Here at Blox, we understand that for the average person, the process of managing crypto assets and filing taxes is completely unknown to them. Accountants and bookkeepers reserve the responsibility of tracking and managing assets, funds and accounts – recording everything in a ledger (usually a spreadsheet). In the new era of cryptocurrencies, managing this entirely new asset class is not only confusing to the average person but the average accounting team, too.
With that in mind, it’s important to note that in the U.S, the Internal Revenue Service classifies cryptocurrencies as a “store of value” and/or securities. This means that every transaction (buying, selling, trading, and more) are all taxable events that require tracking and calculations for capital gains and losses.
Blox would like to provide you with a checklist guide when preparing yourself or your business for crypto taxes or to manage crypto assets more efficiently.
Map Out All Your Accounts
Have all your crypto accounts, wallets and exchanges (their passwords and authentication protocols) mapped out. Having easy access to this information in an organized fashion will make your life easier.
Write down all your exchanges and for each token/coin, list the coins you own and include your password, login information and other important details. Once you have all that information, the next steps become easier.
Stay up to date with the latest news surrounding crypto news, trends and changes. By staying informed, you are better equipped to make smarter financial decisions. The world of blockchain, crypto, and fintech moves quickly. It can’t hurt to make a habit out of checking for new daily or weekly.
Crypto focused websites like CoinDesk, and Bitcoin.com are great resources for staying up to date with news, announcements, trends and more. Additionally, publications like TechCrunch, Wall Street Journal and other mainstream outlets can be a valuable resource. You can follow them all online via newsletters or Twitter and other social mediums.
Learn About Crypto Taxes
It is important to note that nothing will matter until laws are set in place, and little has changed since the IRS first acknowledged cryptocurrencies in 2014. If you need to file your taxes, it’s good to have a grasp on what it entails. It is important to consider that nothing is set in stone, but staying proactive and organized for when laws are implemented will prove valuable.
Here is a small glimpse to get you started.
Crypto brokers are NOT required to issue 1099 tax forms, but they are required to disclose all assets and transactions to the IRS. Some taxable transactions can include:
- Exchanging cryptocurrency for fiat money (cashing out)
- Paying for goods or services, such as using some Bitcoin to buy an item
- Exchanging one cryptocurrency for another cryptocurrency
- Receiving mined or forked cryptocurrencies
Find A Crypto Accounting & Management Platform
A smart crypto accounting and bookkeeping platform can provide you with the ability to track and monitor transactions across hundreds of blockchains, currencies, wallets, and exchanges. Once accounts are synced, customers can classify transactions, organize accounts and export to traditional software like Quickbooks and Xero.
Blox offers a free Pro account that lets users sync the most popular wallets and exchanges.
It’s super easy to sync your accounts, transactions, and get a full view of your crypto portfolio. Blox understands the complexity of crypto, and to make it easier on you, we have a free Pro account that will simplify your life.
Integrate and Organize Assets & Accounts
Now that you have your management platform set up, start syncing your wallets, exchanges to integrate them into the platform. This should give you access to features to organize your account, label transactions and finally wrangle your crypto assets into one unified location. Keeping accounts, portfolios, and transactions can be tedious, but platforms exist to offer full automation.
It’s always important to keep all your private crypto asset information secure. When selecting your platform to manage your assets, investigating the security features is of the utmost importance. Look for measures such as TouchID, FaceID, Two-Factor Authentication, and try to always create long and sophisticated passwords.
Many users of crypto will never transact enough to require a crypto accountant or bookkeeper. For the few that do, we suggest doing a lot of research online and through word of mouth. This is the best way to find an accountant or accounting team that are acquainted with emerging crypto accounting procedures. Take the time to find someone you trust and is knowledgeable on the space.
Need More Help?
If you have made it to this point, you have come pretty far! The unfortunate truth is, when dealing with crypto for tracking, management or accounting for taxes, it never ends!
We hope that you are smarter after reading this, but if you would like more support – please feel free to contact us at Blox.io.
A Bit About Blox
Blox is a world-leading platform for crypto accounting and bookkeeping, dedicated to helping CFOs empower their accounting teams, finance teams, and bookkeepers. We have thousands of customers around the world including crypto.com, TenX, Beam, and eToro. Our platform is used by CPAs, CFOs, bookkeepers, and finance teams that need access to smarter crypto accounting solutions to help boost their productivity and efficiency.
At the end of the day, Blox is a platform you can count on!
Adam Efrima, Co-Founder of Blox.io