24 Aug Solving your IRS 280E Problem for Cannabis Businesses
The fiscal calendar year is over for most companies, and for cannabis enterprises the season of dread and fear is upon them. As they gather their financial records for the annual visit to their accountant, the reality of the tax bite is starting to haunt them. Why? Because unless your business is set up correctly, you have no deductions except cost of goods sold. You can’t deduct rent, utilities, payroll, maintenance, insurance, or anything for that matter that let’s you sell cannabis at your dispensary due to the draconian nature of the IRS code.
Is it too late to do anything? Maybe not. If you have solid accounting records, and know anything about cost accounting, you can eliminate part or all of the tax bite by increasing your cost of goods sold. How? A management company with a long term contract to your cannabis operation can be used to help offset the cost of goods sold with services “sold” to the cannabis dispensary.
Stay tuned – this is a part of a series on how to reduce the tax, become more efficient, and provide the IRS with a strong rationalization for your income statement, balance sheet and what taxes are actually due.