Proper GAAP accounting might lower your Canna Business tax bill 

In addition to performing the normal functions of their business, most CEOs focus on how to lower their expenses, such as the business’ tax liabilities, and increase profits year to year.

With that in mind, did you know that under  Internal Revenue Code (I.R.C) § 280E, any company, where the primary source of revenue consists of the sale of Schedule 1 and 2 Controlled Substances, cannot use tax credits and deductions in its tax filings? Furthermore,  §280E even disallows a deduction for expenses including, but not limited to, salaries, rent, and office equipment [1]-- all of which are legal deductions for any other business.  .  This makes it difficult as a CEO to achieve the aforementioned goal – to ultimately increase revenue and in turn have more to invest to improve the company.  

 Many states and lawmakers across the United States are diligently working to get marijuana off the Federal list of Schedule 1 substances. Until that is accomplished, most Canna CEOs feel stuck. 

How can they grow their business and increase market share if they can't take advantage of the same credits and deductions other small businesses have access too?

Trust Prysm

Prysm  is part of a network of CPAs, lawyers and tax professionals that specialize in the Cannabis/Hemp/CBD business. This network shares best practices across the industry. One of those best practices utilizes cost accounting to get your net income lower- resulting in a lower tax bill. Cost accounting provides companies the benefit of absorbing costs into cost of goods sold (COGS). Under 26 U.S.C. § 280E, certain expenses are prohibited but may be allowed if those same expenses are absorbed into the production costs. You can trust Prysm to advise you through all accounting, legal, and tax regulations to reduce your taxable income and put your company in the best position to succeed.

https://www.freshbooks.com/blog/8-tax-credits-every-small-business-owner-should-know-about

https://quickbooks.intuit.com/r/taxes/small-business-tax-deductions/

1. https://www.irs.gov/pub/irs-wd/201504011.pdf