Bitcoin in Business
Posted on: 23 June 2018 by Debra Jones
Bitcoin has an ever-growing acceptance rate amongst businesses, both new and old.
There are many startup companies which are specializing in exchange their goods and services for Bitcoins as well as established companies which are expanding their possibilities by accepting Bitcoin as a form of payment. As Bitcoin increasing in value, much more business is seeing the opportunities that Bitcoin providing as well as a growing recognition of governments around the world. Visit here, for more information about bitcoin in business.
Bitcoin operates much the same as regular currencies when exchanging the cryptocurrency for goods and services. For those businesses that do use Bitcoin as part of the operations, they are still required to pay taxes on the Bitcoin received, with the tax offset now treating it as a form of income rather than an additional asset. You can refer to this article https://www.newswire.com/news/coin-ira-introduces-coinquick-a-full-service-cash-cryptocurrency-20410721.
Some business may be reluctant to start accepting Bitcoin as a form of payment. This is mainly due to the previous shade that was cast on Bitcoin in its early adoption. Previously, it was associated with the darknet, a perceived lack of security and rapid fluctuation. Many businesses felt that it was unsustainable and wanted to avoid getting their hands dirty. Over the several years, Bitcoin has shown to be far more resilient and adaptive than people had previously thought. With the skyrocketing value of the last twelve months from 2016 - 2017, Bitcoin has started to gain the attention of business owners and investors like never before and there has never been a better time to have Bitcoin as a central part of your business transactions.
As a business, you will first need to let your customers know that you are accepting Bitcoin.
This can be done with just a simple sign, icon or note at your storefront or on a website which lets people know that you are now accepting Bitcoin. This will help not only let customers know that you will be accepting Bitcoin but also helps spread the awareness of Bitcoin and furthers the mission of the cryptocurrency.
The next step towards using Bitcoin as a form of exchange is to establish your payment methods. This could be through using hardware terminals, mobile apps or even just connecting your wallet address through a QR code.
QR code allows you to easily connect your wallet with the rest of the world. You are able to create a QR code by using a dedicated app either on your phone or on a website. This will seamlessly connect your wallet to your customers and is both safe and simple. Customers will then simply scan the QR code, enter the price that is owed for the goods and services and Bitcoin will be withdrawn from your wallet to be added to the balance of your own.
Accepting Bitcoin online may be a little more completed and it is best to have a programmer help you since you will need to be coding the payment method into your website.
Why Use Bitcoin for Business
You may be wondering why you would be using Bitcoin for your business when the regular currency is working just fine. There are a number of advantages towards using Bitcoin for your business that you can take advantage of, particularly in these times of early adoption.
Firstly, Bitcoin can help your business stand out from the competition, particularly if you are the first of your industry or local area to adopt Bitcoin as a form of payment. You may also be able lowering your transaction fees, saving you and your customer's money rather than going through the banks.
You will also be able to take ride the support of the Bitcoin community and encourage a new wave of consumers to your business through media attention and publicity. A number of outlets support a business that uses Bitcoin in new and creative ways, if you were the first of your industry or use Bitcoin in a unique way, you can catch the attention of those crypto enthusiasts who can put your business in the limelight.
Accounting with Bitcoin
You will find that Bitcoin will have an effect on the way you do your accounting. In standard accounting, you will record when payment is made by your customers in dollar terms. It can be difficult to record Bitcoin with accounting.
The ideal way to record your income in regard to Bitcoin is to simply record when you decide to sell the Bitcoins for currency as this will be when you receive the cash. It is advised that you speak with a professional account to understand the complexity surrounding Bitcoin and recording your business transactions.
Accepting Bitcoin as part of your business is not without the risks. As with any emerging technology, there will always be those who attempt to exploit the system in order to further their own personal gains. You should always consider the possibility that you will face dishonesty when dealing with Bitcoin, the same as you would with any form of exchange.
One particularly fraud that you should be aware of is when fraudsters use invoices which resemble those that you send your customers. These will be sent to your customers and clients, claiming to be representing your business. Frauds will opt for a Bitcoin payment due to the fact that it will be next to impossible to determine where the wallet is located. When this occurs, the first thing you should ask yourself is how would a fraudster gain information on your customers?
In the same way that you would protect the privacy of your customers and your business dealings with fiat currency, Bitcoin requires equal oversight in order to avoid opportunists from taking advantage of flaws in your security. Bitcoin is not immune to fraud and due to many inexperienced merchants using the cryptocurrency, it can carry additional risks.
Setting Prices with Bitcoin
It can be difficult to determine how much you would need to set in terms of pricing for items and services sold using Bitcoin. You will need to convert Bitcoin to your local currency when paying suppliers, employees, shareholders and those for your customers. These could be based on market rates at the time of the transaction, however, this can often fluctuate depending on the cryptocurrency market.
You are able to see the current exchange rates through many websites and exchanges. You can have your prices pegged to these exchanges rates in order to have them automatically updated depending on fluctuation. You may also like to keep prices weighed on an average basis to avoid prices having to change frequently, which could be frustrating for customers who are confronted with rapidly changing prices or employees and supplies subjected to different payment terms.
As a merchant, you might also prefer to convert Bitcoin instantly to ensure that you reduce the risk of having too many Bitcoins on hold, in a particular wallet or subject to those same fluctuations.
Paying Taxes on Bitcoin Income
This is where it can be difficult for businesses to deal with Bitcoin. Tax compliance regarding Bitcoin is an emerging topic as governments decide the best way to approach Bitcoin. Previously, Bitcoin was counted as an asset rather than a currency, however, this still caused difficult particularly since this was not how it was treated for many businesses when exchanging goods and services.
Bitcoin transactions are very much the same as cash. When we think of cash, we know for those transactions that are made in cash, there is no paper trail and it is anonymous with no details of who or where it came from. We also know that for the most part, the cash economy is perfectly legitimate to deal with in commerce each and every day. This is how businesses are able to wrap their heads around how to implement Bitcoin into their businesses. Since many businesses would pay taxes on their cash transactions to stay above the board with the tax office, the same can be done with Bitcoin
Another area of difficulty is that it be a challenge to determine how much a Bitcoin transaction is worth. The IRS and many other taxation organizations around the world lack appropriate rules and guidelines on how Bitcoin transactions should be valued. One way we can do this is by looking at the guides provided by the IRS for dealing with foreign currency or cash equivalents.
This can help us understand how to approach Bitcoin.
When dealing with a highly volatile cryptocurrency such as Bitcoin, there will oftentimes be a difference between the value of the Bitcoin when you received the payment in comparison to when you exchange them for a fiat currency. This can be thought of as a similar scenario to foreign currency.
It is best to receive advice from an accountant on the subject of taxation when using Bitcoin. Ensure that your account is familiar with cryptocurrency and ahead of the times. If your account is lacking knowledge on Bitcoin, it would be a challenge to explain to them why you would want to use the cryptocurrency and why you feel it is the best step forward for your business.