by Sevana Jannian,
Business owners can find it difficult to manage finances and adhere to complex regulations in the highly-regulated cannabis market. It is essential to hire a qualified cannabis accountant. We will be discussing four main reasons that a competent accountant is important in the cannabis market. These are grouped into different categories.
Reduce the risk
A cannabis accountant is a specialist who can provide a wealth knowledge and expertise for your business. They are familiar with the regulations and unique challenges of the cannabis industry. They can offer guidance and support to help make informed decisions and avoid potential dangers. You can leverage their expertise to ensure stability and success for your business in this rapidly changing industry.
An accountant who has worked in volatile or new industries will be able to manage the risks associated with such environments. The accountant can identify and measure these risks regularly to help minimize them and ensure stability and success for a business.
It is crucial to hire a qualified cannabis attorney and accountant when you are just starting out. Do not let the simple process of creating an entity fool you. Get proper advice on the type of entity that is best for your needs. Be aware of legal and accounting issues and make informed decisions. A knowledgeable cannabis accountant can discuss the possible consequences of each entity type if it is not in line with your business goals. This will allow you to make an educated decision.
This information was provided because of the constant discussion surrounding entity type and its status. The IRS does not consider a Limited Liability Company (LLC), a tax entity. An LLC’s taxation can be complicated and it may be classified as either a single-member LLC or a corporation.
The risk of failure and accumulation of large tax debt is one of the greatest risks in the cannabis sector. Businesses in the cannabis industry face significant financial risks due to its strict regulation and taxation. It is crucial for cannabis businesses that they have a solid understanding of the tax laws and regulations that apply to their operations. They also need a system to track and report their financial transactions. A knowledgeable and experienced cannabis accountant can ensure that the tax laws are correctly applied and that the regulations are followed. This will reduce the risk of financial loss and tax debt. It is possible to reduce potential risks by establishing and strengthening robust internal controls. This can be done in conjunction with careful monitoring.
It is notable that cannabis business owners are notorious for taking risks. It is important to have attorneys and accountants who can help you evaluate and reduce these risks. It is important to choose your advisory team with care.
Aligned Mission, vision
In order to achieve a win-win scenario, it is important for accountant and business owner to have a clear understanding of each others’ needs and goals. It can be difficult to navigate the highly-regulated and complex cannabis market. An accountant who shares the same passion and vision as the business owner can help ease the business cycle and avoid conflict. The accountant’s job is to assist clients in managing their financial resources efficiently and effectively. This includes monitoring the financial performance of the company, giving financial advice, and complying with regulatory and legal requirements. An accountant must have a thorough understanding of the goals, objectives, and overall strategy of the business owner to be able to effectively carry out this mission.
A cannabis accountant and a business owner can align their goals to reach common goals. The accountant can better understand the financial needs of the business owner, and provide targeted advice and recommendations. This helps the business owner to understand the importance and benefits of financial management. It can also help the business owner feel more confident about their accountant’s recommendations and advice, which can lead towards more productive and collaborative working relationships and better outcomes.
Training or experience in the cannabis industry
It is vital to keep your accountant up-to-date and trained in the cannabis industry. There are many CPA firms that specialize in cannabis, which gives business owners more options. An accountant who specializes in cannabis should have a good understanding of 280E, the Internal Revenue Code. This code can be very taxing for the industry. For accurate financial statements, they should be familiar with inventory management and cost accounting. A background in the manufacturing industry is a plus for cannabis accountants.
In order to emphasize the fact that cannabis is still in its infancy and evolving, the use of the term “trained” was intentional. Accounting firms with decades of experience may do their best but they might not be able provide timely service or have the time to innovate and analyze data. Many programs and think tanks that focus on cannabis can offer trained accountants many of the same benefits as experienced ones. This is because technology has revolutionized every industry, even accounting.
Analytical reporting
An experienced cannabis accountant should be able provide financial statements and analysis to aid the business in understanding its financial situation and taking steps to achieve its goals. They must be able to simplify complicated financial analysis and present key performance indicators and ratios that will help the business keep on track. They are also responsible for managing cash flow. This is crucial to any business’ success, especially in a competitive marketplace. Many businesses fail due to a lack of cash and not profit.
A thoughtful analysis goes beyond the information and places it in context. It identifies the actions that must be taken to improve or maintain the organization’s operations. Managers will appreciate reports that help them do their job better and make better decisions.
CFOs and accountants are increasingly important in a highly competitive market.
Conducting business is ultimately a spiritual pursuit. It requires the right mindset, effective communication and teamwork. If a business has a strong culture and a growth mindset, it will thrive and have a positive impact.
We are proud to show our respect for people who work in the marijuana industry. They often risk their lives and licenses. We must strive for better compliance and create a better world.
Sevana Janian, a California Certified Public Accountant with over 17 years experience in accounting and tax, is an expert in California. For the year 2023, she is a member the National Cannabis Industry Association’s Cultivation committee. AICPA, CalCPA and other organizations are also her affiliations. Sevana loves to travel with her family, and she also enjoys playing the piano in her spare time. Sevana is passionate about networking to increase her professional and personal knowledge. Sevana is passionately committed to motivating and inspiring the next generation.
Green Plus CPA is a national company that offers a high-quality automated tax and accounting solution for CEOs and other business owners involved in the cannabis industry. We aim to provide accurate financial statements. We were established in 2022 and are passionate about the healing properties of cannabis. We are excited to serve this industry, which has been neglected.
The National Cannabis Industry Association published the first post Member blog: The Importance Of Skilled Cannabis Accountants.
