Tax and accounting issues you should not ignore when setting up your marijuana business:
- The Trouble with Cash Based Businesses
- Internal Controls – any cash based business is closely scrutinized by the IRS and other taxing authorities; having strict internal control procedures, in writing, which are strictly enforced, will go a long way in establishing credibility with taxing authorities
- Form 8300 requirements – educate yourself or hire an accountant who can work with you to comply with this filing requirement
- Find Good Help
- It is very important to hire reputable CPAs and legal counsel to assist you in operating your business
- CPAs often do not have guidance from their licensing boards re: representation of marijuana businesses and many are reluctant to advise marijuana businesses
- Even though many state bars have given comfort to attorneys, many large law firms are still reluctant to assist marijuana businesses
- However, sophisticated advisors are starting to work with the industry, both in house and as external advisors
- Comply, comply, comply
- Abide by Internal Revenue Code section 280E – this requires knowledgeable and diligent accounting advice
- Be timely and fully pay your taxes – tax liens can create issues with licensing authorities and the IRS has very unfavorable positions regarding collections issues for the industry
- Taxpayers have the burden of proving the proper tax liability – consider all your options before refusing to cooperate in IRS examinations