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How to Manage Your Digital Assets in 2024 | Top 9 Business Tools for Crypto Accounting and Tax

By April 12, 2023 No Comments

Cryptocurrency has taken the world by storm, with more and more businesses and individuals continuing to embrace this form of digital currency. And with a new kind of currency comes a whole bunch of business tools for crypto management.

And if you’re a business owner who invests in or uses cryptocurrencies as a method of payment, utilizing some business tools for crypto management will make your life a whole lot easier. Here’s why:

Keep track of your investments.

Business tools for crypto help you keep track of all your crypto investments in one place, so you don’t have to worry about losing track of what you own and how much it’s worth.

Keep track of your money in and out of crypto.

Utilizing subledgers to track your crypto investments separately from your other accounting records is a great way to stay organized. But subledgers also create an easy way for you to track who you are paying and who has paid you.

Crypto is decentralized and autonomous by nature, so having these tools in place helps you keep track of every in and out occurring in your business’s crypto. 

Make informed business decisions.

With all of your crypto info in one place, you can easily see how many digital assets you have, how your investments are performing, compare different currencies, and track market trends. This will help you make informed decisions about what digital assets to accept, and when to buy or sell.

Stay on top of taxes.

Crypto is taxed just like any other investment, and some business tools for crypto management help you keep track of your profits and losses, making tax time a whole lot easier.

In short, using a crypto management tool can help you stay organized, informed, and secure. So if you’re invested in crypto, it might be worth considering using one!

So, you’re a business owner getting into crypto…Now what? Which crypto tools are best for you?

Don’t sweat a thing! We’ve got you covered. We’ve compiled a list below of 9 business tools for crypto management, whether you need help handling payments, exchanges, accounting, tax, or all of the above.

(We recommend all of the above.)

Rules, Regulations, & Taxes – Oh, My!

Are you a business owner who invests in or receives crypto as payment? Rest easy knowing you’re following the latest crypto laws, and dodging costly fines and audits, with Acuity.

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Best Crypto 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.

The company offers the BitPay app, which allows users to manage and spend their Bitcoin from their phone.

Plus, customers can also sign up for the BitPay Prepaid MasterCard, which offers easy reloading and no conversion fee to spend instantly. One of the big business perks of this card 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. Keep on reading for a cryptocurrency exchange to use in conjunction with BitPay.

Best Crypto Exchange

Coinbase has become one of the largest crypto 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.

The Coinbase app also allows you 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.

As far as business tools for crypto go, 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.

Quick PSA:

We strongly encourage our clients to never leave their crypto in exchanges – AKA, only use them for exchanging. Why? A few reasons.

They’re unregulated, and you don’t have a key to your own crypto when it’s stored on an exchange. Plus, this money isn’t legally yours – it’s the company’s.

Even if you have your crypto in a wallet on an exchange, your keys to the wallet are public. The analogy we like to use is, “not your keys, not your coins.”

Exchanges can also be hacked or can go bankrupt. If anything happens to the exchange, you could find yourself waiting to find out if you’ll ever see your assets again.

Anyone with over $1,000 in cryptocurrency should use a wallet that gives them control of their private key. We recommend hardware wallets like Trezor, or software options like Gnosis Chain.

Best Crypto Accounting Software

Quickbooks Online is one of the best tools for crypto. Why? Its crypto accounting software because:

1. 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. Plus, 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.

2. Bank Feeds – Crypto-friendly Mercury Bank is fully supported by QBO bank feeds, which is great. We believe that Mercury is the bank that matters in this space if you want to deal in cryptocurrency frequently. A lot of crypto companies utilize Mercury Bank for their operations needs due to their technology and knowledge in the crypto space.

QuickBooks Online Does Require an Add-On

In order to make crypto work in QuickBooks, 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. So if you use Ledgible, you have this info for analysis, or to export and upload to third-party systems.

The Ledgible Accounting software offers three levels of membership: bronze, silver, and enterprise, depending on the number of users, wallets, exchange connections, etc. Check them out to see what works best for you.

