Comprehensive Crypto Accounting Services for Investors and Businesses

A large number of companies have started using cryptocurrencies not just for transactional purposes but also for operational and investment purposes. This rising popularity of cryptocurrency is based on the wide range of benefits that crypto provides, such as privacy, security, and transparency in transactions.

Whether your business is using cryptocurrency for transactions or investments, professional crypto accounting services are required to navigate challenges in tax compliance and financial reporting. Let’s explore the benefits and strategies provided by crypto accounting services as well as key areas to consider when choosing a service provider.

1. What is Crypto Accounting?

Crypto accounting is a specialized field of accounting where crypto tax accountants who have experience in managing digital assets like cryptocurrency ensure that your finances are in a good position. You may wonder why crypto accounting exists when you already have professional accountants managing your financial records smoothly. The issue lies in the fact that crypto is not considered a cash equivalent for filing taxes. What’s more, cryptocurrency operates differently. They are decentralized and have high volatility. So, crypto accounting is needed to track each transaction and provide complete visibility for both financial reporting and tax purposes. Let’s explore these factors further.

2. Why Your Business Needs Crypto Accounting Services

Crypto needs special attention from crypto accountants who can understand the rapid changes that occur in the market. Crypto tax experts know the best strategies to ensure that there is minimum tax liability while remaining compliant with the latest tax regulations. Since crypto is an evolving technology, tax regulations change from time to time and locationwise too.

A crypto accounting firm offers a wide range of services, including crypto tax compliance, bookkeeping, and financial planning to suit both your individual and business needs. Here are the key areas that crypto accounting firms offer their services in:

01. Compliance and Risk Management

Staying compliant with crypto regulations is a separate task that crypto accountants look into as these regulations get updated frequently. As such, crypto tax experts are well-versed in IRS rules, reporting forms, and anti-money laundering (AML) requirements. A crypto accounting firm makes sure that there is no risk of penalties resulting from your crypto transactions and investments while you focus on your business’s growth.

02. Specialized Knowledge in Crypto Transactions

Each crypto transaction you engage in is considered a taxable event, whether it’s buying, selling, or trading. Crypto accountants help businesses track these events by keeping records of essential details like cost basis, asset price at the transaction, and associated fees. This is necessary for accurate tax filing.

03. Strategic Tax Planning for Crypto Assets

Your crypto accounting firm offers tax planning services by leveraging tax-saving strategies like tax-loss harvesting and choosing the ideal cost-basis method. By doing so, tax liability is minimized. Crypto tax accountants have the expertise to apply these strategies while staying compliant with tax regulations.

3. Crypto Accounting for Investors

If you own an investment company that invests in crypto intangible assets like Bitcoin and Ether, you are subject to accounting principles outlined under US GAAP’s ASC 946. US GAAP (Generally Accepted Accounting Principles) is a set of accounting regulations that US companies have to use for their financial records.

ASC 946 focuses specifically on investment companies and provides guidelines on how to measure and report digital assets as investments. Under ASC 946, your crypto tax accountant has to measure digital assets like crypto at fair value. Assessing crypto assets is specifically challenging as crypto pricing is volatile and crypto transactions take place in a 24-hour trading environment.

4. Strategies for Crypto Tax Compliance and Crypto Accounting

Crypto accounting services apply many strategies to optimize your tax position while keeping your financial records compliant. These approaches do not work for every company or individual in the same manner. Crypto tax experts have the necessary blockchain tools and resources to analyze what is best for your business’s or personal investment’s future and choose the ideal approach.

In general, investors can apply these crypto tax planning strategies to minimize tax liabilities.

1. Choosing the Right Cost-Basis Method
2. Tax-Loss Harvesting
3. Crypto Bookkeeping with Blockchain Tools
   

In addition to the strategies mentioned above, crypto CPAs analyze all taxable events in your crypto transactions to identify opportunities for reducing tax liability. By carefully managing both long-term and short-term gains, they can help you optimize your tax position. For more insights, explore our detailed guide on crypto tax planning strategies.

5. Benefits of Partnering with a Professional Crypto Accounting Firm

Not that it’s impossible for your in-house accounting team to handle crypto taxation; however, partnering with a professional crypto accounting firm puts you in a better position to get the maximum benefits out of your crypto investments. The main reason is that the crypto industry is always evolving with new tax laws and guidelines. Your in-house accountants may not be updated on these changes as much as crypto tax experts from an accounting firm specializing in crypto accounting.

As a business owner or an investor, you need to think of the long-term benefits that come out of hiring experienced crypto accountants to maintain your crypto financial records rather than focusing on the additional expenses it causes. If your crypto tax filing is incorrectly done, there is a chance of facing penalties and legal issues that could cost you more.

Plus, crypto tax accountants don’t just offer crypto bookkeeping services; they plan tax strategies so that you can maximize tax deductions while staying compliant. A general accountant does not have the necessary expertise and knowledge to design crypto tax strategies that are customized for your needs.

6. Choosing a Crypto Accounting Firm

When choosing a crypto accounting firm for your tax filing and crypto bookkeeping needs, seek accounting firms with a proven track record in crypto accounting. The best way to do this is by assessing client testimonials.

Choose a crypto accounting firm like OnChain Accounting, which offers a wide range of services for digital assets like financial reporting, tax planning, and crypto bookkeeping. If your crypto accounting firm has limited services and resources, your business will not be able to gain the maximum benefit out of your investment in crypto accountants.

In addition, make sure that your crypto accounting firm provides reliable customer support by listening to your requirements. This is important as issues can arise during tax season and during financial audits.

At OnChain Accounting, we provide a free initial consultation for you to get an idea about our specialized crypto accounting services prior to hiring us. Schedule a free consultation for more information on how crypto accounting services can help your business grow.

Further readings

Choosing the Right Crypto Accounting Firm for Your Needs

How Crypto Tax Accountants Simplify Your Tax Filing

Essential Crypto Tax Planning Strategies for Investors