Business owners following the growth of cryptocurrency should expect more of the same in 2022: a line moving up and to the right.
It depends LinkedIn, which recently included in its 29 Big Ideas for 2022 the prediction that “cities will start operating 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 think accepting cryptocurrency payments from your customers is valuable or necessary, here’s how:
- Talk to your lawyer and your accountant. Accepting cryptocurrency will mean new
approaches to accounting, and possibly new taxes and fees. For example, cryptocurrency is considered property by the IRS, which means that you are subject to capital gains tax when you sell it. These capital gains will require an additional step in the accounting: recording the date and price that you received the payment, as well as the price and date that you sold that cryptocurrency.
- Decide what products or services you are willing to sell in exchange for cryptocurrency. With taxes, complications, and additional fees, small businesses are often advised to only accept cryptocurrency payments for large purchases with high profit margins. You want to make sure that the extra cost and effort is worth it.
- Set up processes and rules to manage cryptocurrency before accepting it into your business. Many cryptocurrencies are extremely volatile, and providers have fees to move them to different accounts, trade them for other cryptocurrencies, or exchange them for dollars. Look at the daily and monthly charts found on Yahoo! Finance and Google Finance to see if you are comfortable maintaining these cryptocurrency payments.
- Establish a clear policy for customer refunds. A common approach is to refund customers in the currency and amount they paid, but be prepared to respond to customers requesting refunds in dollars, or complaining that the cryptocurrency they are refunded is now worth less than ‘it was when they paid.
- Check if your existing payment processor or online shopping platform already offers cryptocurrency payment options. Many are doing this, including Etsy, Shopify, PayPal, and Square, which could lead to a fairly seamless process to open the door to cryptocurrency payments.