This means that ancillary business activities like marketing are off-limits for tax deduction purposes, and they don’t even qualify for an ordinary deduction. Cannabis businesses have limitations regarding how they can lessen their tax obligations, even for ordinary business expenses. Many cannabis clients receive fractional accounting services, including tax preparation, with specialization in the cannabis space.
Whether handling the medicinal plants or offering ancillary services to the cannabis industry, many businesses save tax dollars with proper accounting expertise leading the way.
Outsourcing Cannabis Accounting & Bookkeeping: The Right Choice
Cannabis businesses can be benefit from hiring in-house cannabis accountants and bookkeepers. While you have a professional down the hall, the additional expense of paying for a cannabis accounting professional could take away from your overall profits. While hiring an in-house expert will cost you more at the outset, it’s important to consider the long-term costs of keeping cannabis accountants on staff. In contrast, a cannabis tax advisor or firm can help your company meet its legal requirements while also allowing you to avoid penalties down the road.
Protecting Finances & Inventory
Any cannabis accountant worth their weight in gold will advise you to protect your finances and inventory. The cannabis industry attracts people interested in taking advantage of the cash these businesses have on hand. Thus, one of the first steps we recommend taking as a business operator in this industry is to ensure your highly regulated products and cash is protected. Internal revenue can easily be taken by staff if you don’t have cannabis SOPs in place to safeguard your investment.
While those operating in the cannabis space can’t always deduct ordinary business expenses, it’s also challenging to make deductions based on stolen cash and products.