The CBD market is exploding. Its impact is felt in cosmetics, pharmaceuticals, and even the food and beverage market. Researchers believe that by 2024 CBD sales in the United States will be over $20 billion. Understandably, many people are interested in getting a piece of this billion-dollar venture. If you are an entrepreneur looking to get into the CBD market or if you have already established yourself in the field, you may have seen firsthand the complexities surrounding CBD warehouse tax planning, bookkeeping, and accounting.
How Can a State Nexus Tax Impact Your CBD Warehouse Tax Planning?
Many state governments are on the lookout for ways that they can meet growing revenue obligations. Further, some politicians who may be leery of asking their constituents to pay more money in taxes may look to get tax revenue from businesses that are headquartered elsewhere but do business within their state. This may be one reason nexus tax is heavily monitored.
Your CBD warehouse CPA may need to file state taxes in a state outside of your state of residence if your CBD warehouses or distribution facilities are located outside of your state of residence. The same may also apply if you have employees or affiliates who work on your behalf in other states. Your CBD warehouse CPA may also need to file additional state taxes in areas where you hold trade shows or have inventory.
If this isn’t confusing enough, each state has created its own rules to define what a tax nexus is and the impact it has on taxation. At Fusion CPA, our CBD warehouse accountants make it their mission to stay up-to-date with changes in state tax nexus laws, so you don’t have to worry about it.
How the Federal Legalization of CBD Impacts CBD Warehouse Bookkeeping
The Agriculture Improvement Act of 2018 removed CBD products derived from hemp from the CSA. CBD oils and other hemp-based products that have less than 0.3 percent THC are not classified as controlled substances. As a result, the distribution of CBD is no longer subject to IRC 280E, which prohibited those who distributed controlled substances, such as marijuana, from taking tax deductions. So, your CBD warehouse accountant may be able to deduct things like marketing, auto expenses, bank fees, licenses and permits, charitable contributions, cost of goods sold, education, and more.
When doing your CBD warehouse bookkeeping, it may be advantageous for you to understand IRC 471, SEC. 199A, and IRC 263A and have some familiarity with farm accounting. You will need to determine if cash or accrual accounting is best for your CBD warehouse. A benefit of cash accounting is that it may defer taxes. However, accrual accounting may give you a better picture of what’s going on right now with your business. The latter may be preferable for CBD related businesses because there’s a constant need to raise capital, comply with audits, determine valuation, and improve management reporting.
Stay Current with Federal, and State Laws with the Help of a CBD Warehouse Financial Adviser
CBD regulations and tax laws are continually being written and rewritten. Lack of familiarity with these changes will not protect you from fines and penalties imposed by the IRS. At Fusion CPA, we offer CBD warehouse CFO business advisory services focused on keeping your business compliant with tax law. We understand that federal, state, and local compliance means that you face a complex tapestry of often conflicting legislation. That is why we strive to create specialized tax strategies built for your unique business needs. CBD businesses may be the focal point of IRS audits. We stay up-to-date on all tax issues, whether you have multi-state locations, are dealing with international taxes, or are interested in risk management, valuations, or estate planning. At Fusion CPA, we are here for your business needs. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
This blog article is not intended to be the rendering of legal, accounting, tax advice, or other professional services. Articles are based on current or proposed tax rules at the time they are written, and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.