MISCONCEPTION 1: Marijuana dispensaries are not federally approved, so they are not subject to income taxes.
OUR EXPERT OPINION: Although not federally approved, medical marijuana dispensaries 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, unless stated otherwise.
MISCONCEPTION 2: Marijuana businesses are filled under 501(c) nonprofit tax code.
OUR EXPERT OPINION: Not even close. This is not your standard non-profit business, this is medical marijuana, illegal under federal law.
MISCONCEPTION 3: It’s best not to keep operating records in this industry.
OUR EXPERT OPINION: Generally speaking, if you do not have proof of purchase receipts and payments your expenses can be disallowed, 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. 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 books to preparing and presenting you with the proper financial statements.
MISCONCEPTION 4: 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?
OUR EXPERT OPINION: If you don’t claim your income, but incur traceable transactions, it may 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.
MISCONCEPTION 5: Collecting donations in return for marijuana.
Definition: do·na·tion [doh-ney-shuhn] noun