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Cannabis Accounting and Tax Help

With over $52 billion in sales, the cannabis industry is one of the fastest growing in the US. With demand growing exponentially, it’s little wonder that more people in Los Angeles, and other cities are starting up businesses in the recreational and medical marijuana field.

However, unlike other industries, cannabis suffers from having major issues with proper accounting, record keeping, bookkeeping and tax management. The right cannabis accounting and tax help (CPA, EA tax attorney) can provide proper guidance to navigate the new set of US laws dealing with the taxes generated from your cannabis-based business. Proper accounting and tax assistance start when you begin your business and stays with you as the environment changes for cannabis companies.

Get a free evaluation today at 877-788-2937.

Issues of Accounting for Cannabis-Based Businesses

Although some states have legalized cannabis for recreational and medicinal use of marijuana, cannabis is still illegal under federal law. While such laws do not apply within each state, they do apply when the product is transported or sold outside the state. This makes cannabis one of the relatively few products that fall under such laws.

In addition, the states that do allow for cannabis-based businesses have strict laws that govern how they operate. And more importantly, how such businesses can bank, raise capital to build or expand their companies.

Financing: Getting a bank account for your cannabis-based business is difficult. Federal banks will normally not provide one while state banks or credit unions will, but under certain conditions. It is why many cannabis business owners keep cash on hand and limit the expansion of their companies. So, finding a state bank that will let you open an account is important.

Tracking Sales: Since financing options may be limited, getting the most out of your sales becomes paramount. This means accurately tracking the sales which compare to the expenses you make. There are many factors involved in tracking sales which can influence the direction your company will take. In addition, what you can and cannot do based on the sales will dictate your plans.

Future: Being such a young industry, where cannabis sales will be in five years is difficult to guess. Perhaps changes in federal laws will greatly expand opportunities to grow your business to reach other states. Or, there may be a regression in terms of state laws that make it more difficult to operate your business.

What is true is that many changes are possible which include the rise and fall of customer demand. It is why anyone starting up a cannabis-based business, recreational and medical marijuana should have as much assistance as possible before making crucial financial decisions.

An accountant (CPA, EA tax attorney) in Los Angeles, and other cities who is knowledgeable and experienced in accounting methods and tax management for cannabis-based businesses can help. By providing accuracy in the tracking of sales combined with the knowledge of accounting, bookkeeping, tax practices that save money over time.

The Problems Facing Cash-Only Businesses

Admittedly, the temptation for cannabis business owners to keep substantial amounts of cash either in a safe or their home is tempting. The lack of financial institutions willing to lend money or create accounts for cannabis businesses often leads to having large amounts of cash piling up from sales with no safe place for storage.

The most obvious problem is the risk of robbery. Criminals are smart enough to understand that many businesses which sell cannabis products keep large amounts of cash available. It is why robberies of cannabis stores are more frequent compared to most businesses in Los Angeles, and other cities.

An accountant (CPA, EA tax attorney) that specializes in cannabis-based businesses can be of great assistance in finding banks and financial institutions willing to work with you. From opening an account where the money is protected to offering loans to help expand your business, an accountant can be most helpful with such matters.

Tax Laws

Currently, seven states tax sales of cannabis products. It is the tax laws which can be quite tricky to understand given the nature of legalization at the state and federal level. As of the time of publication, federal tax laws do not apply to cannabis, recreational and medical marijuana because they are considered illegal. However, the income you earn personally as a small business owner is considered by the IRS. Because of this discrepancy, you will often face this.

Auditing: Because of your income source, you stand a higher risk of being audited compared to other types of business owners. Businesses that sell cannabis products are more likely to find themselves facing such an audit automatically because of the current state of federal law.

Understand that federal law is still in a state of fluctuation. This means that if cannabis becomes legal under federal law, a new set of tax requirements will be created. So, it is possible that this one set of issues will be replaced by another set and you still may be audited.

Why Choose Our firm for Cannabis Accounting & Tax Help?

Accounting and tax practices of businesses which sell cannabis products can be difficult to do alone. In fact, it may be difficult to find accounting and tax professionals who are willing to work with businesses that sell cannabis. From bookkeepers to accountants to tax professionals, many are simply unwilling to work with cannabis businesses based on moral grounds, ethical considerations, or the complexity associated with tax laws.

Businesses that focus on cannabis sales, recreational and medical marijuana have fewer tax deductions available and may have expenses not foreseen compared to other types of sales. With the high startup costs, fluctuating costs of goods and equipment, and facing the potential of lawsuits and other issues, an experienced tax accountant is someone who can be of great assistance.

The need for accountants and tax professionals willing to work with cannabis business owners is stronger than ever. It is why you need the best by your side and willing to work in your industry. If you are starting up a cannabis-based business or have run into issues with accounting and tax practices, then please give us a call at 877-788-2937.

Our friendly, courteous staff will take your call, listen to your needs, and provide information about our services, so you can make the best-informed decision. Do not wait, act today which may help improve the profit potential of your business while steering well clear of tax issues.

Get a free evaluation today at 877-788-2937.

Client Reviews
★★★★★
Mike has given us peace of mind! He helped negotiate down a large balance and get us on a payment plan that we can afford with no worries! The stress of dealing with the IRS is huge and Mike helped us through it all. The peace of mind is invaluable, thank you Mike! April S.
★★★★★
Mike Habib - Thank you for being so professional and honest and taking care of my brothers IRS situation. We are so relieved it is over and the offer in compromise process went just as you said. Mike is very professional and will give you honest answers to the OIC process and you can really trust him. You won't be sorry you chose him! Joe and Deborah V.
★★★★★
Mike is a true professional. He really came thru for me and my business. Dealing with the IRS is very scary. I'm a small business person who works hard and Mike helped me see that they are not that scary after all. He was always there with the answers I needed and was very good about calling me back which I appreciated since your first reaction is to freak out and ask a million questions. He solved a messy case and worked very hard to resolve it. His rates are VERY reasonable for the amount of work he does! I give him my highest recommendation! Marcie R.
★★★★★
Mike was incredibly responsive to my IRS issues. Once I decided to go with him (after interviewing numerous other tax professionals), he got on the phone with the IRS immediately (as in the same day I signed with him) to squash an impending issue. And he worked directly with them to quickly come to a resolution I am very happy with. I'd highly recommend reaching out to Mike to see if he can help you with any IRS issues. I'm very satisfied! Marshall W.
★★★★★
I’ve seen and heard plenty of commercials on TV and radio for businesses offering tax help. I did my research on many of them only to discover numerous complaints and unresolved tax issues. I found Mike Habib through my own online search and contacted him. He was very professional with great communication, always answering my questions and concerns. Mike resolved my complicated tax problem just as he said he would. I would definitely recommend his services to family and friends. Nancy & Sal V.