Crypto & Digital Asset Bookkeeping: What Every Business Needs to Know

Several businesses today are stepping into the world of digital finance all backed by crypto and many other digital assets.

As the need and trend to opt in for digital financial assets is increasing day by day, it is also important to understand that these activities need to be tracked for clear bookkeeping. You also need to understand that unlike the traditional bookkeeping processes, crypto bookkeeping or digital asset bookkeeping can be very complex.

And this is exactly where expert help is required.

In this blog, to make things easier for you, we will be explaining everything you need to know about crypto bookkeeping that every business needs to know.

Table of Contents

• Understanding Digital Assets

• Why Bookkeeping for Crypto Is Not Like Traditional Accounting

• Common Challenges in Crypto Bookkeeping

• Regulatory and Tax Implications

• Tracking Transactions Across Wallets, Exchanges, and Blockchains

• Stablecoins, Staking, and DeFi: How to Record Complex Crypto Activities

• Valuation and Fair Market Value Considerations for Reporting

• Best Practices and Tools for Crypto Bookkeeping

• How Orbit Accountants Helps Businesses Stay Compliant and Organized

• The Future of Digital Asset Accounting

Understanding Digital Assets

One of the most surprising aspects about digital assets today is that they are no longer a trend, they are now a true part of businesses today. These digital assets often include cryptocurrencies like the Bitcoin, NFTs which are also known as non-fungible tokens, and other tokens that are used in blockchain networks.

And the best part is that many businesses today accept payments in digital assets. However, it is important to understand that they also come with their own set of challenges.

Why Bookkeeping for Crypto Is Not Like Traditional Accounting

Crypto transactions are absolutely fast and can happen anytime due to its 24/7 system and this in turn makes bookkeeping even more harder than it is with regular traditional payments.

Moreover, the value of these digital assets like crypto can change within minutes. It has different rules, prices, and has its own set of risks that need to be kept in mind before opting for any. 

Common Challenges in Crypto Bookkeeping

One of the most common challenges that businesses face while dealing in crypto is tracking every transaction. Another challenge that businesses generally face is that of calculating profit and loss as the prices of digital assets like crypto keeps fluctuating almost every minute.

And without proper bookkeeping, these transactions can quickly become confusing and overwhelming while tracking in the future. 

Regulatory and Tax Implications

Remember that there are several regulations and tax implications that you can’t ignore while dealing in crypto. In most of the countries, for instance - Canada, digital assets like crypto come under the tax slab as that of properties. And this means that if your business earns and deals in digital assets, it has to be reported for tax.

Make sure to file your taxes in time before it leads to big penalties.

Tracking Transactions Across Wallets, Exchanges, and Blockchains

A lot of businesses today usually use more than one crypto wallet. Some of them keep their assets in hardware wallets while some on the other hand use digital platforms like Coinbase or apps like DeFi.

Now, each platform records its transactions in its different formats and systems making it difficult to track them all as it gets confusing and time-consuming. In such cases, it is very important to deploy tools to make the calculations and track the transactions for bookkeeping easier.

Stablecoins, Staking, and DeFi: How to Record Complex Crypto Activities

Digital finance includes more than just dealing in the buying or selling of coins, it includes activities like earning interest through the process of staking and using stablecoins for easy payments. Each activity needs to be reported for tax and compliance. Here's how

Valuation and Fair Market Value Considerations for Reporting

One of the most important aspects to understand is that when businesses deal in crypto, the value is not always constant as it keeps fluctuating. Hence it is of the utmost importance to record each transaction at the value at which the transaction took place.

This will not only help you calculate your transactions but also make bookkeeping and timely tax filings easier.

Best Practices and Tools for Crypto Bookkeeping

Some of the best practices to follow is that you must always track the transaction correctly and at the value at which the transaction was carried out. Next, make sure to keep a backup of all records from exchanges and wallets to make it easier for crypto bookkeeping.

Always ensure to use the best tools or softwares to track and sync the transactions as it helps prevent loss of data or any other errors.

How Orbit Accountants Helps Businesses Stay Compliant and Organized

As more and more businesses are opting in for crypto and other digital transactions, it gets very important to hire an expert for such digital asset bookkeeping.

And this is exactly where Orbit Accountants’ comes in! They offer the best-in-industry bookkeeping and accounting services in Canada. As experts in the industry, they have all the expertise needed to guide you through the entire process and help you stay compliant with the local tax regulations at all times.

Book a free consultation with Orbit Accountants and rest assured knowing that your business’s bookkeeping is in the right hands.

The Future of Digital Asset Accounting

As digital assets are increasingly becoming a part of businesses today, it is very important to hire the right bookkeeping professional to manage your bookkeeping, avoid any future confusions and penalties. With experts like Orbit Accountants by your side, you can rest assured that your business is sure to stay ahead of the curve and compliant at all times! The future of digital asset accounting is set to bloom. But the question is, are you ready to adapt to this smart revolution?

Disclaimer: This article is for informational purposes only and does not constitute tax or legal advice.