Breaking Down Cannabis Taxation and Business Issues

We’ve rounded up our top blog posts for managing all things cannabusiness-related in areas such as tax codes, accounting, inventory management systems, cash flow management, and more.

By Monique Swansen.

You may be wondering, “how much the cannabis industry worth in 2020?” Well, predicted sales for the year-end are $19.7 BILLIONAnd it’s expected to grow MUCH more (see below).

. Yep, you read that right.

Are you an accounting firm or cannabusiness that needs help with understanding the ins and outs of the budding cannabis industry?

The cannabis industry can be complicated, especially since it’s growing like crazy (wink!) — but we can help you get your head around all of it.

Indica marijuana flower at Green Buffalo dispensary, Norman, OK.Photo: Isaac M. O’Bannon, CPA Practice Advisor

We’ve rounded up our top blog posts for managing all things cannabusiness-related in areas such as tax codes, accounting, inventory management systems, cash flow management, and more.

There’s no need to be overwhelmed when you’ve got a specialist like us who will explain everything!

Now, let’s dive into these blogs.

  For Getting Started…  

So You’ve Decided To Open Up a Dispensary

Learn the three types of professionals you’ll NEED when you just open a cannabusiness. Since each state has its own laws — and marijuana is still a Schedule I substance under federal law, you’ll need someone to guide you in legal matters.

Most banks don’t do business with cannabusinesses, so you’ll also find out how security services can help keep your cash safe. Finally, we talk about maximizing cash flow in light of the fact that cannabusiness expenses are non-deductible. (Read more…)

For Getting Help…Why You Need a Specialist in Cannabis Accounting Services

While you patiently wait for cannabis to no longer be classified as a Schedule I drug, you’ll have to deal with all those taxable expenses.

Finding an accountant who specializes in the industry will help you reduce your taxable income. Learn how hiring a cannabis accountant will also help you get ALL those cannabis customers running to you! (Read more…)

Retail cannabis dispensary, Norman, Oklahoma.Photo: Isaac M. O’Bannon, CPA Practice AdvisorFor Guidance With Tax Codes…

The Ultimate Guide to 280E Compliance for Cannabis Business Owners

Heard about the 280E Chart of accounts? Find it overwhelming? There’s good news… we can help!

Learn how to optimize your business structure, properly handle cash transactions, and categorize your expenses so that when the IRS decides to do an audit, you’ll be ready for them. (Read more…)

For Overcoming The Biggest Challenges…5 Business Headaches a Cannabis Accounting Expert Can Help You Cure(Read more…)

As a cannapreneur, headaches are the LAST thing you should be dealing with.

Eliminate tax liability surprises, stop juggling software, find banks willing to work with you, and expand your network as a cannabusiness owner all with the help of a cannabis accounting expert.

Why work in the cannabis industry considering all these challenges it poses? Because you can easily get ahead of the curve and beat your impending competition! 

For Accounting Firms On The Fence…

Why Accounting Firms Should Embrace Cannabis Clients

This article, which was featured on CPA Practice Advisor

, weighs in on the potential that accounting firms now possess all thanks to the growth of the cannabis industry.

Learn seven reasons accounting firms should embrace cannabis clients in a post-COVID world. Sneak peek: Marijuana sales are expected to reach a whopping $37 billion by 2024! (Read more…)

For Post-Pandemic Cannabis Businesses, The “New Normal”…

What the Pandemic Means for the Future of the Cannabis Industry

The pandemic was a game-changer for canabusinesses, but it doesn’t mean you’ve lost — quite the opposite. You likely experienced serious growth in demand, and probably aren’t sure how to deal with it.

Find out why your marketing strategy should also have a “new normal” as you adapt quickly and take advantage of current opportunities for success.

Automated bookkeeping for your business is another must when you switch up marketing strategies.

Additionally, learn about cash management, the SAFE banking act, as well as sanitation and safety. What shopping alternatives have you given your customers in this social distancing era? (Read more…)For Managing Your Inventory…

Your Guide To An Efficient Cannabis Inventory Management System

Having an inventory management system that works for your cannabusiness should be at the top of your priority list. Why? Because it’s what brings in the dough when done right

!

