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In order to operate a legitimate marijuana dispensary, you will need to be aware of IRS tax guidelines. In this unique industry, you will need a professional tax and accounting specialist who is knowledgeable about the business, in order to help you understand and interpret the guidelines and details involved with maintaining good status with the IRS. Most dispensaries and growers don't have the proper tax and bookkeeping records and subsequently end up appearing to operate as illegal or criminal enterprises. When you don't keep necessary or adequate records, don't properly file the correct tax forms, or don't pay the necessary taxes, you expose your dispensary and employees to possible legal action. Allow us guide you through avoiding these many issues and staying out of trouble with the IRS. It is our expert opinion, that many existing dispensaries and growers will likely get audited by the IRS, as the number of each continue to grow in an endlessly emerging industry. The main reason for this thought is simple, medical marijuana dispensaries are cash-based business with little tax and accounting guidance. Knowing this, the IRS prays on dispensaries and growers to find understated income, money laundering, unfiled taxes, improperly filed taxes, and more. Additionally, all the other governmental agencies are also jumping on board to claim their share of the tax wealth such as unpaid payroll taxes, sales taxes, property taxes, and more. Being prosecuted for such an offense is a felony and will put you behind bars!
Common Questions:
1: Marijuana dispensaries are not federally approved, so they are they not subject to income taxes? Although Medical Marijuana is structured as a non-profit entity in-line with being a co-op or collective for the patients, it is not federally approved, meaning that the IRS does not recognized or even define medical marijuana or its dispensaries. Therefore, they are not eligible for IRS tax exemption. For this reason, they are subject to income tax filing and payment. It is safe to assume that all business income will be subject to taxation. 2: Is it best not to keep operating records in this industry? Generally speaking, if you do not have proof of purchase receipts and payments your expenses can be disallowed by the IRS, resulting in taxes due. For this reason, keep all your records. Hang on to your purchase receipts, even if you have credit card statements to prove the purchase. Hang on to your receipts especially if you paid by cash. In addition, make copies and store separately from the shop location to safeguard your documentation. Bookkeeping is the ideal way to keep accurate records in the industry. We can help you each step of the way, from setting up your accounting system, to preparation and presentation of the proper financial statements. 3: Medical marijuana dispensaries are cash based businesses. How is the IRS going to find out what I made, if I don't claim my income? If you don't claim your income, but incur traceable transactions, it will eventually raise a "red flag" with the IRS. Traceable transactions include, but are not limited to: purchasing real estate, car, business, paying rent, claiming business deductions and more.
Avoid all the IRS trouble by letting our expert industry knowledge and experience lead you in the right direction. More specifically, we can help you with: Bookkeeping Payroll Sales Taxes Annual Income Taxes
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