When seeking the services of a reputable business, the first approach is often to ask around. Facebook and Twitter are filled with people asking members of their network for recommendations; including basic questions such as “Where can I get my sofa upholstered?” or “What’s the name of a good plumber?”
When it comes to seeking the services of a crypto accountant, a Facebook entreaty won’t get you too far. It’s the sort of profession that’s too niche for most of your acquaintances to have any expertise in; hence, finding an accountant with specialist knowledge of cryptocurrency means taking your search to the internet. Unless you’re planning to work on your crypto taxes on your own, Google or DuckDuckGo are probably your the best search engines to start with.
Finding a Trustworthy Accountant Online
Cryptocurrency is a global phenomenon, but the laws governing its taxation vary from country to country. Thus, with accountancy, as with law, you’re constrained to professionals who operate within the same geographical boundaries as you do, and are also well-versed in the laws and regulations governing your country.
Crypto accountants don’t need to be composing monthly despatches on the state of the industry, but they need to at least demonstrate that they are cognizant of its peculiarities, of the sort of assets investors hold, and of the tax status that applies to particular actions. Your crypto accountant or bookkeeper doesn’t need to know their Byzantine Fault Tolerance from their Proof of Randomness consensus mechanisms, but they should know what terms like staking, token lock-up, airdrop, and SAFT mean.
Seek a Crypto-Savvy Accountant
If you’re invested in crypto or receive your salary exclusively in bitcoins, your tax obligations will likely stem from a range of sources, which include crypto and seldom in the form of fiat currencies. Thus, your chosen accountant should not only excel in accounting but also be very crypto-savvy. In that respect, the usual means of gauging the reputability of business apply, which are as follows: first, see what customers have to say about your chosen accountant/s on social media, business directories, and review sites – while being mindful of the fact that no company is going to have 100% positive reviews.
Second, in terms of gauging your prospective accountant’s blockchain expertise, there’s no need to quiz them on their recollection of The DAO, or whether XRP should be considered a security. A better indicator of a crypto accountant’s capabilities lies in the readiness with which they’ll support CPA tools designed specifically for the cryptocurrency market. The more tech-minded accountancy firms will enable you to upload your financial records to an online portal, with the data already labeled within a CSV to denote different transaction types, for tax purposes.
Don’t Leave It to the Last Minute
Even the best accountant won’t be able to decipher the intent behind the crypto trades you’ve carried out in the past year without your guidance. Does the transaction to a smart contract address the indicative of placing a trade on a DEX? Or were you locking funds into escrow to borrow ETH within a decentralized lending protocol? Labeling your transactions makes life easier for everyone and, crucially, keeps the time spent auditing your accounts to a minimum, saving you money.
With the advent of technology and the creation of extremely helpful tools such as a few dedicated crypto accountancy software available in the market, you can now track, label and monitor all your activities within a universal portfolio manager. This software will allow you to keep an eye on the value of your holdings over a period of time, and even provide you with insights into various ways to maximize the profitability of your trading. Most importantly, at the end of the financial year, you can export all the details of your crypto finances with a single click of a button which subsequently creates a single document for your accountant to audit.
Agreeably, these days, Crypto accounting software are extremely powerful, but not to the extent of being extremely accurate; hence it is advised that you don’t leave your entire year’s tax planning until the last minute.
Even though the decision between hiring an accountant or opting for a crypto-accounting software remains up to the individual; opting for a portfolio management software over the former can be a better choice. Not only will it give you close visibility over your crypto investments, but will also act as your personal accountant, available anytime, anywhere at the click of a button.
Before you take the final call, it is important to consider the cost incurred by hiring accountants in person vs. using a cost-effective software. In the end, all individuals must make informed decisions, with available prior information.