Navigating the cannabis industry is no easy task! Despite being legal in states such as California, Washington, and Oregon, marijuana is still a federally illegal drug, making it challenging to keep up with regulations and frequently changing policies. Since the majority of the cannabis industry is paid with cash, managing the specific amounts of money coming into the business is critical. Without proper accounting, your company’s finances can become a mess, even opening the company up for money loss.
Several accountants and payroll managers often refuse to work with dispensaries. Luckily, All About Businesses is here to help with not only accounting and bookkeeping, but to answer several of your questions about bookkeeping for this particular industry. We’re here to watch your business grow and prosper, providing every resource we can to ensure your success.
Taxes are to be expected in every business, but the cannabis industry is typically subjected to multiple different taxes, all of which can range in different amounts. Some examples of these taxes include:
- Sales taxes- The regular type of tax for retail goods.
- State taxes- Based on the state in which you live, an additional tax can be applied to marijuana products. Between Oregon, Washington, and California, this price can vary from 15% to as high as 37%.
- Recreational use taxes- Some states tax the recreational use of marijuana based on its weight and THC content.
For bookkeeping, part of our job is based on tax compliance. We will keep up to date with changing amounts in taxes and carefully calculate the appropriate deductions, keeping your business up to code with regulations.
To successfully run a cannabis company, you can expect to be involved with quite a few outside vendors. The cultivation, chemical processing, retail, food manufacture, and labs involved in the production of cannabis are all important and must be properly paid off. One of the trickiest vendors to pay is seed-to-sale tracking. Each state is mandated to monitor the distribution of cannabis plants, to properly track their amounts and earnings. Luckily, even the trickiest accounting processes are no match for All About Businesses! Our accountants and bookkeepers are prepared to handle all kinds of accounts payable, making your life as a business owner easier.
Since cannabis bookkeeping is known to be messy, our accountants and bookkeepers will most likely have to perform accounting clean-up to make sure your books are accurate and in order. It can be expected that you will have to:
- Collect a retainer and sign an engagement letter.
- Prepare a list of expectations for the client and penalties if the amounts and deadlines are not met.
- Collect all legal documents such as signed corporate documents, stock option plans, leases, notes, and debts.
- Create a journal entry of the monthly income and expenses.
We hope we were able to help you! All About Businesses is dedicated to serving our clients and is eager to help your company succeed. To set up an appointment, contact us today! We offer free consultations and will take the time to understand you and your company’s goals.