Choosing the Right Accountant for Your Cannabis Delivery Service

October 21, 2020 Cannabis Business

Whether you’ve recently started your cannabis delivery service or have been in business a while now, you should have a team of professionals and advisors to steer you in the right direction. 

Most of the time, cannabis business lawyers are the go-to. They’re almost always the professional questioned first regarding where to find the right accountant for cannabis delivery services.

Like picking an excellent attorney, finding a knowledgeable cannabis accountant will contribute to your service’s success. So it makes sense that you’re looking for valuable insight into choosing the right accountant for your cannabis delivery service.

If you operate businesses outside of cannabis, you might already know an accountant you trust. However, the laws surrounding the accounting profession don’t provide enough protection for CPAs (Certified Public Accountants) operating in cannabis. This usually means that while skilled, some CPAs aren’t willing to work with cannabis businesses.

The truth of the matter is that many CPAs are qualified to handle accounting services for businesses. But to work in cannabis, a CPA must dedicate some time to develop their expertise in this budding industry.

With so many rules and regulations, cannabis business accounting demands more research from CPAs. Between IRC 280E and the various other laws surrounding cannabis accounting, there’s a lot of information for CPAs to digest before they’re ready to handle cannabis delivery service accounting.

Here’s what you should look for to choose the best accountant for your cannabis delivery service:

A Firm Grasp of Accounting Core Skills

It’s crucial to start at the basics, regardless of the niche you plan to participate in. With this in mind, it’s helpful for your cannabis delivery service accountant to understand the core skills of the CPA, Enrolled Agent, and bookkeeper.

But what does all of this entail?

Qualifying as a CPA means this individual has taken a specific number of accounting-related courses, passed an in-depth exam, and has obtained a license in at least one state. CPAs can offer audits and reviews of your business’s financial statements, as well as provide an educated opinion. Your CPA should be able to give assurances for your financial statements, ensuring third parties like banks or potential investors can rely on their statements when the time comes.

As a bookkeeper for your cannabis delivery service, your accountant will have to review all of your business transactions and piece together the information into a useful financial statement. This can also include preparing your state tax returns and other government filings.

The role of an EA, or Enrolled Agent, is to prepare tax returns and represent your business before the Internal Revenue Service. For someone to qualify as an EA, they would have had to pass a comprehensive IRS exam or have worked for the IRS at some point.

Red Flags

Regardless of the kind of professional you’re looking to work with, they should always have certain qualities. Keep these red flags in mind as you’re looking for an accountant for your cannabis delivery service:

  • The accountant is unresponsive. While skilled accountants tend to be busy, they understand how to balance their work to ensure every client is treated fairly. Even though it could take a skilled accountant more time to complete something than you’d like, they should always return phone calls and keep you informed.
  • The accountant chooses to take shortcuts. Your accountant may try justifying shortcuts by deeming them creative. However, while the cannabis sector is demanding and fast-paced due to the regulations, shortcuts aren’t always the answer. You’re trying to progress your cannabis delivery service forware. But even though you might think getting things done faster by creating misleading statements on bank applications or tax returns is the right way to do things, the right accountant understands that these shortcuts are damaging to cannabusinesses and their owners. The right accountant will know to protect you from temptations to take shortcuts.
  • The accountant doesn’t know how legal entities work. An accountant working with a cannabis delivery service should understand the fundamentals of accounting. This, of course, includes reporting financial operations by legal entity as opposed to reporting by business groups. For instance, if you have a group of investors who own several cannabis delivery service operations, each business should be operating as a separate legal entity. This means keeping separate books and records for each legal entity. Your canna-accountant should know that this is something they’ll need to do for tax reporting purposes, as well as for recording information that’s needed to remain compliant with your state’s licensing requirements.

Your legal agreements and business practices should be documented accurately in all transactions. You should have legitimate contracts to ensure your cannabis delivery service isn’t left open to any unnecessary risks. For instance, a valid loan agreement is essential for loans between two legal entities. You’ll also need a management services agreement if you’re exchanging payments between two legal entities for management services.

Simply put, your accountant should understand how to do everything by the books to ensure your business adheres to regulations.

A Strong Professional Network

The right cannabis accountant for your cannabis delivery service will have a professional network composed of all sorts of professionals. Professionals know other professionals, and with this being the case, your cannabis accountant should become a resource you can use when you need another professional.

Your accountant should assist you with minimizing costs, budgeting, complying with tax and financial reporting, and evaluating financial opportunities. But you’ll likely have other tasks that your accountant won’t be able to fulfill.

For example, your accountant will not create legal entities or prepare legal documents. With this in mind, if this professional has a list of other professionals they trust, they should be able to recommend you to someone who can help.

Looking for a reliable accountant for your cannabis delivery service? Feel free to contact us today to learn how we can help your service navigate the complexities of the cannabis sector.