How to Find a Good Accountant for Your Cannabis Company
Your cannabis business relies on several professionals. One of them is an accountant.
Marijuana taxation laws aren't fully understood by the typical cannabis business owner. Fortunately, a cannabis accountant knows how much cash the IRS expects from your business.
But you need to ensure your accountant is up for the job. While any accountant could work, a cannabis accountant knows how to document your cannabis-related sales, losses, and report your taxes to the IRS.
Just because cannabis is a new industry doesn't mean the IRS doesn't take cannabis businesses seriously. To avoid tax penalties and achieve expert bookkeeping, here's how to find a good accountant for your cannabis business.
Look for Proper Certification
The IRS recognizes specific accountants and tax preparers with different licenses.
The most common license is a CPA, or certified public accounting license. This is the gold star accounting license, meaning it's accepted everywhere.
Overall, a CPA license means the accountant can provide accounting services to the public, including non-business owners. But a CPA can also extend their services elsewhere, including businesses.
You can also find an accountant with a CMA license, or certified management accountant. If you want your accountant to have an internal role in your company, such as a CFO or a COO, choose an accountant with this certification.
A CMA license teaches an accountant how to serve as an accounting manager or an executive.
Know What Type of Accountant You Need
Accountants have complex roles. They handle bookkeeping, report profits and losses, assist you and your employees with taxes, and report all of this information to the IRS.
But no two accountants are the same. Some accountants have specialties, such as tax preparation. There are also "jack of all trade" type of accountants who can handle everything.
Before searching for an accountant, know what type of accounting duties you need. If you already have a bookkeeper on staff, you can outsource an accountant during tax time.
But if you want an accountant to handle all of your duties, consider hiring an accountant in-house or outsource a full-service accountant.
You'll also want to take a look at the costs. Accountants make your life easier, but they're not cheap. Some accountants charge a flat fee for specific services.
Others charge by the hour. When you find an accountant, take a look at their pricing. Understand what is worth your money.
While having a local accountant is beneficial for all businesses, this is dire for a cannabis business. That's because marijuana is only legal or medicinal in a few states, and each state has their own laws.
30 out of 50 states have legalized marijuana. 22 states only allow medicinal marijuana and eight states allow full recreational use.
A local accountant will know which marijuana sales are medicinal and recreational. This is important because taxation is different. Recreational marijuana is taxed higher than medicinal marijuana.
The amount each state taxes marijuana is also important. Washington State only requires a 3% state tax whereas Oregon requires a 17% sales tax.
Your accountant will understand these tax laws and can report sales from the marijuana products versus the amount you're paying in taxes. They will record these numbers so correct estimates will be sent to the IRS.
Look for Cannabis Expertise
Cannabis is a recent industry, but don't think you won't be able to find cannabis-specific accountants.
The marijuana industry is worth millions, so accountants know it's essential that marijuana businesses have a knowledgeable accountant on their side.
Your best bet is outsourcing accounting services. Specific accountants promote their services to marijuana businesses.
Look at their clients and see if they support big-name marijuana companies. If you can't find their clients on their website, ask if they have experience working with marijuana companies.
You'll also want a cannabis accountant who can handle your specific business size and your revenue stream. But these two factors depend on your business.
For example, you can own a million-dollar grow operation and your only employee is your significant other.
Or you can own a local dispensary with several employees, but you only generate $50,000 because it's your first year in business.
Your dispensary has fewer sales but you'll need to support your employees by recording their income and creating their tax forms.
Look at each aspect of your cannabis business and understand which type of accountant you need.
Ask Your Business Connections for Recommendations
Your cannabis business depends on your connections. Whether you're a grower, a dispensary owner, or sell other cannabis products, your connections are your lifeblood.
If you have no luck searching for an accountant on your own, ask your business connections for advice.
In addition to your connections, there are other resources available. Check social media.
You can find local cannabis accountants and ask your social media connections for recommendations. There are forums and other digital sources available if you have no luck with social media.
Ensure They Will Save You Money
Owning a business isn't cheap, especially a cannabis business. Not only are you worrying about the costs to keep your business running, but you're anticipating a big payment to the IRS.
But a good accountant will know how to work around the IRS.
Business owners have an advantage over others: tax exemptions. You can write off the expenses that are required to keep your business running. This will help lower your IRS bill.
An accountant has to work within the legal parameters, but they will still do what they can to save you money on your taxes.
They will ask about necessary expenses, what new equipment or materials you purchased for the tax year, and will use this information to lower your taxes.
Accountants are great with money and can use this information to find other ways to save.
They can recommend ways to spend less. A cannabis accountant has great knowledge of the cannabis business so they will recommend how to buy certain equipment or products for cheap.
You may end up spending more money on an accountant, but you'll save more in the long run.
Now You Know How to Find a Good Accountant for Your Cannabis Business
No cannabis business owner wants to worry about taxes. That's why you hire a good accountant. You just need to know how to find a good accountant for your cannabis business. Use this advice and focus on what you love most: marijuana.
Is your cannabis company based in California? Take a look at our accounting services.