Cannabis business operators juggle many responsibilities to keep their organizations running. From managing personnel, security, inventory, and marketing, to surviving in an environment with exceptionally high tax rates and complex license requirements, the to-do list is unending. Accounting does not have to be on the list. Outsourcing accounting can simplify managing the financial side of the business while simultaneously strengthening compliance with tax and licensing obligations.
Here are five reasons why cannabis organizations should outsource their accounting function:
- Save Money
- As with any decision, cost is a chief factor. Hiring full-time accounting employees involves steep costs associated with compensation, benefits, and more. Outsourced services are typically much less expensive and assign a fixed fee for customized project services, meaning you only pay for what you need
- Compliance, Compliance, Compliance
- Cannabis is a highly regulated industry and impeccable books, and records are non-negotiable
- Outsourcing provides a good foundation for tax compliance and meeting the documentation requirements of regulators, the IRS, and potential investors/lenders. Operators should expect to be audited by the IRS and other regulators.
- Using a third party adds another layer of defense to strengthen controls over the financial function
- Real-Time Tracking and Metrics
- Customized solutions to track performance, including integration with seed to sale management or POS system to know where you stand at any time, which is vital in the cannabis industry due to the high tax rates. You can’t effectively plan for tax payments without a solid foundation.
- Consistent Expertise
- No turnover and the associated expense and down time and headache of finding a replacement
- Trustworthy professionals with industry expertise who are there when you need them; no need to go it alone.
- COGS is the only deduction for tax, and the related cost accounting is complicated. Get it right the first time to prevent future tax issues under audit.
- Free up leaders to focus on the valuation drivers for the business – product, branding, and differentiation in the marketplace.
- Reduce stress associated with managing the accounting function, including comfort in knowing accounting records comply with Sec. 280E for income tax reporting.
- Ability to more easily leverage/outsource responsibilities such as excise tax filings or other compliance requirements, smoother tax prep at year end.
If you’re interested in learning more about outsourcing your accounting function, click here. And if you have any questions, we’re here to help. Please do not hesitate to reach out to our trusted experts today.