6 Common Cannabis Bookkeeping Mistakes

Bookkeeping is an essential part of any business, and cannabis businesses are no exception. Unfortunately, many cannabis entrepreneurs make common mistakes when it comes to bookkeeping. This can lead to a number of problems, including missed tax deductions and penalties from the IRS. This is why many business owners turn to marijuana-friendly payroll companies to outsource their accounting and bookkeeping needs.

In this blog post, you’ll learn about six common cannabis bookkeeping mistakes and how to avoid them. By knowing what these mistakes are and how to avoid them, you can keep your business afloat financially and avoid any headaches down the road!

What are some common cannabis bookkeeping mistakes?

First and foremost, you already know that bookkeeping can’t be taken lightly. It’s a crucial part of your business, and if you don’t do it right, it can come back to bite you. Let’s take a look at these common mistakes many cannabis entrepreneurs make when it comes to bookkeeping:

Not knowing the difference between cash and accrual accounting 

This is one of the most common mistakes cannabis business owners make:

• Cash accounting is used to record transactions when money changes hands. This is the most basic form of accounting and is often used by small businesses. 
• On the other hand, accrual accounting records transactions when they occur, regardless of when the money changes hands. This is a more complex form of accounting and is often used by larger businesses. 

Many cannabis business owners make the mistake of using cash accounting when they should be using accrual accounting. This can lead to a number of problems, including missed tax deductions and penalties from the IRS.

Not tracking inventory properly 

Another common mistake cannabis business owners make is not tracking inventory properly. This can lead to a number of problems, including overstocking or understocking your product. Not tracking inventory properly can also lead to lost profits and decreased customer satisfaction.

Not keeping up with receipts 

This is another common mistake cannabis business owners make. Receipts are crucial for tracking expenses and deductions come tax time. Many business owners simply don’t bother to keep track of their receipts, which can lead to a lot of problems down the road.

Not separating personal and business expenses 

This is a mistake many small business owners make, not just cannabis business owners. It’s important to keep your personal and business finances separate to avoid any confusion come tax time. Many business owners simply don’t bother to do this, which can lead to a lot of problems.

Not staying organized 

This is another common mistake businesses make. Staying organized is crucial for any business, but it’s especially important for businesses that deal with a lot of cash. Many cannabis business owners simply don’t bother to stay organized, which can lead to a number of problems, including missed deductions and penalties from the IRS.

Not hiring a professional 

This might be the most common mistake, as many business owners simply don’t bother to hire a professional accountant or bookkeeper, which can lead to a number of problems, including missed deductions and penalties from the IRS. Hiring a professional is one of the best things you can do for your business. 

A professional can help you stay organized and on top of your finances, which will save you a lot of time and money in the long run. If you don’t have the option to hire a full-time bookkeeper, you can rely on agencies and online platforms to help you out. 

Can I get help with my bookkeeping from marijuana-friendly payroll companies? 

There are a number of different providers out there, and not all of them are created equal. Some payroll companies are more expensive than others, and some don’t offer the same level of customer service. This is why many businesses try to find a feasible solution.

Fortunately for you, you can fully count on Green Leaf Business Solutions for excellent service and a broad scope of expertise, from helping you deduct payroll taxes, finding funding solutions, and streamlining HR operations. We are a full-service accounting and bookkeeping firm that is dedicated to ensuring your cannabis dispensary or cultivation business succeeds. Contact us today to learn more about our services or to schedule a free consultation. We’re always at your service!