In the cannabis sector, the need for flawless record-keeping and accounting combined with permanently evolving regulations means cannabis businesses face a steep challenge in maintaining financial compliance.
Relying solely on in-house methods for cannabis bookkeeping and accounting purposes could prove futile, especially given the busy pace of the cannabis space.
Thus, the wisest approach to financially-centric legal compliance in the cannabis sector is outsourcing to a third party. Before deciding on an outsourcing option, though, there are necessary nuances to grasp. For instance, what’s the difference between an accountant and a bookkeeper?
What To Expect From An Accountant
Here’s what an accountant can do for a dispensary:
Financial planning guidance:
○ An accountant can point a dispensary owner towards an ideal business structure during the business’s infancy and continue providing long-term guidance afterward.
○ Accountants can also provide forecasts and more proactive planning before a dispensary owner completes their initial business plan.
Business loan application due diligence:
○ Accountants grasp a dispensary’s broader financial picture and can therefore offer direction when lenders ask more sophisticated questions about profit margins, etc.
○ An accountant also understands the nuances of terms, conditions, interest rates, and other facets involved in business loans.
Tax return filing and preparation:
○ Tax season is an accountant’s time to shine because they’ll limit your tax liabilities and reduce how much your dispensary owes the IRS.
○ An accountant also ensures your taxes get filed correctly, mitigating the potential for IRS auditing due to errors.
Additionally, there are different levels of accountants you can hire.
Some are standard accountants with a bachelor’s degree in accounting with no further certification. A certified public accountant (CPA) owns a higher education degree and has successfully completed a CPA exam. On top of that, certifications must remain current so that CPAs stay updated on changes in tax laws.
What To Expect From A Bookkeeper
Below is a list of what cannabis bookkeeping will offer your dispensary:
Transaction recording:
○ A bookkeeper manages the general ledger–a document showing each financial account’s balances, debits, and credits.
○ The ledger records every dispensary transaction, whether a sale, bill, or purchase.
Chart of account maintenance:
○ Bookkeepers ensure dispensaries have the ideal number of accounts–not too few or too many.
Bank statement reconciling:
○ A bookkeeper will match recorded transactions with the previous month’s bank statement.
Financial report preparation:
○ Balance sheets, cash flow statements, and profit/loss statements are all completed by bookkeepers.
Overseeing accounts payable/receivable:
○ Bookkeepers ensure payments are successfully made to vendors when managing accounts payable.
○ Conversely, accounts receivable tasks involve establishing payment terms, ensuring timely customer payments, tracking down delinquent payments, and dispersing invoices.
Payroll management:
○ Deduction calculations, reading timesheets, and payroll processing fall under a bookkeeper’s purview.
An ideal bookkeeper will have earned American Institute of Professional Bookkeepers or National Association of Certified Public Bookkeepers certifications. CPB or CB will follow their names.
Certifications aren’t mandatory for bookkeepers, but–depending on your budget–you’re better off hiring someone with the above distinctions.
Why Should You Outsource Your Dispensary’s Accounting And Bookkeeping To A Third Party?
Given the complexities and shifting regulatory nuances in the cannabis industry, pinpointing accurate accounting and sound record-keeping must be prioritized.
Since accounting and bookkeeping are so labor-intensive, outsourcing accounting and bookkeeping to a third party is the wisest approach to these critical business facets.
By outsourcing cannabis bookkeeping and accounting, dispensary employees and employers can focus more on marketing, customer service, and product sourcing, all invaluable to success in the sector. Additionally, what you pay a sure-handed third-party bookkeeper or accountant pales compared to what’s saved through their expertise with finances and taxes. The returns are nearly immeasurable.
Want to learn more about accounting and bookkeeping in the cannabis space? Click below and schedule a half-hour consultation with our team and take the first step toward solidifying your dispensary’s financial compliance.