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Best Crypto Subledger

Tracking and understanding crypto transactions can be a real headache, and it’s not always easy to keep your financial records accurate and ready come tax season. That’s where subledgers come in!

What is a subledger?

We’re so glad you asked! “Subledger” is derived from the main accounting record, AKA the “general ledger.”

A general ledger helps you track financial transactions, used to create financial statements such as the balance sheet and income statement. However, a subledger is a subset of a general ledger, showing record of a specific set of transactions.

In other words, a subledger contains more granular data about a category of transactions, while the general ledger shows important financial data at a glance.

So, the idea behind using a subledger for cryptocurrency is to have a clear and precise log of every transaction made using that specific type of crypto.

In short, a good subledger is one of the necessary business tools for crypto tax management. They log important information like when the transaction took place, how much was involved, and who was involved (using their address).

From there, a subledger is used to calculate the tax liability for each transaction and helps with preparing and filing crypto taxes.

The best crypto subledger depends on your tax situation. That’s why we’ve outlined our top 5 recommendations below – Ledgible Tax, TaxBit, Lukka, Cryptio, and Bitwave.

All of these are solid business tools for crypto tax management, but which one is best for you? We’re so glad you asked!

Each of these subledgers has its own strengths and could be a better fit for different types of users, depending on what you need.

For example, if you’re an individual looking for a platform to help you manage your crypto taxes, TaxBit or Ledgible Tax might be your best bet. But if you’re a business looking for a comprehensive platform to manage your digital asset holdings, Lukka or Bitwave might be the way to go.

Keep on reading for more details on each subledger below:

TaxBit is a crypto tool geared toward upmarket and venture-backed startup clients – a great comprehensive solution for enterprise clients from small to upper market. 

More about TaxBit:

TaxBit is a trusted leader in crypto tax and accounting. Using modern tech, it simplifies tasks like corporate tax calculations and financial reports. It’s perfect for all sizes of businesses working with digital assets.

This subledger lets you track your crypto transactions and calculate your taxes in real-time. You can import all your transaction data from various exchanges, wallets, and platforms, and even generate tax forms like Form 8949 and Schedule D for the IRS.

The TaxBit Accounting Suite seamlessly integrates with your current accounting systems, adheres to U.S. accounting rules, and meets regulatory standards. It automatically calculates fees, gains, losses, and converts prices to dollars, taking tricky crypto accounting tasks off your hands.

To get started, simply create an account, connect your crypto accounts, and you’re good to go.

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ledgible 1

Ledgible Tax is what we call the tax “best in breed.” This tool boasts an investment from Thomson Reuters and integrates with all of their products and CCH products.

Not to mention, if you’re a TR-based shop, you can work with your TR rep and take advantage of the credits already built in. Legible also offers an accounting tool, but their claim to fame is the tax integration on their tax offering.

More about Ledgible Tax:

Like its competitors in the subledger space, it provides up-to-date tax calculations and generates reports you need for taxes, like Form 8949 and Schedule D.

Using Ledgible Tax is pretty straightforward. Connect your crypto wallets and exchanges to the platform, and it aggregates all of your crypto transactions.

For those of you with private equity or venture capital clients in the trading world, Lukka is the crypto tool for you. It’s focused on serving the PE and VC-specific space, receiving great feedback for its work.

More about Lukka:

Lukka is a great subledger that helps you keep track of all your digital assets. Like other business tools for crypto, Lukka instantly calculates your tax liabilities, and generates a variety of reports for you, like Form 8949.

Lukka also integrates with all your crypto exchanges, wallets, and other platforms to give you a complete picture of your crypto holdings. All you have to do is create an account and connect your platforms.

lukka 1
cryptio 1

If you have a CAS practice, Cryptio is the way to go. The best part? You and your staff can still set rules, code each transaction, and hold off on pushing transactions to QuickBooks until giving it a good look.

More about Cryptio:

Cryptio is a subledger designed to help business owners like you manage your crypto portfolio. It gives you an overview of your crypto holdings across multiple exchanges and wallets, so you have a clear picture of your crypto investments, all in one place.