Looking to scale? Learn four ways you can create and maintain an inventory system specially suited to your cannabusiness.

As a result, you’ll be ultra-confident in regard to regulation compliance, know the best practices for avoiding heavy fines, diminish the risk of fraud and theft, and you’ll know what your bestsellers are so you can scale and GROW! (Read more…)

More To Come From The Cannabusiness Accounting Experts

We’ve got many more blogs on the way packed with up-to-date, practical information for your cannabis accounting firm or cannabusiness, so be sure to stay on the lookout.

If any of the above posts piqued your interest and you want to learn more, let us help with experienced cannabusiness consulting by scheduling a FREE consultation.

—

Monique Swansen, founder and CEO of Automated Accounting Services and Accounting for Green outside of Boston helps visionary cannapreneurs automate and outsource their financial needs. She also consults with accounting businesses looking to move into the cannabis space. Learn more at accountingforgreen.com@afgcannabis@AFGcannabis

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https://www.cpapracticeadvisor.com/tax-compliance/article/21218759/7-valuable-blog-posts-that-break-down-the-cannabis-industry

Apr 15th, 2021

The post Industry News: Breaking Down Cannabis Taxation and Business Issues appeared first on CAMICO.

Business Tax Effects of New Covid Stimulus Law, American Rescue Plan Act

In addition to the $1,400 stimulus payments to many Americans, the American Rescue Plan Act provides many other relief measures, and also some new business tax measures, that should be noted.

The American Rescue Plan Act of 2021 (ARPA), enacted by President Joe Biden on Thursday, is an approximately $1.9 trillion COVID-19 relief, funding and tax bill that has received a lot of attention for the inclusion of $1,400 direct payments to individuals.

What else does it do?

• An extension of the $300 federal unemployment benefit supplement through Sept. 6,
• $15 billion of additional targeted Economic Injury Disaster Loan (EIDL) grants
• $28.6 billion to fund a new grant program for certain restaurants,
• a tax exclusion for certain unemployment compensation income and for certain EIDL advances and Restaurant Revitalization Fund grants,
• $7 billion of expanded Paycheck Protection Program (PPP) eligibility for certain nonprofit organizations,
• an expansion of the earned income tax credit (EITC) and child tax credit (CTC),
• support for Affordable Care Act coverage,
• an extension and expansion of paid sick leave and Family and Medical Leave Act leave tax credits through September,
• an extension of and increase in certain FFCRA (defined below) credits,
• and an extension and expansion of the Employee Retention Tax Credit (ERTC) through December.

The ARPA also:

• extends the 15% increase in Supplemental Nutrition Assistance Program benefits through September
• provides $7.5 billion for Centers for Disease Control and Prevention vaccination distribution,
• $5.2 billion for Biomedical Advanced Research and Development Authority vaccine procurement;
• $48.3 billion for testing, contact tracing and personal protective equipment for healthcare workers;
• $50 billion for the Federal Emergency Management Agency Disaster Relief Fund;
• $125 billion for K-12 schools; $39.6 billion for colleges and universities;
• $39 billion for child care programs; $25 billion for emergency rental assistance;
• $7.6 billion for community health centers; $7 billion to help with broadband for remote learning;
• $4.5 billion for the Low-Income Home Energy Assistance Program;
• and $3.8 billion to support state mental health and substance abuse programs.

The ARPA contains several revenue-raising provisions, including

• an outright repeal of the long-delayed Section 864(f) worldwide interest allocation rules, which otherwise would have applied beginning this year;
• an expansion of the Section 162(m) compensation deduction limitation to include an additional five of the highest-paid corporate employees, beginning in 2027;
• increased information reporting for certain third-party settlement organizations regarding payees receiving in excess of $600 annually;
• and an extension for one year – through 2026 – of the Section 461(l) limitation on excess business losses for noncorporate taxpayers.

The ARPA 

does not

 include federally proposed so-called Mobile Workforce provisions or COVID-19-related liability protections, and most believe those proposals are unlikely to be enacted in 2021. The ARPA also contains no restrictions on the Section 461(l) loss limitation suspension for 2018-2020 pursuant to prior COVID-19 relief legislation and also does not prevent net operating losses generated in 2018-2020 from being carried back even if not yet carried back in filed tax returns.

