new accounting technology is part of the package.
by liz gold
cannabizcpa.pro
when cristina garza launched her cannabis accounting and payroll company, cannacomply, back in 2014, she wanted to make sure she understood the nuances and complexities of the industry.
more on cannabiz: minorities, women & cannabis | john pellitteri takes grassi full steam into the cannabis industry | moving beyond 280e: dean guske on the cannabusiness | 5 challenges for cannabusinesses | dope cfo levels up its offerings
exclusively for pro members. log in here or 2022世界杯足球排名 today.
a new transplant to denver, garza was already running accountingprose, an accounting company providing bookkeeping, payroll and advisory to small businesses. if you haven’t seen her website you should – she dubs her team “small business superheroes” and calls herself “chief number cruncher” in her email signature.
however, when she started networking in denver, she realized there weren’t a lot of accounting professionals serving cannabis companies at the time. she was interested and decided to investigate, taking it slow.
so, as part of her due diligence, garza aligned herself with compliance companies that were working in the cannabis industry. she ended up taking a budtender training as well as business owner training from one in particular, icomply cannabis. icomply ended up becoming one of her current partners.
“i didn’t want to be blind to any challenges,” she said. “for example, you have to have really different financial statements and there’s different compliance needs in terms of document management. i didn’t want to put any potential clients at risk because i wasn’t prepared. it took a little time to get going but we feel very comfortable about how we approached it.”
her conscientiousness paid off. with a virtual team of 16 employees and growing, cannacomply focuses on providing cannabis accounting and payroll and some tax work – in the form of sales, payroll and excise tax. end-of-the-year tax returns are done by cpas who have partnered with cannacomply. but for garza, her focus is on cash management, document management and preparing a good set of books that helps deter the risk of theft or fraud.
“in addition to compliance, we also set them up with tons of technology,” she said. “we put up processes from end to end so there’s no question of how to get us that information. it doesn’t add any additional time and we don’t have to work on site. it’s really imperative that if we are going to work in a business that is primarily cash-based that we’ve got some processes set up for them so it’s super easy.”
garza enjoys new accounting technology and that’s apparent in what her firm offers her clients. after a discovery phase, which allows them time to dig into what the cannabusiness has already done, as well as discussing goals and expectations, comes implementation. this is when garza and her team move her new client to what she calls the holy trinity: xero (her accounting technology partner of choice), hubdoc for document management and then box, a final resting place for all documents.
finding technology that supports cannabusinesses has been challenging but her partners tend to be cannabis-agnostic – meaning, they don’t seem to mind. accounting software in particular can be tricky because of the connection to banking.
“xero isn’t out promoting that they work with cannabis but they have people on their sales team who are actively looking for partnership with pos (point of sale) and seed-to-sale tracking,” garza said. “that goes directly into the xero software so they are definitely working toward being green-friendly.” it also probably helps that xero’s new headquarters is in denver.
“all the tools we use are specific,” she said. “they solve a problem. we are not just going to go out and use the next shiny thing because it’s available. it needs to solve a problem that we can’t solve using some other method.”
for example, the team uses spotlight reporting to provide highly visual financial statements that help explain cash flow projections and forecasting, as well as share reports that are specific to management and investors.
“that has been really helpful because it helps bring numbers to life,” she said.
garza said she works with all types of clients, but if they are looking to get licensed, she will refer that client to icomply. she said her sweet spot clients are those that are vertically integrated – have an operations company, a grow and a dispensary – and are poised for growth. typically, they are between $1 million to $15 million in revenue. she said once those businesses get bigger, they really need to have a controller managing the day-to-day.
“they need to be nice,” she added of potential clients. “we have a lot of interactions with them. they need to be communicative, respectful, and they need to want to be in compliance.”
garza said when it comes to her clients, their biggest challenges are that they try to do the accounting and compliance work on their own. they also are lacking connections to other professionals such as insurance agents, attorneys and cpas.
“they basically try to do the work on their own and didn’t understand how to mold the financials the correct way, or get the chart of accounts set up right, or have things flowing into the right sections of their financial statements so it actually gives them the most tax benefit,” she said. “usually getting hit with that first big tax bill is a big wakeup.”
in terms of her own team, she is currently on the search for what she calls “accounting unicorns” – or those unique individuals who are not just good at the numbers, but who have an interest in the clients and in the work. and while she found setting up a team in a denver office didn’t work for her savvy and mobile crew, the technology the company uses keeps them well connected. cannacomply uses slack to talk with each other throughout the day and embedded in slack is zoom, which allows for on-demand, face-to-face video calls.
“we are looking for people who are not only really great at accounting, but are also unique in their skill set, have really deep soft skills, are good communicators, inquisitive and who ask why a lot,” garza said. “they don’t accept the status quo of how things have traditionally been done. they are basically tiny entrepreneurs in our business. they are out there talking to people and making relationships happen.”
“our goal is to offer financial statements and a road map to a positive future,” she said. “if they are looking at expanding, bringing on additional partners or employees, our goal is to arm them with information so they can make decisions.”
as for other accountants and cpas who want to move into the cannabis space, garza shared an “abundance not scarcity” mentality. she received most of her clients via referral and acknowledged that not every business will be a match for her company – and vice versa.
“before you get started, do your research,” she said. “know what regulations you need to follow in your home state, be careful with your current business – we wanted to make sure we didn’t lose banking and payroll – and then go for it. there are definitely challenges. you have to be a person who is less risk-averse. if you are happy and don’t want to learn anything new, don’t get into cannabis.”