Eric Sheldon CPA, PC

How to Account For Crypto Payments In Your Accounting Software?

With the increased attention cryptocurrencies and other digital assets are getting from consumers, companies and governments, you might be wondering how you account for payments in your accounting software?

 

Currently, the standards used to account for cash or cash equivalents are not applied to crypto, yet. That’s because virtual currencies are not considered legal tender, except in El Salvador. Also, unlike cash equivalents, crypto has a weighty swing in value, which poses a greater risk.

 

How do I report it?

Though the accounting model for inventory or financial instruments is the closest model to consider, but it’s not an exact match. Currently, account for digital currency as an intangible asset with indefinite life under GAAP in the U.S. and international financial reporting standards (IFRS) abroad.

 

According to this Forbes article, “Generally accepted accounting principles (GAAP) consider cryptocurrency to be an intangible asset that is recorded at cost, and impairment of the asset cost must be recorded.”

 

That means the value may be reduced on a balance sheet over time.

 

What software should I use to record crypto payments?

Keeping track of crypto payments for tax purposes can be painful, but there are some solutions to help you monitor and report transactions accurately, including:

 

  1. QuickBooks claims “Our cloud-based software syncs crypto transactions to QuickBooks Online to generate complete and accurate financial reports.”
  2. Koinly is a feature-rich cryptocurrency tax software that provides you with accurate reports. It has multiple features to ensure you are not paying a cent over what’s strictly necessary.
  3. CoinLedger (formerly CryptoTrader.Tax) has a tax calculator that can help you crunch all the numbers for your crypto dues and turn them into reports you can file with the IRS.
  4. CryptoTaxCalculator integrates with many popular exchanges and uses the data to offer very detailed calculations. Its algorithm calculates and generate tax reports for you.
  5. TokenTax offers to take a solid selection of crypto tax reports off your plate, including IRS Form 8949. It can also help you with crypto income tax, generate a cryptocurrency audit trail, and international gain/loss reports.

 

For a more comprehensive software list, visit Fortunly’s Best Crypto Tax Software.

 

If you’re considering cryptocurrency as payments in your company do your research before pulling the executing a transaction. Give me a call if you need help or have any questions.

 

You Might Also Like

Did you like this article?

Get notified when I publish new articles. Just enter your email address below.

About the Author

Eric Sheldon

Eric Sheldon

Eric Sheldon is a certified public accountant with more than 25 years of experience in a wide variety of industries. He's the owner/operator of Eric Sheldon CPA, PC, an accounting firm that specializes in providing tax strategy and preparation, accounting, and bookkeeping services to individuals and small business owners.

More information:

How is Crypto Reported to the IRS?

Under the broker information reporting rules, brokers must report transactions in securities to both the IRS and the investor on Form 1099-B. It encompasses cryptocurrency exchanges, custodians, or platforms (e.g., Coinbase, Gemini, or Binance), and digital assets, such as cryptocurrency (e.g., Bitcoin, Ether, or Dogecoin).   Legislation is also extended to existing cash reporting rules

Read More »

How to Account For Crypto Payments In Your Accounting Software?

With the increased attention cryptocurrencies and other digital assets are getting from consumers, companies and governments, you might be wondering how you account for payments in your accounting software?   Currently, the standards used to account for cash or cash equivalents are not applied to crypto, yet. That’s because virtual currencies are not considered legal

Read More »

How to Get a Crypto Loan?

Before jumping right to crypto loan requirements, let’s first take a look at what crypto lending is.   According to Stilt, “Crypto lending refers to a type of Decentralized Finance that allows investors to lend their cryptocurrencies to different borrowers. This way, they will get interest payments in exchange, also called “crypto dividends”.   A

Read More »