1. Before you consult with a lawyer or hire a
consultant, you may want to do some of the
work yourself. One of your first decisions as
a cannabis growing biz owner is what form
of biz you are going to choose. This
decision is very important because it can
affect how much you pay in taxes, the
amount of paperwork your cannabis
growing biz is required to do, the personal
liability you face and your ability to borrow
money. cannabis growing biz formation is
controlled by the law of the state where your
cannabis growing biz is organized.

2. The most common forms of cannabis growing biz’s should be:
Corporations (C Corp)
Limited Liability Companies (LLC)
S (Subchapter) Corporations (S Corp)
The two forms of cannabis growing biz’s should not be:
Sole Proprietorship
Partnerships
All cannabis growing biz's must file an annual return regardless
of biz form.

3. Of course, regardless of industry, the question
"What structure makes the most sense for my
growing cannabis?" answer really is dependent
on the individual circumstances of each cannabis
growing biz owner. LLC's are a common choice
for small to mid size growers. You can even set
up an LLC to pretend to be a corporation which is
a good approach for cannabis growing biz
owners on assistance. Each cannabis growing
biz owner must assess their own needs. Here is a
brief look at the various. cannabis growing related
biz structures.

4. A sole proprietorship is the most common form of cannabis
growing biz industry. It's easy to form and offers complete
control to the owner. But as a cannabis growing biz owner, I
wouldn't want to also be personally liable for all financial
obligations, debts, and legal of the cannabis growing biz.
As a sole proprietor you can operate any kind of cannabis
growing biz as long as you are the only owner. It can be full-
time or part-time work. But it's only you. This includes
operating a:
Trade show cannabis growing biz
Home-based cannabis growing biz
One-person on-site consulting

5. Every sole proprietor is required to keep sufficient records to
comply with federal tax requirements regarding cannabis growing
biz records. Your net cannabis growing biz income or loss is
combined with your other income (other income could be your
salary if you also work for someone else, or your investments) and
deductions and taxed at individual rates on your personal tax
return.
Sole proprietors do not have taxes withheld from their cannabis
growing biz income so you may need to make quarterly estimated
tax payments. You generally have to make estimated tax
payments if you expect to owe tax of $1,000 or more when you file
your return. Use Form 1040-ES, Estimated Tax for Individuals, to
figure and pay your estimated tax.

6. A partnership is the relationship existing between two or more
persons who join to carry on a trade of a cannabis growing biz.
Each person contributes money, property, labor or skill, and expects
to share in the profits and losses of the cannabis growing biz.
Each partner reports his share of the partnership net profit or loss
on his personal tax return. Partners must report their share of
partnership income even if a distribution is not made.
Partners are not employees of the partnership and so taxes are not
withheld from any distributions. Like sole proprietors, they generally
need to make quarterly estimated tax payments if they expect to
make a profit. Also just like sole proprietors, the cannabis growing
biz partners share personally liable for all financial obligations and
debts of the biz in general.

7. A corporate structure is more complex than other cannabis
growing biz structures. It requires complying with more
regulations and tax requirements.
Corporations are formed under the laws of each state and are
subject to corporate income tax at the federal and state level.
In addition, any earnings distributed to shareholders in the form
of dividends are taxed at the individual tax rates on their
personal annual tax returns.
The corporation becomes an entity that handles the
responsibilities of the cannabis growing biz. Like a person, the
corporation can be taxed and can be held legally liable for its
actions. If you organize your cannabis growing biz as a
corporation, you are generally not personally liable for the
debts of the corporation. (Exceptions may exist under state
law.)

8. LLCs are popular because, similar to a corporation, owners have limited
personal liability for the debts and actions of the LLC. Other features of
LLCs are more like a partnership, providing management flexibility and the
benefit of pass-through taxation.
Owners of an LLC are called members. Since most states do not restrict
ownership, members may include individuals, corporations, other LLCs
and foreign entities. Most states also permit "single member" LLCs, those
having only one owner.

9. The Subchapter S Corporation is a variation of the standard
corporation. The S corporation allows income or losses to
be passed through to individual tax returns, similar to a
partnership.
Generally, an S corporation is exempt from federal income
tax other than tax on certain capital gains and passive
income.