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Year-End Tax Planning for Cannabis Businesses | amazon business website


Year-End Tax Planning for Cannabis Businesses

Year-End Tax Planning for Cannabis Businesses Now its very easy to make moneynin the cannabis industry but its hard to keep thatnmoney because of taxes and the government doesnt neednany more of your money Theyre raising record tax revenuenyear after year after year So dont give them any morenmoney than you have to and no individual or business shouldnhave to pay any more taxes than are legally obligated to So in this video were going to help you tonbetter understand
What yournend tax planning is and how it can benefit you as a cannabisnbusiness Now if you need help or if you have questionsnabout annual tax planning that please reach outnto us via our website atnGreenGrowthCPAscom or give us a call at Lets hop right into the presentation So again our topic is yearend taxnplanning for cannabis businesses And this presentation is broughtnto you by green growth CPAs Now before we get ed I need to let you know thatnthe information containednin this presentation is meant for guidance purposes only and not as professional legalnor tax advice and further it does not give any personalized legalntax investment or any business advice in general So with that out of the way lets review
What werengoing to cover in this video So first were going to talk aboutn
What is yearend tax planning Then were going to talk aboutn
Why we implement these strategies Then well talk about considerations forncannabis businesses When tax planning well talk about expense accelerationnbusiness tax opportunities personal tax opportunities And finally
What its like working with GreenGrowthnCPAs on your yearend tax planning So lets hop in first Its very important to understandn
What tax planning actually is And at its core tax planning isnthe analysis of your finances from a tax perspective with the purpose of ensuringnmaximum tax efficiency Now some common considerations ofntax planning include timing of your income the size of your income timing out your purchases andnplanning your expenditures Now you may be asking well
Whyndo we even do tax planning Well most importantly it helps you to potentially reducenyour taxable income by delaying certain revenues or increasing spending ofnmoney in the current tax year to offset some revenues essentiallynpay less taxes or better said dont pay more tax and youre legallynobligated to and you may be asking
Why am I calling itnyearend tax planning Yes there are tax planningnto do ahead of time But
When you look at the end of the year its pretty important and it needs tonhappen soon because
When the tax year closes on December 31st that is it Your cannabis books are closed and cannno longer be impacted by subsequent spending or increasing your revenue So if an expense or revenue isntransacted by December 31st then it doesnt get includednin your accounting And thus it will not impactnyour tax filings So understand that time is of the essence So lets now talk about disclaimersnfor cannabis businesses now Yes we all know IRC 280E is there it kind of ties the hands ofncannabis business operators So
What does that mean for yearendntax planning Well first as you know for cannabis businesses mostnexpenses are not deductible And as you may also still know only itemsnthat fall into cost of goods sold are actually going to be deducted Andnthis varies by your cannabis vertical Typically dispensarys are thenhardest hit
When dealing with IRC 280E and they are limited as to
What expensesnand really limited actually in
What expenses actually can be pushed intoncogs and cannabis manufacturers and cannabis cultivators usually have theneasiest time creating a reasonable methodology for including certainnexpenses into cost of goods sold Second if your cannabis entity isnin a loss position for or any other tax year thatnyoure doing tax planning for then accelerating your expenses wouldnnot be very beneficial Pretty much Having more of a loss is notnreally going to help you much And third due to the currentnelection and different tax laws there is a potential for taxnrates being higher in And with that accelerating yournexpenses in may not be as beneficial as waiting but understand This is something to consider in thatnno one on the entire planet knows
What will happen with higher or lowerntax rates in the coming years But its just worth noting beforenwe proceed with this presentation Okay So youre in tax planning One of the most common tactics is tonincrease your spending in the current tax year Now you may be askingnwell
What are those expenses So lets go ahead and jump in andnlearn
What those are right here So expenses to consider acceleratingnin this current tax year The first one is consider buying largencapital items things like vehicles machinery or other equipment The second one is consider prepayingnyour January rent in December If that rent is deductiblenfor your business such as cultivators andnpotentially manufacturers third you can pay up your direct labor costsnthings like salaries vacation pay fringe benefits such as life healthnor dental insurance Number four you can also pay up your utilitiesnrelated to your cannabis business If thats deductible fornyour cannabis business things like your utilitynbill for your lights that can be deducted as ancannabis cultivator Next you can increase spending a materialsnand supplies that are typically not subject to 280E such as prepayingnvendors for product for soil for nutrients things like that The you can go ahead and getnsome of your repairs done If thats deductible fornyour business number seven you can prepay yournpayroll taxes on labor directly involved with yourncannabis business Number eight you can prepay legal and professionalnservices for your business as well as lastly number nine here you should consider depleting yourncannabis business inventory by yearend to potentially apply that directlynto your cost of goods sold So now that you understand some of thenexpenses that you can increase your spending on you may be askingnwell how much more do I spend Am I even doing this right And you may feel even a littlenbit lost and thats okay GreenGrowth CPAs offers a yearendntax planning service that can walk you through each step of this process So thats
What were goingnto explore right now First were going to talk about some of thendetailed in nuance opportunities that we can help you explore as annindividual and as a business And then from there were going to talk more about
Whatnthis engagement looks like and
What the process and next steps are Sonlets hop right into that now So again
When you work withnus on yearend tax planning these are going to be somenof the opportunities thatnwe will evaluate for you And I will again with the businessnopportunities and then your personal return opportunities So firstnfor your cannabis business you can use currentnlosses for quick refunds Now the cares act resurrected a provision allowing businesses to use currentnlosses against past income for immediate refunds meaning that net operating lossesnor NOLs arising in tax years beginning And in and it can be carried back five yearsnfor refunds against your prior taxes This is a big one that most peoplendo not know about Secondly consider the timing ofnpayroll tax deductions Now the cares act allows employersnto actually defer paying their share of social securityntaxes for the rest of Next You can also look into taking advantagenof the business expensing election
