he says 280e issues aren’t going away.
by liz gold
cannabizcpa.pro
frank palomino jr. is ready to roll up his sleeves for cannabis companies.
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having obtained his cpa designation in march 2017, palomino started his company just a few months later in july to live the cpa dream of hanging out a shingle and building up a book of clients.
a virtual dream, that is.
palomino and his wife were living in orange, texas, thinking about moving out of the area. he had just stopped working with high net worth clients at a small accounting firm and was looking at six feet of water in their home because of hurricane harvey. a decision had to be made.
“the majority of the stuff we owned went to the side of the road so we decided instead of staying here and rebuilding, we would work remotely and see how that goes,” he said. as a result, palomino started taking clients he could help out from anywhere. it was a decision that proved more than just convenient.
“i can help them no matter where they are,” he said. “and along the way, i’ve figured out great processes to facilitate that. we feel lucky in a way because it gave us the opportunity to do this. yes, it was unfortunate, yes, we lost a lot of stuff, but we have always looked at the silver lining.”
his firm is truly virtual – in fact, he and his wife live out of a travel trailer, traveling from california to colorado back to texas. for him, it’s a dream.
palomino said, “life just gave us a kick in the butt” and as a result, he got really clear on who he wanted to serve – cannabis businesses. so he started frank palomino cpa pc, working to help clients with cost accounting, new technology and best practices to legally reduce their tax liability. his website is currently in development and he’s been using linkedin to start networking.
as a fairly new cpa, palomino knows there’s a lot to learn – and continue to learn because the industry is constantly changing and moving at rapid speed. as irs code 280e continues to be a major headache for cannabis companies, he said those issues won’t go away until cannabis is federally legal or reclassified to not be included as a schedule 1 substance.
“i got into the cannabis industry because i know (business owners) are underserved,” he said. “i just saw a big lack of help. i’m trying to use my experience of using different technologies to help streamline the accounting process. being virtual is a tool that my clients and i utilize so we can communicate at our convenience. if i have to do work at midnight, i can do that at my leisure and send it to them for review. it makes it more efficient.”
though palomino is new to the cannabis industry, he’s said he’s doing his due diligence. that includes deep dive reading, researching various topics and issues, learning different strategies to implement with cost accounting and talking with his peers. he recognizes the many issues – lack of access to banking, cash management, fraud, underreporting, payroll, inventory, tax liabilities, compliance – as well as the general economy in some states that has produced an overabundance of product, driving prices down. the challenges are many as is the margin for error, but palomino is ready. he’s starting small and expanding by targeting smaller, mom and pop companies to help them out at ground level and grow together.
palomino said he has always had an entrepreneurial spirit and can help clients with whatever challenge they are confronting – even if it’s not accounting-related. he enjoys working with clients hands-on, rather than being behind the scenes doing just the technical side.
“i don’t like being idle,” he said. “in order for me to be more client-facing, i had to do it on my own,” he said of leaving his previous firm. “i want to be their advisor; i want them to come to me when they have the big problems they need to face. and to make sure everything is compliant and above board.”