So there are now several plugins and different ways to accept bitcoin to your ecommerce shop and websites. As it becomes easier to turn on these ways of accepting bitcoin or other cryptocurrencies, the accounting and bitcoin bookkeeping may get a bit weird. (Let’s be real – bitcoin should be the only one you accept),

Here are just a few thoughts I have had about trying to consider how to account for the bitcoin you receive. I will delve into the specific details in a future post once I work out the kinks. The same journal entries for currency exchange should apply. For now, here are just some quick hits on things you should consider. There are a lot of “mights” and “maybes” below as work through to find certainties.

Bitcoin Bookkeeping Thought 1

Most likely, for the foreseeable future, you are probably considering your final number in dollars or another fiat currency. Since that is the case, the amount of bitcoin you have in your business wallet must be expressed in your base (fiat) currency. We have all seen cryptocurrencies go up down by thousands of dollars for the past half year. So the “price” of your bitcoin expressed as fiat can wildly flucuate from when you acquire it as part of a sale.

If you’re a HODLer, by the end of the year you might be dealing with a unrealized gain or loss. Basically, if you accept bitcoin and you still hold the bitcoin at the end of the year, the exchange rate may have shifted wildly. Your bitcoin might be worth much more or maybe much less than when you acquired it. If you still have all it, you will have to factor in the difference for your end of year reports.

Bitcoin Bookkeeping Thought 2

If you are both both accepting and using bitcoin, the chances are you will have have less swings in the losses and gains. However, usually the sender of the bitcoin pays the fees to send the bitcoin. Something to consider, you might want to categorize these fees in your expenses. If you are just converting your bitcoin immediately, then your difference will also be smaller. There may be fees in converting bitcoin as well.

Bitcoin Bookkeeping Thought 3

The next idea is to consider the potential for income on the appreciation of your bitcoin. Up above, I mentioned “unrealized gains”. However, once you have exchanged the bitcoin for fiat currency, the gain or loss is realized. From my understanding, losses can be helpful for you tax situation, but gains on a currency transaction can be taxed as ordinary income. In the end, that’s a higher tax bill if you realize the gain on your crypto.

In the future, I will try to put together some actual how-to’s on journalizing these transactions- to get them in your email, sign up below.





