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Employee Retention Tax Credit, good or bad?

Many cannabis businesses are wondering if the Employee Retention Tax Credit (ERTC) would work for them. In many ways, it could. The ERTC is now available for the cannabis industry, unlike many other government provided relief programs post COVID. If you continued to pay your employees through the challenges of COVID, then this may be for you.

Many cannabis businesses were hit hard during COVID as they saw either a decrease in gross receipts, or they were forced to shut down or quarantine. Because of this, it has been a slow recovery for some. To see if you qualify, it will be incredibly important that you have your accounting in place. In order for companies that are assisting with the applications to determine if you qualify, they will need you to provide several documents. These documents should include such things as quarterly revenues, payroll records, quarterly federal tax returns, and others. Without solid accounting practices in place, this can be a challenge for some.

There is another reason why you will want to make sure that you have solid accounting, applying for the ERTC could trigger an audit. It is not guaranteed that it will, but there is always that possibility.

Many cannabis companies are delivering world class products, without world class accounting. It is critical that you have an accounting professional that is well versed in cannabis accounting, as there are many nuances to correctly doing the accounting. If you are unsure if you are in a good position with your accounting procedures and practices, contact us today!

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