When cryptocurrency showed up, the accounting book flew out of the window. Not only did it make even basic accounting difficult, but with the very nature of cryptocurrency as a highly irregular asset, more than a few questions have popped up since money went cyber.
Of the few guidelines that the US has put into practice, here’s what you need to know:
- Cryptocurrency is federally classified as a property, so it’s not treated as a currency to determine gains or losses
- Digital currencies can have a virtual loss or gain, depending on when they were purchased
- The fair market value is determined on the date acquired, and for the purpose of taxes, the value must be virtually exchanged for USD and included as taxable income when used to pay for goods or services
And the most important thing to keep in mind as you determine the value of your cryptocurrency? Building a strategy that ensures you get the most out of your digital assets while minimizing business expenses. Instead of an in-house bookkeeper or accounting service, for many start-ups and small businesses the smartest move financially is to outsource the accounting duties.
Here’s how outsourcing can help
To take advantage of the opportunities that cryptocurrencies present, you need a team with a knowledge of crypto, and a clear understanding of how to manage the terrain. Acuity specializes in the world of digital currency, and we’re happy to be the experts that navigate you to better books and more growth.
Here’s how we can help:
- We’re a team with industry-leading tools and knowledge on how to manage crypto and the ways they can be incorporated into the financials
- We’ll advise you on crypto-employee payments, contractor payments, and 1099 requirements, as well as other tactical issues with this new payment vehicle
- We’ll help you maneuver the documentation required by the IRS to make sure you’re compliant and to minimize your tax liability
As complex as the world of cryptocurrency investments is — and continues to become — Acuity is a leading expert in the field and happy to ensure you always avoid the common mistakes in this ever-changing world of digital currency.