Cannabis Accounting FAQ
We’ve curated a list of answers to the most pressing cannabis accounting and compliance questions.
General
What’s the difference between a Certified Public Accountant (CPA) and other accountants?
A CPA is an accounting professional who has met state licensing requirements and has demonstrated proficiency by meeting high educational standards and passing a thorough examination. This differs from a standard accountant, which is any person who keeps and interprets financial records.
What do cannabis accounting firms do?
Business accounting firms help you keep accurate records, manage cash flow and payroll, and identify areas of your business that could change to make you more profitable. For cannabis businesses, our team will also ensure that your business and finances stay compliant with your state’s regulatory requirements.
How much does monthly accounting cost?
Pricing for monthly accounting services varies by your company’s needs, size, accounting activity, etc. We will work with you to develop a plan that fits into your budget.
How will my business benefit from outsourced accounting services?
Outsourcing your accounting allows you to focus on the more important things you need to scale your business. You’ll save valuable time in your day as well as reduce your overall operating costs.
What states do you operate in?
We operate in every state with a legal cannabis market.
Cannabis Accounting FAQ
Will any accounting firm take me on as a client as a cannabis business?
Many traditional accounting firms will not work with cannabis businesses because of the increased risks associated with the industry. It is best to work with a dedicated cannabis accountant that understands the ins and outs of compliance, payroll, and bookkeeping for cannabis companies.
Why is it important for cannabis businesses to manage their income and expenses carefully?
Some cannabis businesses, like dispensaries, rely solely on cash transactions. Because of this, mismanagement of your cash flow has the potential to kill your business. Green Space can help you in developing a cash flow projection, effective collection and payment policies, and more.
How is banking different for cannabis businesses?
Getting a bank account for a cannabis business can be more complicated than it is in other industries. This can vary from state to state. A financial institution will likely need to know more details about your business before they work with you. You will have a higher chance of getting accepted if you can show a comprehensive business plan, including anticipated income and expenditure.
How does IRS Code 280E affect my business?
Internal Revenue Code (IRC) Section 280E (Section 280E) denies deductions and credits for amounts paid or incurred in carrying on the trade or business of trafficking controlled substances (within the meaning of Schedules I and II of the CSA) in violation of federal or state law.
Do you offer accounting for dispensaries?
Yes, we offer complete accounting and bookkeeping services for dispensaries and any other type of business in the cannabis space. From small dispensaries to multi-state operators, we do it all.
Why should I hire a cannabis accountant?
Hiring an accountant is important for businesses in any industry, but it’s even more crucial in the cannabis space. Constantly changing state laws and regulations make it difficult for dispensaries and cannabis companies to keep a compliant financial system in place, especially when you’re doing business in multiple states with different laws.
How do dispensaries pay their employees?
A large number of dispensary operators choose to pay their staff in cash, although this can be dangerous and difficult for many reasons. An alternative to this method is hiring workers as 1099 employees, which is a type of independent contractor. For more information on how dispensaries handle payroll, check out our blog.
From Seed To Sale: Financial Management For Cannabis Entrepreneurs
Click below for complimentary access to our e-book that covers:
- How To Navigate The Regulatory Landscape
- Budgeting And Financial Planning Strategies
- Cost Control And Expense Management
- Getting A Handle On Taxation And Accounting
- Find Capital Investment And Financing Opportunities
- Building A Financially Sound Cannabis Business
Cannabis Compliance FAQ
What is cannabis compliance?
As a dispensary or ancillary business in the cannabis space, you’re required to follow a set of rules governed by the state you’re operating in. Compliance rules range from financial to retail to environmental, and your business must operate within these parameters.
Why is compliance important for cannabis companies?
Failure to abide by state regulations can lead to hefty fines and, in extreme cases, loss of a dispensary or grow license. While this is a rare occurrence, it’s better to strictly follow the rules in your state to prevent issues from arising.
How do you help my business stay compliant?
Green Space Accounting helps businesses of all sizes stay compliant with state regulations through thorough reporting, audits, and the set-up of good procedures and processes. To learn more about how we can help your business stay compliant, contact us today.
Cannabis Payroll FAQ
How does payroll outsourcing work?
When you outsource payroll, we’ll handle everything from preparing checks to direct deposit to recording your employee’s vacation, sick, and personal day accrual. Essentially, you leave everything to us, and we’ll ensure that your payroll system is set up and running smoothly.
How is payroll different for cannabis industry companies?
There are many complications in the cannabis industry, and payroll is one of them. Ensuring accurate records is essential for state regulation compliance. If you attempt to handle payroll yourself and don’t record everything with 100% accuracy, you could be hit with a hefty fine. If you’re a business with multiple locations and dozens of employees, the burden of payroll will only grow and should be outsourced before you lose control of the process.
Do dispensaries pay taxes?
Yes, dispensaries do pay federal taxes on gross income and state taxes for wherever they’re located. To learn more about tax preparation and general accounting services, please visit our cannabis accounting page.
Cash Flow FAQ
What is cash flow management?
Cash flow management is the process of tracking how much money is coming into and out of your business. It is essential for identifying unnecessary expenditures and improving the financial strength of a business.
Why is it important to measure dispensary cash flow?
Dispensaries and other cannabis businesses have a lot of moving parts. Navigating different seed-to-sale systems in each state while purchasing inventory and paying employees can make it complicated to get a clear view of your cash flow. Working with a cannabis accountant to manage your cash flow will make it much easier to identify areas of improvement and create a plan for increased profit.
Why should I outsource cashflow management?
Your time is better spent strategizing and finding ways to take your business to the next level, not haggling over financial projections and account balances. Outsourcing your cash flow management needs to us will free up your time to focus on what matters, and you can rest assured that your business is compliant and in a secure financial position.
