If you're a new or even established cannabis business, you're often bogged down in the day-to-day operations and concerns. Being an owner in this industry isn't easy, especially where all things money are concerned. From banking to funding, your mind may be set on growth, but there's probably one area of your business that needs a little more TLC—your bookkeeping.
It's easy to get behind on the books, especially if you're just starting out. Outsourcing your bookkeeping is an option, but if you've just opened your doors, you're more than likely doing everything yourself for the time being. That's perfectly fine, but it's something you should make a top priority on a regular basis.
The cannabis industry is obviously at odds with the federal government, which means you should always be aware that you could get audited any given year. Many cannabis business owners don't prioritize their bookkeeping, even on a basic level. Which is obviously not good if you become a target of regulators at any level.
So, what are some things you could do to spruce up your bookkeeping for your dispensary?
As you would imagine, proper categorization is important when it comes to bookkeeping. However, what you may not be aware of is exactly how you should be making those categories. As a dispensary operating in a state where adult-use cannabis has been legalized, you'll need to make a point to differentiate between sales of medical-use cannabis and adult-use cannabis.
The reason why this is so important is because each category is not taxed equally. Tax rates surrounding adult-use cannabis are different from those with a doctor's recommendation attached. In addition, be sure to gather, store, and organize all proper medical documentation from your customers. If and when you need to provide proof of a medical sale, you'll be glad that you did so.
While categorizing between different types of cannabis sales is incredibly important for your bookkeeping needs, they aren't the only categories you will need, depending on what you sell. If your dispensary also sells apparel or other accessories, properly distinguishing between them could make tax time that much easier, and even help you save.
It goes without saying, when we don't prepare, the worst happens. Keeping your sales data is a crucial component of your bookkeeping, so making backups of all your reports is one of the best things you can do to ensure that your recordkeeping doesn't have any major hiccups.
There are a few places that you can make and keep backups of your data, such as your point of sale system if you utilize one, cloud storage, or an external hard drive of some sort. Keeping your data in a multitude of locations will keep you smiling in the event one of those locations fail.
If you're wondering how long you should keep that data around before deleting it—the answer is that you should try to keep it around indefinitely. That means getting and storing multiple external hard drives so you're prepared no matter the situation. In the event your dispensary is audited, the IRS will be looking at the last few years, primarily. Though there are situations where they may want to audit even further back in your business's history—so hold on to your sales data.
It seems like such a simple step, but it's so easy to fall behind or lose track. When it comes to taxes for your marijuana business, be sure you're always paying them on time. In the event you cannot do this, file for an extension.
Related: 5 Startup Cannabis Business Tips
Posted by Canna Business TeamFacebook
In an industry that is constantly evolving, Canna Business Financing provides business owners with a reliable source to gather the most up-to-date information. From resources to fund the growth of your business to insights on best practices to scale, look no further!