A Quick-Start Guide for Ensuring Your Cannabis Clients Comply with State Requirements

Top 5 Cannabis Accounting Services You Can Offer (and Get Paid High Fees For)

When you start working as a cannabis accounting professional, it’s hard to know which services you can provide to clients and how to charge for them.

To help you confidently define your services and set rates, we’ve compiled a list of the top five services any cannabis accounting professional can offer (even when you’re brand new to the space).

A few words about knowing what you offer – and your worth

The list you’re about to dig into is not just a “cheat sheet” or a sample engagement list.

It’s a blueprint for growing your client’s business and your own practice.

With this list in hand, you can confidently walk into any enrollment call and describe what you do and the value you provide. If you want to analyze a potential client’s accounting department and identify services they need, check out this article on setting up an accounting services audit.

You’ll also notice we haven’t provided you with a “one-size-fits-all” price list.

Instead, you’ll find some notes on pricing considerations so you can think about the variables involved when you talk to each client. Also, keep in mind that you’ll want to think in terms of value-based pricing instead of hourly rates. Determine your price on the value you offer, not how long it took you to complete the service.

Drumroll, please… 5 services you can start performing now

Keep in mind this is a basic list. You can add many more potential services. All you have to do is listen to your prospect’s pain points and be creative. 

1. Monthly Accounting

What it is: For monthly accounting, you’ll be conducting financial statement reviews, adjusting entries, and preparing final financial statements. You’ll also perform financial analysis and strategy, forecasting and budgets, and cash flow forecast. Additionally, expect to provide GAAP advice, ensure compliance and accuracy with tax law, manage the audit process, and focus on historical data.

How to price: Consider the time it will take you to perform these services and how much value they’ll bring your client. Also, weigh the company’s size and accounting budget.

Start by estimating your fees based on 2 to 2.5 percent of the company’s annual revenue. For example, a $3 million business should afford to pay you $60 to $75k for this job.

Also, think about what the client would pay an in-house professional bookkeeper. If you work remotely and can take on other clients, you should make an offer 10 to 20 percent less than what they would pay in-house. Factor this discount into your value proposition.

2. Accounts Payable Management

What it is: With accounts payable management, you’ll be responsible for purchase invoice reviews, approvals, and processing and payments. You’ll also manage the timing and flow of purchases and payments, and negotiate payment terms.

How to price: When pricing for this role, consider the volume of monthly transactions, ease or difficulty of the business’s payment process, and the company’s size. According to Glassdoor, an accounts payable manager’s average annual pay is $68k. Depending on the other roles you perform for the client, you might charge more or less for this service.

3. Outsourced CFO

What it is: An outsourced  CFO functions as an external financial leader. This multi-faceted provider delivers high-level accounting, business, and operation guidance for a company. Suppose you decide to market yourself as an outsourced CFO. In that case, you’ll be in charge of overall financial strategy, financial statement analysis, growth strategy, forecasting, and long-term planning. You will also advise on establishing systems, fostering shareholder relationships, and much more. 

How to price: CFO-level services mean you can charge more! First off, consider the company’s size, annual revenue, number of locations, entities, investors, and business goals. Is the business currently raising capital or going through a transition? 

Next, consider how much time it will take to perform these services and the overall value you will bring to the business. In the case of an outsourced CFO, a company should be able to pay you 2.5 to 3 percent of its annual revenue. With this service, you could quickly help them double or triple their income, so your potential value is considerable. 

4. Cleanup

What it is: With most cannabis accounting or bookkeeping clients you’ll encounter, cleanup is inevitable. Make sure it’s a skill you feel confident pricing and offering right away.

Your cleanup responsibilities will include reviewing all legal and financial contracts and ensuring the current business registration and license. You’ll also track all invoices and receipts, organize historical data into financial statements, prepare historical tax returns, and implement accounting systems and software. Additionally, expect to conduct account reconciliations, prepare financial reports, organize the books and records, and more. 

How to price: Without proper cleanup, a cannabis company will struggle to stay compliant and profitable. As a provider of cleanup services, you pave their path to success. Your value is immense. 

When pricing cleanup fees, look at the years or months of cleanup needed and the current state of the books and records. Consider how much time it will likely take to perform all the necessary work. Guage how far back you need to go to get the company organized and compliant. 

Next, come up with a monthly fee you would charge this client for all the services they need, including cleanup. You can expect to apply half of that fee to the cleanup. For example, if you name your total fee at $2,500 per month and cleanup will take 18 months, you’d charge them $1250 per month or $22,500 total.  

We calculate this fee on a monthly basis because of value comparison. If your potential client would have had the proper accounting in place, they would have been paying a higher monthly rate all along. It would have cost this example client $45k to complete the accounting work if they engaged you from the beginning. So, we are cutting them a little break because we can condense the timeframe. However, make sure your client understands how much they are SAVING when you reveal this offer. 

5. Taxes: Sales and Use, Marijuana Retail, State and Local, and Federal

What it is: Completing and filing forms for each type of local and state tax is an area where cannabis clients can go seriously wrong if they try to do it themselves or hire an unqualified accounting professional. As a cannabis-trained accountant or bookkeeper, you can ensure tax prep and filing compliance.  

The stakes are even higher with federal tax. If you prepare federal tax forms, you’ll add substantial value. Responsibilities for federal tax include prepping and filing returns, advising on tax reduction strategies, protecting the company from paying unnecessary taxes and fees, and fixing tax return filing issues. 

How to price: Regarding sales and use, marijuana retail, and state/local tax, you’ll want to price based on the business size. In many states, preparing and filing these forms doesn’t take long, so you’ll be charging more on value (and the consequences of improperly filing). 

If you roll federal tax preparation into your services, you can charge between $2k and $4k for the entire tax offering, depending on the complexity of the state you’re working in. 

Putting It All Together

Based on the pricing of each type of service, you can see how your revenue could quickly accumulate. The more confident you become working with cannabis clients, the more you can add services to your overall offering. Let this list form the basis of your practice, and grow from there.

For more information on developing or starting your cannabis accounting or bookkeeping practice, begin your free 30-day NACAT Pros trial today. We provide the network, resources, expert speaker webinars, templates, and more to become a leader in the cannabis accounting industry.

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