Need to Know About Cryptocurrency For Accountants
This year may bring a barrage of questions from clients of accounting firms and advice on the cryptocurrency, and Matthew May wants to help you be prepared for them.
“People always ask accountants about different kinds of assets and what people perceive as investments, and cryptocurrency is what everyone wants to talk about this year,” says May, founder and director of operations at Acuity, a service accounting for early stages and growth. technology companies. “And it’s something that very few people have experience with.”
“In addition, some business owners are exploring the possibility of accepting cryptocurrencies from customers, so they want to know more about whether they should do so and, if so, how it will work,” says May, who runs a webinar on February 22 for Sageworks on cryptocurrency.
The cryptocurrency is a form of currency that only exists digitally and is based on encryption for the security of transactions. There are thousands of cryptocurrency forms, some of the best known with names like Bitcoin, Ethereum and Ripple. May says that accountants will benefit from knowing the basics of the cryptocurrency and thinking about the answer they will give customers who ask for it.
“It’s also a timely issue due to the lack of good information on cryptocurrency,” says May. “Everyone keeps talking about how bad it is, so some people just stop trying to understand it,” he says. “Everything you see in the press is sensational, but there are practical applications.”
You can also plan how accounting clients can accept cryptocurrencies for payment without being exposed to the volatility of the asset. For example, merchant accounts can immediately convert payments into cryptocurrencies to dollars so that companies can accept Bitcoin, for example, without receiving payments in Bitcoin.
“Customers who can afford to take more risks and early adopters seem to be the types of customers who are currently more interested in accepting the cryptocurrency,” says May. “But some companies are also exploring the payment of cryptocurrencies to employees or suppliers, and these customers will need to know about various IRS reporting requirements.”
“Accountants will also have to help clients understand the reports and fiscal ramifications of the commercial cryptocurrency,” says May. “The cryptocurrency is treated as property, not currency, for federal tax purposes, so the IRS tries to buy Bitcoin in a similar way to buying a share in the stock market.” Under the tax reform plan recently promulgated by Congress converting a form of cryptocurrency in another way means that the owner also has to pay taxes on capital gains on the activity of the virtual currency, and this is probably a novelty for people, “says May.
“Practitioners are going to have to relax this for these people,” he says.
May during the webinar will review old and new tax regulations at companies that accept cryptocurrencies and will also describe where some of the technology players are to help with accounting related to cryptocurrency. It will also help accountants and advisors learn more about possible game changers in the cryptocurrency world that could make them more conventional.