As an entrepreneur, you know that time is your most valuable commodity. Many business owners make the mistake of wearing too many hats and wasting hours trying to figure it all out by themselves.
Outsourcing your accounting to cannabis industry professionals is one of the best options to solve this problem. With so much competition in the cannabis industry, it’s crucial to prioritize productivity and efficiency- especially when it comes to getting accurate financials.
Continue reading to learn how outsourcing will help you scale your business and maximize dispensary cash flow.
How to outsource cannabis accounting
Green Space Accounting has experience helping cannabis companies with cash flow management, bookkeeping, and maximizing their revenue. If you’d like more information on our services, you can read our service page about cannabis accounting or contact us today — we’ll explain how Green Space Accounting can help.
It’s no secret that many entrepreneurs are looking for ways to grow their businesses while also saving time (and money) in the process.
One way you can accomplish this is by partnering with accountants that specialize in cash flow management. This is particularly important for dispensaries, as most transactions are cash. A crucial aspect of cash flow management is looking at unnecessary expenses that may be cutting into your profit margins. An excellent financial expert will be able to identify these “useless” expenses, so they don’t add any more strain on top of what’s already there – helping save both time AND funds.
Similarly, a good accountant can point out the assets and tasks that bring in the most money so you can expand your efforts in these areas. Green Space Accounting prepares historical cash flow statements to help you gain valuable insights from past spending that will help shape your future decisions. Along with cash flow projections, your accounting partner will provide you with effective collection & payment policies to assist in getting the maximum rate of return on your idle cash.
Another way that outsourcing will maximize your profits is by allotting you and your team more time to focus on core business tasks. It’s easy to get behind with so many responsibilities in running a dispensary, such as managing costs and payments from suppliers and reconciling bank statements. In addition to the financial side of your business, you also have to stay on top of tax filings with the IRS.
Taking these tedious tasks off your plate frees up valuable time that you can use elsewhere, such as training new employees, developing robust marketing strategies, or whatever other projects might boost your bottom line. Your employees can focus on what they do best: providing cannabis products to patients and generating revenue in a safe environment.
Taxes & IRS Audits
Cannabis businesses have considerably greater odds of being audited by the IRS when compared to companies in more conventional industries. Their well-earned reputation for targeting the cannabis industry comes at no surprise as marijuana is still federally illegal. Attempting to navigate your taxes on your own can lead to costly mistakes as specific protocols are unique to the cannabis industry (particularly deductions).
280E of the IRS tax code is a Catch-22 for cannabis businesses. In short, this tax code “prohibits the deduction of business expenses when the trade or business consists of trafficking controlled substances.” This was developed in the early 80s to prevent street “drug dealers” from making deductions related to illegally selling controlled substances. Despite operating legally at the state level, cannabis operators will have to navigate 280E until marijuana is no longer considered a Schedule I substance on a federal level. Getting penalized for mistakes with your deductions will majorly stunt the growth of your business, so you must avoid this entirely.
The best way to ensure that you understand the 280E tax code is by partnering with an accountant who has experience working in marijuana enterprises. It’s essential to look for a partner that offers complete compliance advisory solutions, including tax planning & tax preparation.
Whether you are a start-up, a growing business, or a multi-state operator, Green Space Accounting can help you with an intimate knowledge of cannabis rules and regulations. Working with Green Space means access to experienced accountants that create complete accounting solutions tailored specifically to your needs. If this sounds like something your business would benefit from, please feel free to schedule a free 30-minute consultation.
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