Getting started on Cryptio is simple, like other tools for crypto. Connect your crypto wallets and exchanges to the platform, and it collects all of your crypto transactions. From there, you can see your portfolio’s performance, keep track of your investments, and even get market insights to help inform your investment decisions.

Bitwave is a tool that’s hyper focused on the CAS and tax space, with a strong emphasis on QuickBooks integration. If you have a heavy QuickBooks shop, Bitwave is definitely worth checking out.

More about Bitwave:

Bitwave is a subledger designed to help you with crypto asset management, automatically tracking and organizing all transactions from different exchanges and wallets.

It also easily integrates with accounting software solutions, like QuickBooks, Xero, and NetSuite.

Bitwave keeps track of the cost basis and holding period of your assets, so that you can accurately report your taxes. Plus, it offers out-of-the-box gain-loss reports as well as custom reports to easily monitor your digital assets.

bitwave 1

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.

Crypto Accounting Services Built For You

We know the ins and outs of crypto. Plus, we can help you develop a solid accounting and tax strategy around your digital assets.

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Frequently Asked Questions

What is TaxBit, and how do I use it?

TaxBit is a fintech company that provides tax automation and compliance solutions for business owners and individuals. It’s one of the popular business tools for crypto, offering a mobile app to track crypto transactions, calculate taxes, and generate tax forms.
To use TaxBit, you need to create an account and connect your exchanges, wallets, and platforms to the platform. Once your transaction data is imported, TaxBit will calculate your gains and losses and generate the necessary tax reports for you.
From there, you can then use these reports to file your taxes and stay compliant with tax regulations.
In addition to providing crypto tax solutions, TaxBit also has a slew of educational resources and support to help you navigate the tax implications of crypto transactions, and how to properly report them to the IRS.

What is a digital asset? What is an example of a digital asset?

A digital asset is just a fancy way of saying something that exists only on the internet and is used for things like ownership, transactions, or exchange of value.
An example of a digital asset is a cryptocurrency, like Bitcoin. You can buy it, sell it, trade it, and even use it to buy things or send money to people. 
Another example is an NFT or Non-Fungible-Token  which is a unit of value that is issued and managed on a blockchain network. For example, an NFT could represent a share in a company, or it could represent something physical, like gold or a house.

What is Form 8949?

Form 8949 is a tax form used in the U.S. to report when you buy and sell things like stocks, bonds, real estate, or other property. When you sell these things, you either make a profit (gain) or a loss.
If you make a profit, you may owe taxes on it. If you have a loss, you can use it to lower the taxes you owe.
Form 8949 is where you tell the government about these gains and losses from your sales, so you have to attach the form to your tax return when you file. It’s used to make sure that the IRS knows about all of your gains and losses and can figure out if you owe taxes.
You fill out Form 8949 with info about each sale, like the date you bought and sold it, how much you paid for it, how much you sold it for, and how much of a gain or loss you had. If you have a lot of sales, you might have to fill out more than one form.
You’ll also need to file Schedule D with Form 8949. Learn more about Schedule D below!

What is Schedule D?

Schedule D is another tax form that you file along with your federal tax return and Form 8949. Schedule D takes the information from Form 8949 and summarizes it to give you a total of your profits and losses for the year. 
Schedule D also calculates your net capital gain or loss, which is used to determine your federal income tax liability.

What is the difference between Schedule D and Form 8949? Do I need to file both?

Form 8949 and Schedule D are forms used to report money you made or lost (AKA capital gains and losses) from selling or exchanging investments like stocks, real estate, or mutual funds.
The difference between them is that Form 8949 is where you list each separate sale or trade, including the date, cost, and amount made or lost, whereas Schedule D takes the information from Form 8949 and summarizes it all.
Schedule D gives you a total of your gains and losses for the year, which is used to figure out if you owe any extra taxes, or if you’re eligible for a refund.
You need to file both forms with your federal tax return if you have any capital gains or losses from selling or exchanging investments.