How Tech Can Help Keep Your Books in Order
Cannabis accounting is not for the faint of heart. The stringent reporting requirements, high-compliance environment, and expectations of additional scrutiny from the IRS are enough to make even the toughest operator weak in the knees.
Sure, we all dream of a rescheduled future where things will become simpler and more profitable, but that won’t likely happen anytime soon. Getting your books in order now will do you a world of good, reducing the stress around cannabis accounting, simplifying taxes, and streamlining compliance reporting at a cellular level.
If you’re still using Excel spreadsheets, we see you. Even if you’re using basic accounting software, you might miss out on some opportunities to cut your workload, automate processes, and generally make light of your financial life.
Now, there’s something to be said for doing things manually. If you actually do the work—daily, weekly, or whenever you get around to it—you’ll know where your business stands financially. You’ll know what’s coming in and what you owe and will be able to plan for the future.
But as your business grows, manual processes become a burden. The busier you get, the less time you’ll have for back-office work. By that point, if you’re like many small business owners, the bookkeeping falls by the wayside, and you have a massive mess on your hands.
Today’s accounting systems, integrated with niche third-party apps, can automate payroll, bank deposits, and expenses without manual calculations or data entry. You’ll need to check your systems periodically to ensure everything’s correct, but you’ll put time back into your day, stress less, and get back to doing what you do.
Recommended Tech for Cannabis Accounting
Technology has come a long way in recent years. Cloud solutions dominate the landscape, makQuickBooks Online (QBOing the right tech both accessible and affordable. Cloud-based apps can be accessed anywhere from any device. Since most are offered on a subscription basis, there’s no large upfront investment, and you’ll pay a nominal monthly fee.
Better yet, you can connect all your solutions and even integrate them with your accountant’s systems to make their lives easier.
And for those who might think, “Hey, I’m just a small operator. Do I really need this?” We would respond with a resounding “yes!”
The more you can implement automation in your processes, the more time you’ll have to devote to your business and the less hassle you’ll have to deal with when things start getting busy, messy, complicated, or all of the above.
Here are some of the critical tech tools and automations Growise accountants rely on and recommend for our cannabis clients.
QuickBooks Online (QBO) is capable of managing multiple bank accounts, credit cards, and payment processors. QBO also integrates with hundreds of apps that can help to enhance its functionality. One of the main tools we use in QBO is Bank Rules, which helps categorize the hundreds of transactions that come through your accounts. You can set up customized Bank Rules, so the system recognizes certain types of transactions and categorizes them appropriately. This will take a little work to set up at the outset, and you will need to check it periodically to ensure transactions are assigned accurately, but it’s guaranteed to slash your workload by about 90%, if not more.
RightTool is a QBO integration that automates some of the steps to make writing bank rules faster and easier.
QB Time is an app that helps you track employee hours and bring them into your accounting system for payroll. Employees clock in on a kiosk, computer, or mobile phone running the app. Individual logins and shifts can be assigned to projects or job roles, and there is even a geofencing feature to ensure accountability. For example, a geofenced employee wouldn’t be able to log hours from home.
Gusto is a great payroll system, although it would be incredibly complex without automation. Gusto calculates your deductions and syncs to tax laws in all 50 states, giving you everything you need to stay compliant. Set up your employees for direct deposit, and you literally won’t even have to think about it.
Racetrack automates the extraction, transformation, and summarization of all key financial data available through POS API and integrates with Quickbooks.
The Benefits of Automation
We’ve extolled many of automation’s benefits but can’t stress enough how essential this technology has become—not just for accountants but all businesses.
Cannabis businesses are especially challenged with rules, regulations, and compliance concerns. Any missteps can be time-consuming and costly during tax time or an audit.
With so much at stake, you can’t afford not to implement technology in your financial workflows. If you’ve been doing it all manually and spending way too much time and effort, we encourage you to leverage every tool in the kit to simplify, streamline, and optimize.
Automation is a massive help in 280E expense categorization and reporting, as it ensures you don’t miss any details that might raise red flags with auditors. Generate a report with a couple of clicks, and you can get back to doing what you’d rather do.
Probably the best thing about automation, though, is that it puts time back in your day. Whether you do your own books or hire someone to do them for you, those hours will be slashed to a fraction of what they were, saving you even more money and time. You’ll get more done with less effort, fewer errors, and a heck of a lot less stress.
What will you do with all that extra time and money?
You might expand your business, spend more time on customer service, sales, and marketing, spruce up the store, hire more employees, develop new products, invest in equipment, or start a blog—whatever floats your boat.
The challenges of being a cannabis operator can’t all be solved with automation, but it sure eases the pressure. And don’t we all need a bit of that?
Speak to us today about technology and automation recommendations for your cannabis business.