Portions of the ARPA are supplemental in certain respects to the Dec. 27, 2020, Consolidated Appropriations Act, 2021 (CAA); the March 27, 2020, Coronavirus Aid, Relief, and Economic Security (CARES) Act; the March 18, 2020, Families First Coronavirus Response Act (FFCRA); and the March 6, 2020, Coronavirus Preparedness and Response Supplemental Appropriations Act. Prior alerts addressing those relief bills are available here.

1. Details of Certain Corporate Tax Provisions
2. Repeal of IRC Section 864(f) Worldwide Interest Allocation RulesIRC Section 864(f), enacted in 2004 with a delayed effective date, would have allowed taxpayers to elect to allocate and apportion interest expense on a worldwide basis. The provision has been repeatedly delayed by legislation but was finally scheduled to be effective in 2021. The ARPA permanently repeals the provision. The repeal is scored as raising $22 billion to help lower the cost of the ARPA.
3. Increase in Number of Employees Subject to IRC Section 162(m)’s Limitation on Deductions of Executive CompensationIRC Section 162(m) generally prohibits tax deductions by publicly traded corporations for so-called covered employees to the extent annual compensation of those employees exceeds $1 million. Section 162(m) generally applies to the CEO, the CFO and the three next-highest-compensated individuals. For tax years beginning in 2027, the ARPA requires corporations to also include the five next-highest-compensated individuals, so that the total number of covered individuals will be at least 10. Once an individual is subject to Section 162(m) under pre-ARPA law, the individual continues to be covered by Section 162(m) even if not among the five highest-compensated employees. With respect to the five next-highest-compensated individuals, the ARPA does not provide for continuing coverage by Section 162)(m) if they later fall outside the ARPA-expanded group. The expansion of Section 162(m) is scored as raising $6 billion to help lower the cost of the ARPA.
4. Details of Certain Tax and Related Provisions Relevant to Noncorporate Businesses and Individuals
5. Extension of IRC Section 461(l)’s Limitation on Excess Business Losses of Noncorporate TaxpayersIRC Section 162(l) generally disallows use of noncorporate losses in excess of $250,000 ($500,000 for joint filers). The CARES Act removed the Section 461(l) limitation for tax years 2018-2020. The ARPA pushes out the current expiration of Section 461(l) from 2026 to 2027. The ARPA does not remove or change CARES Act provisions relating to Section 461(l).
6. Recovery Rebate Payments The ARPA provides for additional recovery rebates of up to $1,400 for most individual U.S. residents. The rebates begin to phase out for individuals with earnings in excess of $75,000 ($150,000 for joint filers), with rebates being unavailable to individuals with earnings in excess of $80,000 ($160,000 for joint filers). The rebate, which will be delivered via direct deposit when possible, is not taxable income; it is an advance payment of a refundable tax credit on the taxpayer’s 2021 federal income tax return.

III. Additional Infrastructure Spending and Very Significant Tax Changes Are Forthcoming

With passage of the ARPA, the focus in Washington, D.C., now shifts to a second budget reconciliation bill – Biden administration tax changes, expected to be joined with infrastructure spending. The tax changes are expected to be substantial and far-reaching and to include corporate, individual and capital gains tax rate increases; international tax changes; and estate and gift tax changes.

President Biden’s fiscal year 2022 budget is expected to be released in mid- to late April, at which point the House and then the Senate will craft and approve a budget resolution to serve as the vehicle for the next reconciliation process. Most expect committee action to begin in the next few months, with ultimate enactment in the fall. Only 51 votes are needed to pass budget reconciliation legislation in the Senate.

The effective dates of the newly enacted provisions generally are expected to be Jan. 1, 2022, but certain provisions may have proposed effective dates tied to committee action or the date of enactment (for example, capital gains tax rate increases may be proposed to apply to sales occurring after the date of committee action in early October or the date of enactment of the legislation later in the fall). The effective dates of certain provisions may be phased in over time, and certain provisions may be enacted on a temporary basis to help keep the scored cost of the legislation within acceptable parameters.

