Issue #004 - 13th August 2019
A bi-weekly newsletter for accountants, auditors &
tax lawyers in the cryptocurrency/blockchain industry.
Finding an accountant who understands crypto can be a tough feat. However, most accountants are definitely willing to learn! So in this week's article, we have shared with you a guide on how you can explain cryptocurrencies to accountants in their terms. Have a client who you're not able to support, but know an accountant who's willing to help, this guide may just be of help.
For many, talking to an accountant translates to going over tedious minutia and being haunted by the past when wanting to move on, often with an impending fire of deadlines. Cryptocurrency compounds the process by turning tried and true systems on their head for the sake of innovation. Accountants are by nature neurotic and seek to minimize administrative pain for all parties involved, and are working hard to revise systems so that crypto can be streamlined.
Here are a few tips to get ahead in the game.
Provide crypto scope
It is possible to demystify some of the black box of accounting by leading part of it yourself. An accountant performs tasks based on their understanding of your business and the information available. A walkthrough of the business flow, volume, and nature of crypto activity builds a solid starting foundation.
Explain the context in which you use cryptocurrency, such as whether crypto assets are treated as an investment, a payment, or dapp. Include details on technologies touching the blockchain such as offchain activity, crypto contracts, and third party dapps.
Developing a personally tailored accounting solution
If you have periodic exchange or Coinbase activity and don’t plan to increase volume, a traditional accountant may be able to help. A limited engagement such as a one-off consult, compilation, or tax filing may be an economical option to escalate to professional crypto accounting support.
Enterprise operations such as building dapps, running an ICO or exchange, or looking for crypto attest services may need more extensive expertise. Startups at inception benefit from early planning. Ideally, entities with significant crypto usage engage long term ongoing support and leverage existing software to help automate processes.
For organic crypto adoption, such as receiving payment in crypto, many existing accountants evolve their skills as the crypto space comes to them. It may be helpful to retain an established crypto accountant to expedite learning and employ latest practices.
Hint: Most accountants follow cycles such as year end close and tax deadlines. Working around industry crunch time can help with both search and negotiation.
Be proactive in speaking with your accountant
Push consistent updates and reports to your accountant. It’s best not to rely solely on requests. Staying current helps catch nuances early on, Some strategy and tax positions and cannot be adopted after the fact.
Designate what information will be documented and what you want provided by your accountant. Organize supporting documentation unless you want to pay extra for organizing as part of the engagement. In general, do not trust third party dapps to hold records long term. Many are still under development and do not provide records suitable for accounting.
Start early. The more you wait, the more you pay
Let not the crypto slow you from finding an accounting solution. On some level, accounting is still accounting, it just needs to happen crypto-style in a way that works for you. There are emergent solutions that can assist in the transition to crypto accounting, typically involving a blend of human and software. Your accountant, lawyer, or friend may be able to make a recommendation. Plan ahead to optimize workflow, avoid rework, and minimize cost.
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To report or not to report: How the ATO’s focus on crypto applies to you
With news of the IRS ordering more than 10,000 taxpayers in the United States to pay back taxes and amend their returns to reflect their virtual currency transactions, the tax treatment of digital assets has quickly become a burning issue for people all over the world.
What Blockchain Means for the Future of Professional Auditing
While it’s true that this cryptocurrency is the most popular project associated with blockchain, it only represents a fraction of the technology’s versatility. In actuality, the complex decentralized network of cryptographically secured data that forms the bedrock of Bitcoin offers much more impressive potential: particularly where professional auditing is concerned.
Should Singapore waive GST on digital payment tokens?
Tax incentives and exemptions are some of the most effective ways to grow or spur innovation in a certain sector of the economy. And accordingly, Singapore’s recent proposal to waive sales tax for goods and services paid for with digital payment tokens will immensely benefit the country’s cryptocurrency exchanges, blockchain managers, and entrepreneurs.
Rhode Island will begin regulating cryptocurrency!
Rhode Island in the US has become the recent state that will add specific guidelines for the electronic crypto devices. By the looks of it, Rhode Island becomes yet another place across the US to adopt strict guidelines when it comes to cryptocurrency regulation.
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