From Bitcoin to NFTs, consumer adoption of cryptocurrency presents important questions for your business
Business owners following the growth of cryptocurrency should expect more of the same in 2022: a line moving up and to the right.
That’s according to LinkedIn, which recently included in its 29 big ideas for 2022 the prediction that “cities will start to run on crypto” this year. Businesses outside of the crypto space likely won’t need to do much to adapt to the new environment. But if you feel that accepting cryptocurrency payments from your customers is valuable or necessary, here’s how to go about it:
- Talk to your lawyer and accountant. Accepting cryptocurrency will mean newapproaches to bookkeeping, and likely new taxes and fees. For example, cryptocurrency is considered property by the IRS, which means you are subject to a capital gains tax when you sell it. Those capital gains will require an extra step in bookkeeping–recording the date and price at which you received the payment, and the price and date on which you sold that cryptocurrency.
- Decide what products or services you’re willing to sell in exchange for cryptocurrency. With extra taxes, complications, and fees, small businesses are often advised to only accept cryptocurrency payments for large purchases with strong profit margins. You want to make sure that the extra costs and effort are worth it.
- Set up processes and rules for handling cryptocurrency before accepting it in your business. Many cryptocurrencies are extremely volatile, and vendors have fees attached for moving them into different accounts, exchanging them for other cryptocurrencies, or trading them into dollars. Look at the daily and monthly charts found on Yahoo Finance and Google Finance to see if you’re comfortable maintaining these payments in cryptocurrency.
- Make a clear policy for customer refunds. A common approach is to pay back customers in the currency and quantity they paid, but be prepared to respond to customers requesting refunds in dollars, or complaining that the cryptocurrency that they are being refunded is now worth less than it was when they paid.
- Check to see if your existing payment processor or online sales platform already offers cryptocurrency payment options. Many do–including Etsy, Shopify, PayPal, and Square–which could lead to a fairly seamless process to open the door to cryptocurrency payments.