With Halloween just around the corner, we decided to speak to a certain kind of horror… specific to the accounting industry. The mention of the word “cleanup” is enough to scare any seasoned accountant. We’ve all heard horror stories from our peers about leftover financials that were too tough to tame. Although most of those stories end with the accounting professional saving the day, the path to a successful cleanup can be a bumpy one, to say the least.
Cleanup is the concept of needing to go ‘back in time’ into a new client’s records to clean them up and “fix” all the errors. And rarely does a cleanup involve a few errors; in most scenarios, there are many, many errors. In order to create a rock-solid set of books, the cleanup will have to go back several months but can also need to go back several years.
Understanding the difference between CBD & THC, hemp and cannabis is vital if you’re entering into the realm of cannabis accounting.
In our recent podcast, we talked with Summer Wilkinson, co-founder of Leap Books, about the differences between them all, and how she got into the industry.
CBD can be extracted from the hemp or marijuana. Hemp plants are cannabis plants that contain less than 0.3 percent THC, while marijuana plants are cannabis plants that contain higher concentrations of THC.
THC is the primary psychoactive compound in marijuana that gives the high sensation. It can be consumed by smoking marijuana, or extracting the THC and putting it in some form of edible or topical delivery.
The plants themselves look identical to an untrained eye, making it a bit challenging to identify, as the real difference lies in the chemistry of the plants.
Under the 2018...
So you’ve decided that you want to take the plunge and dive into cannabis accounting. Great!
While these are new and exciting times, it is completely understandable if you have concerns about promoting your business within your personal and professional networks.
People have their opinions about the cannabis industry; some good, some bad. But don’t let that get in the way of promoting your business and becoming an expert.
The truth of the matter is that in order to be seen as an expert, you have to put yourself out there and dive in completely in order to maximize your efforts in this industry. So if you’re hiding out for fear of judgment, we’re here to help.
1. Have an updated LinkedIn profile.
When you’re first getting started with marketing your cannabis accounting business, you don’t have to have it all figured out. You don’t need to build a fancy website or order business cards right away. Over the past few years, LinkedIn has become an...
With the rise in popularity of legal cannabis products comes plenty of regulatory issues to keep up with, analyze, and implement as an accounting professional. Laws and regulations are changing almost daily, so staying in the know is of the utmost importance in keeping you and your clients out of trouble. Keeping up with THC and CBD regulations in the cannabis accounting space can be a daunting and seemingly hopeless task, but we’re here to help. Let’s take a look at some of the legislation that has affected the cannabis industry lately.
Last December 20, Congress passed the Agriculture Improvement Act of 2018 (aka the 2018 Farm Bill), which declassified hemp as a Schedule 1 controlled substance (among other things). Considering that hemp can be any part or derivative of a Cannabis sativa L. plant that contains less than 0.3% THC, CBD would come off of Schedule...
My goal with this blog is to explain how to win in cannabis in 2019 as an accounting professional. We get countless emails from people that want to try to do it the hard way, and that’s fine. But if you really want to maximize your efforts, you’re going to want to pay attention. As you may know, we provide cannabis accounting training to professionals all over the United States. This knowledge is unique in the cannabis industry right now, and is a way to add REAL VALUE (listen up all of you not knowing how to express value for fees to CEOS) to Cannabis CEOs, and add 10x to your fees to those that listen.
In most of the feedback that we receive, and among many of our students, I still see that most accounting professionals are “missing the boat” around 280e. The goal is simply to do it right, pay the tax, and not “beat” it (that is the losing strategy).
The advice attached is CONTRARY to what many...
To be able to do effective cost accounting for your clients you will need some very important tools, if you plan to take advantage of the maximum tax benefit. For starters, a very good cannabis Chart of Accounts that is QBB/Xero/ready (specific for grow, processing, edibles, and retail operations). You will also need a client inventory template to accumulate monthly/quarterly counts, weights, estimated yields and estimated percent complete, and finally cost accounting templates to perform the calculations.
We have all of this in our program, which was developed after 2-3 years of working with other CPAs, cannabis farm personnel, cannabis tax attorneys, and bookkeepers.
We here at DOPE CFO have been speaking at national conferences and to the press, CEOs, and accountants for quite sometime about how to do things correctly in cannabis accounting. But, we’ve been getting questions from investors, as well: from the billionaires (yes plural) who call us asking how to “fix” a bad investment with poor or no corporate governance, to the local millionaire wondering why he’s getting hit with a big cannabis tax bill, but no distribution from the company, to the average “Joe” on the street who wants to know how to win big in cannabis. We’re here to help. Here are some quick thoughts if you are dead-set on investing in this new industry.
First of all, I get it that right now you can make good money…even on the companies with horrible operations (ie without dropping names like “Med Men”). I also get it that you can make insane money on better run companies, even though they are spending (and losing)...
Cannabis friendly software solutions have posed many challenges to accounting professionals, owners, operators, and investors. In order to remain in compliance in today’s cannabis world, there are monthly, quarterly, and yearly reporting requirements at the state and federal level which include required bank reporting, consolidated financials for investors and lenders, and others that can be laborious and hard to keep straight without centralized software systems that integrate. Coupled with complex entity structures, cannabis reporting requires specific software tailored to the cannabis industry, which means general business solutions will not work. Popular accounting systems like Quickbooks and Xero don’t have cannabis industry charts of accounts, nor do they integrate with other cannabis software, which poses a unique challenge for accounting professionals and cannabis owners alike that are looking...
If you’ve paid attention to what’s going on in the cannabis industry, you’ll have noticed a number of decisions that have been handed down from the US Tax Court regarding how cannabis companies are improperly managing their tax strategies. Due to 280E, cannabis companies are extremely limited in terms of what they can deduct from their taxes. Because of these limitations, taxes are a much heavier burden on cannabis companies than most typical businesses and start to eat away at profit margins. There are legal ways to properly minimize tax liabilities for cannabis companies, but most unspecialized or untrained accounting professionals aren’t aware of them and can potentially get their clients into tax trouble. Every entity is different and must apply the rules in different ways, using different strategies. Here are a few strategies that we use to support our clients and share with our community of cannabis accounting professionals.
The idea of value can be a tricky and very misunderstood topic for accounting professionals and CEOs alike. Determining the services that you want to offer and what to charge for those services is the key to building a successful, competitive practice that will create the most ideal scenario for accounting professionals: to work remotely and under less stress, command higher fees, and have more freedom to work as you see fit. The key to understanding your value is to first understand the difference that your services will make in your clients’ business, and how to communicate it to a CEO so that they understand the level of service that you provide and how it will be a catalyst for their business growth. You have to realize your potential value first; otherwise, you may run into trouble getting and retaining clients - or, in some cases, trouble being compensated fairly for the value that you are providing....