Signing up for a merchant account makes sense for most businesses. With a merchant account, businesses can accept credit and debit card payments. Normally, signing up for such an account wouldn't be controversial. Cannabis merchants may be excluded from a lack of controversy though. Federal law prohibits the sale of marijuana, but a select number of states have decriminalized cannabis, or CBD. The normalization of the cannabis sales industry has led to companies offering merchant processing to legitimate marijuana business owners. Still, a cannabis business owner might prefer the "cash is king" approach, which can be a mistake. Signing up with a merchant account could eliminate avoidable problems.
Merchant Accounts Curtail Concerns
Cannabis businesses can't operate without concerns over federal crackdowns. Why further complicate matters by embracing problems a cash-only business deals with? Setting up a merchant account could help address these other troubles:
- Cash Stolen or Destroyed: Businesses that operate heavily in cash may be targeted for robberies. Alarm systems and armed guards could deter robbers, but the specter of employee embezzlement looms. Never dismiss the possibility of a fire breaking out either. Once cash is gone, business owners remain at the mercy of an insurance company regarding its recovery. Transactions processed through a merchant account go directly to a bank. Concerns and problems with transacting with cash diminish because less cash remains on the premises.
- Tax Audits: All gross payments processed through credit and debit cards must be automatically reported to the IRS via a 1099-K. This could prove helpful to a business wishing to reduce the chances of an audit. Now, nothing can be done to 100% guarantee the IRS won't perform an audit. Decreasing potential red flags on returns, however, could decrease the IRS's assumption that something appears amiss. Suspicious of underreported income on a return certainly draw IRS scrutiny. A business operating on a cash basis might find itself consistently audited to prove the claimed gross receipts figures. With a 1099-K, the merchant account establishes more accurate accounting at least in regards to credit/debit transactions.
- Troublesome Customers: The illicit resale of legally purchased cannabis presents worries to business owners. Credit and debit purchases at least further establish and log the identity of the buyer, which may serve as an added layer of security.
Businesses run best when they eliminate problems and smooth operations. A cannabis merchant is no different than any other business owner in this regard. So why not follow other well-run small businesses and look into CBD merchant account services?Share