Top 5 Common Mistakes Cannabis Business Owners Make (And How a Cannabis Certified Public Accountant Can Help Avoid Them)
As a dispensary owner, you understand the importance of running a successful and profitable cannabis business. However, there are common mistakes that even the most experienced business owners can make. Working with a cannabis certified public accountant (CPA) can help you avoid these pitfalls and set your business up for long-term success.
1. Failing to accurately track and report income and expenses
It’s crucial to have a thorough understanding of your financials, including income, expenses, and profit margins. (It is equally important to track your financials on a timely basis. Not once every few months–EVERY month.) A CPA with experience in cannabis can help you set up a reliable accounting system and provide guidance on record-keeping and tax reporting.
2. Neglecting to plan for taxes
The cannabis industry is heavily regulated, and tax laws can be complex and constantly changing. A CPA with expertise in the cannabis industry can help you navigate these regulations and ensure that you are paying the appropriate taxes, both Federal and State, income and sales, payroll and excise. (By the way–don’t make your life harder by not filing everything you need to file for payroll on a timely basis.)
3. Skimping on security and compliance.
Ensuring compliance with state and local laws is essential for any cannabis business. A CPA can help you implement the necessary security and compliance measures to protect your business and customers.
4. Overlooking the importance of cash management
Tracking and reconciling cash is perhaps the most important function of your business to remain on track to be compliant with 280E. A CPA can help you set up a system to make this process seamless and track cash closely. Just as important is ensuring you have enough cash to keep the business running. The last thing you and/or your investors want is to need to make “surprise” cash injections to your business just to stay afloat.
5. Ignoring the importance of proper business planning
A strong business plan is crucial for any business, and this is especially true in the rapidly evolving cannabis industry. A CPA can help you develop a comprehensive business plan that takes into account your financial goals, target market, and competition. By the way – if you want to remain a business committed to social justice, you need to plan. There’s nothing more powerful than being able to prove that you are meeting your social equity goals by proving it with your numbers–your wages to your employees, etc. Financial transparency paired with excellent planning is the only way to achieve your social justice goals.
If you want to avoid these common mistakes and set your cannabis business up for success, consider working with a cannabis CPA. At Morem and Waller CPAs, we have the expertise and experience to help you navigate the complex financial landscape of the cannabis industry. Contact us today to learn more about how we can help your business thrive.