By Raina Casbon-Kelts
Whatever you’re paying your accountant now...they earned it. Crypto accounting is a beast!
Since 2018 we've been creating solutions to help lessen that burden for you and them.
Crypto accounting begins with the payment.
Why is the accounting difficult? For a business, it’s important that your payments have context. A bank feed has context for each payment. Who, what, and how much? This crucial information helps your business take the proper deductions at tax time.
Crypto makes things complicated
Cryptocurrency was designed with privacy in mind. There’s no bank feed, and no receipts.
So in order for your business to properly account for crypto payments, you must add context. Your accountant must know what every payment is for, to take deductions. Because crypto is property, they also need a spot price for each transaction, for the ledger.
As individuals, we download our trades and spends from wallets and exchanges and send them to a tax professional. Individuals pay taxes first. What's left after taxes is income to spend, save and invest.
For a business entity, income is received from sales revenue, then expenses are deducted. The remainder after all deductions, is profit (hopefully) and business profits are taxed. The crucial difference here is that a business must know what every spend and movement of money is for, in order to properly account for it in case auditors are required.
Business accounting is made up of:
- Accounts payable (expenses)
- Accounts receivable (income)
- Bookkeeping (reconciliation)
- Reporting (P&L, tax, etc.)
Most businesses accepting crypto today, immediately convert to fiat. WHY? Because receiving crypto as income is pretty straightforward and fits fairly easily into one category for business transactions (income). Converting to fiat immediately protects the business from volatility.
But if we keep going this way, the payment processors are collecting a ton of crypto. We pay for goods and services in bitcoin crypto to further adoption, but the business we're giving it to can't use it, because the accounting is a NIGHTMARE!
How can we simplify crypto accounting?
Luckily, there's a service for that. 👋
Gilded empowers businesses to transact globally, using crypto to unlock more efficient business operations. Our simple-to-use invoices, bill payment, and accounting software helps businesses get paid faster and more transparently, with dramatically lower fees.
At Gilded, we never touch user funds. All payments are wallet to wallet and never pass through Gilded servers.
With Gilded, a business can not only accept crypto for payment, they take advantage multitude of benefits afforded by this incredible technology to avoid the high fees charged by banks and credit card processors.
If you know a freelancer or small business who could use help saving money, they can try Gilded for free.