Which is a section electionnfor fixed assets placed into service during the year nownfor qualified property placed into service during the taxnyear beginning in and immediate expensendeduction can be taken Now there is a maximum amount for this thatnmay be expense under code section And that dollar limitation is Next you can accelerate andnpay employee bonuses We covered this a little bit already but generally a cruel base employersnwant to incur the liability for bonuses and have a deductible for thencurrent year and then pay those bonuses to the employees the following year So that employees report thenincome the following year if they are cash methodntaxpayers Now lastly you can also look atnincome and expense timing Now weve covered this a bitnalready in the presentation but businesses that have an expectednto be in a higher tax bracket the following year have long deferrednincome and accelerated their expenses to minimize taxable income Now if the Democrats win the house and thenSenate tax rates could increase as soon as in that case it wouldnt be very advantageous tonaccelerate income into
When it would be taxed at lower current rates Nownagain this is one of those toss ups We dont know
What thentax rates are going to be and if they will change during So as I said before there are strategies for your businessnas well as for your personal income taxes And since weve coverednthe business ones already lets go ahead and jump into thenpersonal strategies to help you with your personal income taxes Now some of these specific personalnopportunities are number one you can use above the line charitable deductions The cares act authorizes annabove the line deduction of up to for monetary contributionsnmade by a non itemiser in And that raises upnto for a married couple Also for the cares act raises the deductionnlimit on monetary contributions to of adjusted grossnincome Also known as AGI Next you can maximize the deductionnfor qualified business income or QBI The tax cuts and jobs act introducedna new provision section one a that allows certain taxpayersnto generally deduct of qualified business incomenon their tax return Now business income fromnpass through entities such as sole proprietorshipsnpartnerships LLCs and escorts may qualify for thisnnew deduction as well Next you can supercharge yourninvestment with opportunity zones Now weve made a
Whole video onnopportunity zone tax credits but opportunity zones are one ofnthe most powerful incentives ever offered by Congress for investingnin specific geographic areas Now in certain scenarios not only can you potentiallyndefer paying tax on gains invested in opportunitynzones until as late as but you only recognizen90 of the gain Next you can make annual exclusion gifts Now each taxpayer may givenup to per year to an unlimited number ofnindividuals free of gift tax Now giving property to yournheirs in a lower income tax bracket during that donorsnlifetime is one way to realize income tax savings And the last personal opportunity thatnwell discuss in this presentation is the higher education expenses andnhow to take advantage of those So
When appropriate pay qualifiednexpenses for next semester by the end of this year in generallynthe cost will be eligible for a credit or deduction in even if the semester doesnnot begin until So now that you understand some ofnthe opportunities and the benefits of yearend tax planning lets go ahead and exploren
What an engagement withnGreenGrowth CPAs would look like So first were going to need to givenyou an estimate of the engagement now fees for a yearend tax planning cannrange from all the way up to for the full engagementnand the tax benefits can surely outweigh by a long shot but the return on investment is somethingnthat we can help you get a grip on during your initial call with our teamnSo make sure you go to the website fill out the form andnschedule a call with our team So you can get to know how much itsngoing to cost and
What that potential return on investment is Now again if youre in a major loss thisnyear or at a low low income level this may not be the rightnstrategy for you this year but you should at least have thatnconversation Now you may ask Hey
Why is there such a big range in thenprice in
What makes this so expensive Well it really comes down to how preparednare you with your financial documents Now the financial statements were goingnto need to do this engagement is your balance sheet for as well as a year to datenbalance sheet for as well as an income statementnfor and year to date for as well as were going tonneed your prior year tax returns for and any other tax yearsnthat you have available If youve been open for morenthan just one year Now if you worked with usnfor your tax prep then you likely haventhese documents ready and your cost is going to be significantlynlower than someone say
Who doesnt have any of these documents in handnand ready but its not a problem If you dont have them we can helpnyou produce these documents
Which Hey it takes time And that adds tonthe cost Its simple as that It costs more money if youre not asnprepared for the engagement with those financial documents and the price doesntnnecessarily go up because you make more money again its simply comes down to how preparednyou are and how organized you are financially in your cannabis businessnNow weve covered a lot of ground here so I just want to hit on four keyntakeaways for yearend tax planning First yearend tax planning can helpnyou strategically reduce your tax Bill Second tax strategiesnmust be implemented before December 31st to have annimpact on the current tax year Third there are tax saving opportunitiesnat the corporate and personal levels So dont overlook things in yourncannabis business or your personal income taxes You need to look atnboth of them And lastly there are limitations for cannabisnbusinesses with taxes due to 280E and experienced tax professionals can helpncreate a thoughtful and reasonable strategy for you and your cannabisnbusiness
When it pertains to yearend tax planning Now hopefully this presentation has broughtnyou some value and helped you to better understand the importance of yearendntax planning for your cannabis business Now if youd like to move forward and atnleast chat about your cannabis business with our team to see if this type of yearend taxnplanning can be beneficial for you then please reach out to us Visit ournwebsite at GreenGrowthCPAscomplan P L A N GreenGrowthCPAscomplan Fill out that form tonthe best of your ability And then someone from our team will reachnout and schedule a time to chat with you And you can also give us a call at Now weve helped hundreds of cannabisnbusinesses throughout the entire country and throughout the world with their taxnplanning and their tax strategies and implementing those tax strategies So if youd like to move forward andnchat with us in our team about how we can help you with yourncannabis business taxes then please reach out to us via ournwebsite at GreenGrowthCPAscomplan Fill out that form and wellnreach out to you or again give us a call at Have a great day Andnwell talk to you soon '