Entity formation & Startup
Entity selection and formation is important both from a legal perspective, as well as a tax planning perspective. Strategic entity selection may enhance the ability to capture product costs at different levels of the organization.
In Michigan, each license is exclusive to the licensee, and conveyance of an interest of more than 1% is prohibited without prior board approval. It is essential to determine the license ownership up front, as changes down the road will require additional regulatory scrutiny.
The MMFLA and LARA requires licensees to develop and maintain accounting and inventory control systems. Depending on the type and size of the business, these might be fairly simple or more complex.
Accounting Procedures and Systems
As a startup entity, we can provide the basic building blocks to set up and organize your business, including monthly checklists, accounting procedures, and templates for your accounting system. We also discuss decisions that will affect your application, accounting, and tax return preparation in the future, including 280E considerations.
By 30 days after the end of each state fiscal year, each licensee shall transmit to the board and to the municipality financial statements of the licensee’s total operations. The financial statements shall be reviewed by a Certified Public Accountant in a manner and form prescribed by the board.
Inventory Control Procedures
The state requires a third party inventory control system that can interface with the statewide monitoring system. We can help your organization develop procedures to ensure inventory data is accurately captured into your system for reporting to the state.
The State performs an extensive, deep background investigation on every license applicant. Importantly, many minor prior issues are irrelevant to the license process if properly disclosed in the application. If left undisclosed, however, it can be a basis to deny the application.
Our dedicated team of investigators will scour relevant histories to identify potential items for disclosure in the application process.
Additionally, the law requires a background investigation of every employee of the licensee. The law prohibits hiring employees with certain prior or pending legal matters without regulatory approval.
As with all of our other services, the results of our background investigations processes are strictly confidential.
MMFLA State License Application
License applicants must submit a comprehensive financial history, including historical financial summaries and tax returns. This involves locating and organizing years of financial records.
Applicants must also demonstrate a capitalization level (net worth) depending on the type of license and size of the business. The net worth statement must be opened upon by a licensed CPA before submission with the application.
We can assist with the gathering, organizing, and summarization of your financial records for presentation to the state.
tax return preparation
Preparation of federal tax returns can be tricky due to conflicts between Michigan and federal laws and regulations.
IRC §280E (cost of goods sold deductions) is a hot topic for licensees, and there are recognized strategies for managing 280E issues.
We can help you develop structures and procedures to achieve your 280E goals.
Cash Reporting Requirements
Form 8300 filings requires the reporting of cash payments received over $10,000 in a trade or business. Failure to properly report these payments can result in severe civil and criminal penalties for non-compliance. It is important that these Form 8300 filings are filed within 15 days after the receipt of cash and the supporting documentation should be kept a minimum of 5 years from the filing date.
Cendrowski Corporate Advisors
4111 Andover Road
Bloomfield Hills, MI 48302