#GM, #Nostr. Does anyone know how a #business needs to set up their books (for #bookkeeping) if it wants to accept or #pay in #Bitcoin? Like, do I need to create a completely new set of accounts that are in #BTC instead of #USD? Suppose a large portion of BTC stays BTC (as in I don't convert each payment to USD rght away), at which point do i make the conversion to USD for tax purposes? (Why is this so confusing! T_T) #asknostr
Discussion
Gm Gm Gm
I don't file taxes, so I have no idea how to answer your question.
However, this is still closely related: I suggest doing all bookkeeping in doggie coin or grams of silver, converting other units to and from your chosen unit for all transactions.
Doggie coin because it seems to be the strongest-performing money these days, and thus using it to record your profits & losses will tell you the true amounts of those profits & losses compared to someone just passively holding the strongest money. I expect pretty much every business to underperform against doggie coin for a while, so this helps keep yourself and others aware of what you're sacrificing financially to operate this business in service to the community, or as an investment for later. The "keeping others aware" part is important because it might be really really really really hard to explain to your grandkids (or some neo-soviet soldiers or whatever) how you ran a business at a loss and struggled with the psychological burden of taxes because the government had arbitrary rules preventing you from registering as a non-profit despite knowingly operating at a loss. Denominating your books in the currency you're losing the most in might really help with this.
Silver is my backup suggestion even though it might not be anywhere near as strong as doggie coin's market performance right now. It's a lot less volatile, more stable & certain, maybe stronger over a longer timescale, and still very strong in the short timescale - strong enough to reflect risk and possible losses, just not as severely as doggie coin.
Keeping books in Bitcoin is a middle ground that I don't suggest because a middle ground doesn't make sense here in my view. If you're willing to deal with volatility to calibrate your books to an asset with stronger performance, I don't see why not go for even more volatility and even more strength. If the volatility of doggie coin is too much of a problem, I don't see how Bitcoin would be stable enough compared to silver.
#GM FREN HAVE A FABULOUS 🌟 DAY TODAY
It all depends on your setup. For tax purposes though
1. When you receive BTC, the value at the time of reception is treated as normal income in USD
2. When you sell/dispose of/spend BTC, you pay capital gains on that
3. When you spend BTC (for example, on a business purchase), the equivalent USD value is the amount you would deduct as an expense.
The capital gains accounting is the only real difference vs USD. You can use tools like koinly, cryptotaxcalculator, etc for that.
So in the bookkeepimg software, the account would be in USD and not BTC? Otherwise I don't see a way to record the USD value going in and at the end of the year.
A lot of business owners I know who primarily use USD have this workflow:
1. Do USD books like normal, don't try to integrate BTC into them at all.
2. Establish a wallet or exchange account. As you spend or receive BTC, write it down somewhere so you can go back and figure out what a tx was for, if needed. This could be the memo field in the tx, a separate text document, whatever. Just like when you use USD.
3. At the end of the year when doing capital gains calculations, mark all "incoming" payments to that account as as Income. So that's all accounted for, easy. Likewise, mark all outgoing payments as "expenses" if they are valid business expenses. Most crypto tax calculator sites have ways to do this in bulk.
4. Make sure you record any transfers from one of your own wallets to yourself separately so they don't get tagged as capital gains events in step 3.
5. Whatever account software you use, open a support ticket with them and ask them to add BTC support. They need to hear from people that want this feature, or it'll never get added.
* Final note: If your account tool is pulling from your bank account, for example, and your exchange account is depositing sold BTC into there, you need to write a rule so that you aren't "double-counting" that as income (once when you receive it as BTC and once when you move it in the form of USD to your bank account). You can just tag it as a special type of income which can be separated out come tax time.
Does "tx" mean transaction? I use GNUCash for bookkeeping (although I'm planning to migrate to Firefly III because they have a REST API I can integrate my own apps with), it's a free application, so there's no customer service. Reddit says to use "Securities" fir bitcoin. I guess they are like stocks? Idk. It's so confusing!
Btw, I'm trying to zap you but the shit's not working again. 😡 Pls stand by
Hey, did you getthe zaps? I dont understand, Amethyst is acting like the zaps didn't succeed, but I just looked at coinos history and it's saying they all got subtracted from my wallet. I'M SO CONFUSED! Why is thissystem so broken? I dont even knoow if it's the Nostr client or wallet issue. 😖
I got a bunch of zaps from you, guessing you didn't mean to send all of them, so I sent some back :).
Thanks. LoL I was trying to zap you a certain amount but Amethyst (the Nostr client I use) was acting like it was faiiling. So I kept re-trying, assuming it was failing. 😅
Final note, I promise, is that this is all so fucking complicated because BTC is discriminated against as a currency. NO OTHER FOREIGN CURRENCY has to deal with this capital gains bullshit. If you are using BTC for your business, kick some money to some BTC trade associations and sign up for/donate to https://www.satoshiaction.io/
They are the ones who got the BTC reserve bills to happen. Participate in elections, especially primaries. We can end this capital gains nonsense if we push.
That's a good point, because other currencies also go up and down. Why are the rules not the same? It might be because the USD is more expensive than mostbof them (except british pound and euro), so it's not in govt interest to let ppl write off capital gains losses when they devalue.