Our Account Executive Tyler Horn has taken a lot of sales calls recently from potential clients inquiring about cryptocurrency. Many are saying, ‘Hey. I’m getting into crypto. Now what?’ The access to cryptos has increased tremendously over the past decade, yet many people don’t know where to start with accounting softwares.
Have no fear! Below, we’ve compiled the best we’ve found in payments, exchanges, accounting, and tax.
Best Cryptocurrency Payment Platform
BitPay is a payment platform that allows businesses to accept Bitcoin and Bitcoin Cash from customers without having to buy, own or manage cryptocurrencies themselves. This is one of the first companies of its kind, founded in 2011 when Bitcoin was still new.
According to BitPay’s website, the company jumped on “the potential for Bitcoin to revolutionize the financial industry, making payments faster, more secure, and less expensive on a global scale.”
The company offers the BitPay app, which allows users to manage and spend their Bitcoin from their phone. In addition, customers can also sign up for the BitPay Prepaid MasterCard for easy reloading and no conversion fee to spend instantly. It’s also geared toward both personal and business use, and one of the big business perks is its elimination of fraud, with no chargebacks or ID theft.
However, BitPay is solely a payment platform not an exchange, so it does not have the capability for its users to buy and sell cryptocurrencies. Read below for a cryptocurrency exchange to use in conjunction with BitPay.
Best Cryptocurrency Exchange
Coinbase has become one of the largest cryptocurrency exchanges in the world, brokering Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, and Tezos, to name a few of the well-known cryptos. It makes it easy to buy, sell, and manage cryptocurrency.
As we mentioned above, you can’t directly buy or sell cryptocurrency with BitPay alone, so a third party system like Coinbase is needed for those features. You can link your BitPay app to your Coinbase account, which lets users buy/sell BitCoin from Coinbase directly from the app.
Coinbase has a reputation for being highly secure, too. Cryptocurrency stored on its servers is covered by Coinbase’s insurance policy. In addition, the platform keeps almost all of its users’ digital assets in offline cold storage, meaning that cryptos are distributed into safe deposit boxes and vaults around the world. (More on crypto storage can be found in our blog about it here.)
Coinbase also has an app that users can download to view the markets, manage your portfolio of crypto assets, schedule recurring crypto buys for gradual investment, and a vault protection feature for added security.
Honorable Mention: PayPal
PayPal entered the cryptocurrency exchange space in November 2020, offering all of its account holders the opportunity to buy and sell Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. The minimum that users can buy is $1.00 in Bitcoin.
This feature is still in the process of its roll out phase in “select international markets.” PayPal also has plans to introduce its crypto services to Venmo this year. Also, it’s important to note that Bitcoin bought through PayPal cannot be transferred out of PayPal’s digital wallet.
Best Cryptocurrency Accounting Software
Quickbooks Online. And here’s why:
- Support Via Foreign Currency Function – You can add the most popular cryptocurrencies as foreign currencies in QBO. Bitcoin, Ethereum, and Litecoin are all set up and ready to go if you enable foreign currencies on your account.
Quick disclaimer – For all cryptocurrencies, you have to manually input the exchange rates into QBO, and you have to manually revalue the balance sheet if you want to track anything other than the cost basis. Be wary unless you have used the QBO foreign currency function in the past.
- Bank Feeds – Crypto-friendly Silvergate Bank is fully supported by QBO bank feeds, which is great. Silvergate is the bank that matters in this space if you want to deal in cryptocurrency frequently. Almost every crypto company has to use Silvergate Bank because other banks won’t support cryptos.
QuickBooks Online Does Require an Add-On
In order to make crypto work in QBO, you need an add-on. We recommend Verady’s Ledgible Accounting.
Ledgible Accounting offers on-demand reporting of capital gains and losses, transaction downloads, OFX reports, exchange orders, and wallet balances. Users can use this info for analysis or to export and upload to third-party systems. The software offers three levels of membership: bronze, silver, and enterprise, depending on number of users, wallets, exchange connections, etc.
Honorable Mention: SoftLedger
Softledger is a great software that combines accounting with cryptocurrency functionality, and we’re watching closely in its initial stages of growth. It has the ability to:
- Attach Wallets directly into the software like a bank feed.
- Have multiple locations or companies and run financials separately or combined.
- Make intercompany journals in one entry that goes to the books of both entities.
- Automatically converts currency if you are making a journal between two intercompany entities that happen to be in two different countries with different currencies. You can also use your own exchange rate.
- Easily build custom financial reports.
Best Cryptocurrency Tax Software
Ledgible Tax is what we call the “best in breed.” It’s on chain support and partnerships with Thomson Reuters and CCH make it the strongest positioned to manage cryptocurrency taxes.
According to Ledgible’s website, about 12 million filers claimed virtual currency during the 2020 tax season. And with the cryptocurrency space always changing, Ledgible created the Crypto Partner Program for complete access to the platform, which includes Tax Pro. Businesses can apply online to become a partner.
Our Recommended Subledgers
Keep any crypto subledger offline in Cointracker, Verady, and Lukka, and book an journal entry each month to get the activity in QBO.
Niche player – Lukka: Mainly for hedge funds or for traders.
Honorable Mention – CoinTracker: Great for really simple stuff. It has limitations with on chain.
Lukka and Cointracker are good for exchanges, but Verady is the only one that supports on chain in a substantial way. Thus, if you don’t use a crypto bank to hold your crypto, Verady’s the only one that can support you here. Also they have major partnerships with Thomson Reuters and CCH, which handle about two-thirds of the tax returns in the United States.
Why We Recommend Subledgers
Balance Sheet Reconciliations – Many companies want to see the crypto assets at fair market value (FMV), and because most payment tracking is being done manually if you aren’t using one of the tools above, there is much room for human error. Add these issues to the 2 decimal place limit in QBO and Xero, and accountants should be adding balance sheet reconciliations for each crypto category (gl line item) that you are tracking.
We know this is a new and ever changing space. Tyler is happy to get you set up or answer any questions that you may have. Click here to book a time on his calendar. You can also keep up with crypto news, trends, and events by visiting our cryptocurrency page.