Cannabis accounting in Michigan is essential for the success of your business. You need to understand how to handle money made from cannabis sales. But you also have to navigate complex laws that may be unfamiliar.
Marijuana is still illegal in some states. However. if you’re operating a cannabis business in Michigan, you’re probably already at least somewhat familiar with the local laws.
In this post, we discuss cannabis accounting in Michigan, offer tips and answer questions to keep your books audit-ready and summarize the services we provide to Michigan cannabusiness operators.
So, let’s dive in!
Importance of Cannabis Tax Planning
Planning taxes contributes to the success of marijuana endeavors. Handling money appropriately while participating in marijuana sales is crucial to bypass costly infractions.
But you also have to navigate complex laws that may be unfamiliar. Some are specific to the cannabis industry, while others are more general.
Getting this wrong could land you in jail or cause your business to fail. Before getting too deep into what the laws are and how they work, let’s discuss why proper marijuana accounting is important.
Your business can be subject to fines and you may be charged with a crime for not handling money appropriately.
Not thinking about taxes and other costs is a recipe for disaster. You don’t want to lose track of everything that’s going on with your company, either with the IRS or state agencies, because you end up paying more than needed in fees and interest charges.
It can destroy your business and waste time you could be spending on expanding your business and taking advantage of new opportunities.
Again, it’s sensible to seek the help of a marijuana accounting firm that understands local laws and how to keep businesses out of trouble as much as possible.
With this being the case, Michigan’s cannabis industry is expanding, and with this growth comes the need for effective tax services to keep businesses operating as they should.
Michigan Cannabis Industry Accounting Tips
While it’s possible to handle cannabis accounting, Michigan cannabusiness operators usually find it’s better to bring in a marijuana accounting firm. Having a team of CPAs that specialize in cannabis finance services is invaluable for these operations.
With this in mind, here’s a list of what we recommend doing as you look for cannabis accounting services in Michigan:
Consider the Cannabis CPA’s Expertise
Accounting services should be on the CPA, not you. You don’t have to stay on top of every piece of information when it comes to accounting and finances because this isn’t your area of expertise.
If something goes wrong in your cannabis bookkeeping, for example, you want someone who can catch problems before they grow out of hand quickly.
The best way to ensure they can do this is to check their credentials and background for prior work in the industry.
Look at the Cannabis Accountant’s Reputation Working with Cannabis
As a CPA firm utilizing cost accounting standards for cannabis clients, we’ve handled all sorts of cannabis business matters. Our background gives us a unique perspective that we offer to clients as needed.
We’re dedicated to helping your company grow and excel, and our track record is proof of this commitment. But not all certified public accountants have experience working as cannabis CPAs.
Cannabis tax preparation comes with a host of compliance issues that can be straightforward to handle if you have experience in this unique finance space. However, for those who lack history handling financial records of and providing these services to cannabis companies, it’s not so simple.
Check Your Marijuana CPA’s Record-Keeping Abilities
When you hire a CPA for marijuana accounting services, you want to make sure they’ve created the necessary documentation required for filing with regulatory agencies.
Their records should also accurately report all your company’s cannabis-related transactions. The right provider of marijuana tax services should know to keep the following documents for at least five years:
- Inventory Records
- Personal Records
- Taxes Paid
- Transfer Logs
- Other Records
Analyze Michigan Cannabis CPA Professional Network
Besides finding a cannabis CPA you can trust, it’s ideal to check their professional network. This can bring tremendous value to your organization.
For instance, while the firm might offer you tax services and record-keeping services, they might have other professionals in their network that can further excel your business.
At Northstar, we have a professional network of CEOs, strategic advisors, digital marketers, and more. Our clients also have access to our connections.
Michigan Cannabis Accounting FAQ
The right marijuana accounting team will help your company overcome all challenges with planning cannabis taxes, consulting, and more. Enhanced profits come from these solutions, and as your operation becomes more prepared for these potentially critical challenges, the future of your company becomes brighter.
Here are some of the most common questions we get asked about financial services for the marijuana industry:
What is a cannabis CPA?
Cannabis CPAs understand cost accounting and know how to use it during tax preparation for those operating in this space. They can create transactional records for your business and make sure they stay high-quality.
What are the qualifications to become a marijuana CPA?
Every person who wants to work in this space will have varying levels of education, experience, and expertise. While everyone should have some general knowledge about cannabis financial needs, CPAs should have a suite of knowledge about best practices and solutions for those operating in this space.
What is deductible under 280E?
This federal statute keeps cannabusinesses from deducting non-cost of goods sold-related expenses. Thus, our solutions to IRS Section 280E usually include COGS-related deductions.
Do dispensaries pay federal taxes?
Yes, dispensaries must pay federal taxes as all income is taxable and needs to be reported on one’s tax return. But due to cannabis’s scheduling, the Section 280E tax code still applies, even for operations with activities in legal states.
Value of Michigan Cannabis CPAs
Our team goes beyond simple tax planning and consulting. We work as business strategists, as well as risk mitigation specialists who can help you through any other necessary compliance needs.
Our team helps cannabis companies by providing the following:
Bookkeeping & Financial Record Keeping
Bookkeeping and financial record keeping ensures compliance and help to make sure your business is prepared for the MMFA excise tax, sales tax liability, and more.
Virtual CFO Services
Our virtual CFO service remotely assists those operating in the cannabis space. We help our clients by providing extensive financial reporting, cash-flow projections, and more.
CPA attestation and review services ensure coordination and quality for those operating in the legal marijuana space. These activities are meant to provide proof and documentation, as well as accountability while guaranteeing quality.
Accounting System Setup & Implementation
Accounting system setup and implementation services include everything from helping you decide on an accounting software platform to implementing the system. Our specialists help with choosing a solution and make sure all data transfers are accurate.
Tax Preparing & Planning Services
Tax preparation and planning includes reducing taxable income and maximizing deductions. Additionally, it’s vital to the success of every cannabusiness to be kept in compliance with laws related to financial reporting, tax returns, etc.
Our specialists can provide clients in this space with consulting services that cover a wide variety of accounting activities that include financial statement preparation, revenue recognition, inventory costing, and more.
Michigan MMJ Firm Accounting Services
Michigan Dispensary Accounting
Our dispensary accounting services offer extensive service options targeted at the marijuana industry. Our CPA team helps dispensaries, growers, and other cannabis-related companies maintain their books and complete financial reports.
We help with filing reports that help with MMFLA excise tax liability. This involves completing excise tax returns, ensuring all business data is properly stored to be accessed in real-time.
We help to ensure that providers are in compliance with the MMFLA tracking system, which requires them to enter all cannabis transactions into a statewide system within 24 hours.
We help with financial compliance by helping to ensure proper accounting for MMFLA taxes, payroll processing, financial statements, and more.
Michigan Grower Accounting
As an established accounting team working with Michigan growers, Northstar provides growers with top-notch accounting services.
Our team helps growers and others who hold cannabis licensing in Michigan by providing financial statements that help them bypass critical problems and maintain compliance with all regulating forces.