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Information compiled by Baker Hostetler Tax Group: https://www.bakerlaw.com/Taxhttps://www.cpapracticeadvisor.com/tax-compliance/news/21214137/business-tax-effects-of-new-covid-stimulus-law

Mar 12th, 2021

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New Security Measures Help Protect Against Tax-Related Identity Theft (IRS)

https://youtu.be/ELzTL6hQKQc 

With more taxpayers and tax preparers working remotely, identity thieves are trying to use COVID-19 to scare and scam people out of their identities or money. Everyone should remember to take basic steps to protect themselves. https://www.IRS.gov/securitysummit

The post Industry News: New Security Measures Help Protect Against Tax-Related Identity Theft (IRS): What You Should Know appeared first on CAMICO.

Learn more about CAMICO’s Members-Only Site (MOS).

Watch the video:

For more information on the MOS, click here

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The Loss Prevention Specialists at CAMICO consult with policyholders on a variety of topics, providing practice and risk management advice. In his video, Duncan B. Will, Loss Prevention Manager, shares an example of how CAMICO helps CPAs via our Advice Hotlines. One of the topics he mentions is fee collections – CAMICO frequently receives calls from CPAs seeking advice on this problematic area. Here are some practical tips on dealing with some of the issues.

Basic steps can be taken to avoid or manage most billing and collection problems. Client screening and engagement letters are the first steps toward controlling losses and enhancing your clientele, but better billing and collection practices are also valuable ways to enhance cash flow.

Billing Tips

If the bill or its description of services is unclear, clients will be inclined to put it aside and to call about it later, lengthening the time it takes to pay the bill. Bills that are standardized, clear, concise and descriptive are more likely to be paid sooner.

All professionals with the firm should be accountable for their timesheet and billing deadlines, but their billable time should be protected by using administrative staff with appropriate training and support to prepare bills and collect payments.

Timely billing leads to better collections. It’s sometimes best to bill more frequently than monthly, as smaller bills are generally paid sooner than larger ones.

Different services often require different billing practices. Consider alternative fee structures, such as hourly rates, fixed fees, value pricing, refundable advance retainers and replenishment, or a combination of structures. If you need professional help for billing practices, don’t hesitate to get it.

Collection Tips

Communicate frequently with the client and gently remind the client of future services needed. Speak to the person in charge of authorizing the bill payment when it’s due. If it’s a large balance due, call 10 days before the due date to be sure the invoice has been received.

Collection calls are relatively effective, inexpensive, immediate, personal and informative. Staff should be trained on the rules under the “Fair Debt Collection Practices Act” (FDCPA), which prohibits unintentional harassment of debtors. Anger management and mediation training will also help staff deal with difficult people.

Once you have sent 30-, 60-, and 90-day letters, turn the account over to a professional collection agency to avoid spending valuable time and resources on deadbeats. If a client offers a reasonable partial payment, consider taking it and disengaging. This will free up more of your valuable time to pursue better clients who pay their bills on time and in full.

Client Screening

Client screening is the first step toward controlling losses and enhancing your clientele, services, and fee structures. The basic process utilizes a checklist to flag problem clients. Some of the questions include:

• Is the client the kind of client the firm would like to have?
• Does the client demonstrate integrity?
• Is the client financially viable?
• Why did the client choose our firm over other firms?
• What does the client like about our firm that causes them stay with us?
• Are the client and engagement still a good fit for our firm?

If the client or engagement is not a good fit, do not accept the engagement. Due diligence is also essential to client screening and should include the following steps:

• Performing background and credit history checks
• Obtaining and assessing the quality of references, and obtaining additional references to check, if necessary
• Checking with the predecessor firm after obtaining permission from client

Some firms create a list of their top five clients with descriptions of why they like these clients above the others. The descriptions then point the partners in the direction of the clients they want to attract.

At the same time, learn to recognize higher-risk engagements and plan your billing and collections according to the risk before you begin. Buy-sell transactions, public offerings and initial public offerings, limited partnerships, financial services, real estate and construction engagements all tend to be higher risk.

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