As digital currencies like Bitcoin (BTC) and Ethereum (ETH) grow increasingly popular, business owners need to understand their tax implications. Do you need a crypto accountant to help you with your taxes, or can a crypto bookkeeper do the job?
It’s a decisive question to answer if you want to stay on top of any taxes, get better information from your financials and avoid any penalties from the IRS. Let’s look closely at the distinction between crypto accountants and crypto bookkeepers so you can decide which is right for you.
The Building Blocks: What Is the Difference Between Accounting and Bookkeeping?
It’s essential to understand the difference between accounting and bookkeeping to understand the difference between crypto accountants and crypto bookkeepers. At its most basic level, bookkeeping involves tracking financial transactions. This work includes recording all income and expenses in a company’s books and ensuring your books are reconciled.
Crypto accounting brings a different level of sophistication than just recording transactions. It includes structuring your financial accounts so that you can analyze, interpret, and report on financial data. Now that we’ve covered the basics, let’s take a closer look at how crypto accountants and crypto bookkeepers differ.
You can think of crypto accountants as the financial analysts of the cryptocurrency world. They use their skills in bookkeeping and accounting to provide insights into a company’s financial health. They look at financial transactions and
A crypto accountant’s responsibilities might include:
- Reviewing financial statements
- Identifying trends
- Providing advice on tax planning and compliance
- Preparing reports for shareholders
In short, crypto accountants help businesses make informed decisions about their finances. Businesses leverage crypto accountants’ insights to decide how to grow their companies.
While crypto accountants provide insights into a company’s financial health, crypto bookkeepers are responsible for keeping track of the actual transactions.
A crypto bookkeeper’s responsibilities might include:
- Recording all income and expenses
- Preparing invoices
- Paying bills
In short, crypto bookkeepers ensure that all of a company’s cryptocurrency transactions are recorded properly. Crypto accountants then use this information to provide insights and advice.
Businesses may use a crypto bookkeeper’s services to save time and ensure that their books are accurate. This approach is especially helpful for companies that don’t have the resources to keep track of their finances themselves.
On the other hand, they may use a crypto accountant’s services to get an outsider’s perspective on their financial situation.
Accounting and the Modern Age: Introducing Virtual Currencies
Virtual currencies, also known as cryptocurrencies, are digital or virtual tokens that use cryptography to secure transactions. These financial instruments are decentralized, meaning they are not subject to government or financial institution control.
This asset class has taken the world by storm. Crypto’s popularity has led to a surge in the number of new businesses that are innovating in this space and who are accepting crypto, trading crypto, and holding it on their balance sheet.
With the increasing popularity of crypto companies, it’s no surprise that there is a growing need for crypto accountants and bookkeepers. These professionals help businesses make sense of their cryptocurrency transactions while following accounting standards.
If you’re considering investing in cryptocurrencies or your business already accepts crypto as payment, it’s important to understand the difference between crypto accountants and bookkeepers. This distinction will ensure that you have the right professional on your team to help you navigate this new landscape for tax and compliance purposes.
Digital currency accounting rules are still being developed. The most important thing for businesses is to keep accurate records of their crypto transactions. This annotation will help them prepare for any future changes in the crypto accounting landscape.
What Method Is Right for Your Business?
Ultimately, a company’s decision to use a crypto accountant or bookkeeper depends on its needs.
Some businesses may prefer to outsource their accounting needs to a professional. Others may like to keep their books in-house, while some may choose to use a combination of both approaches.
Why Should I Use a Crypto Accountant?
You might wonder why you should use a crypto accountant instead of keeping your books in-house. After all, isn’t outsourcing just another expense?
You may want to consider using a crypto accountant because:
- They can help you save money on taxes
- They can ensure you make strategic decisions about your finances
- They can provide an outsider’s perspective on your financial situation
- They can keep track of your transactions and ensure they are properly recorded
All these benefits make crypto accountants a valuable addition to any business team — especially one that’s focused on the long term.
Is a Crypto Bookkeeper Right for Me?
There are several reasons why you might want to consider using a crypto bookkeeper:
- They can help you save time by keeping accurate records of your transactions
- They can ensure that your books comply with accounting standards
- They can catch errors and discrepancies in your records
- They can act as a second set of eyes to spot potential problems
Overall, crypto bookkeepers can provide a valuable service — especially if you don’t have time to track your finances.
No matter which solution you pick, it’s important to ensure you avoid accusations of money laundering or fraud by maintaining highly accurate records and following all applicable laws and regulations.
Does Your Business Have a Trusted Crypto Bookkeeper or Accountant?
As digital asset bookkeepers, we understand the importance of having a trusted professional on your team. At ProfitLinq, we provide reliable and accurate crypto bookkeeping and accounting services. We also offer various other financial services, including outsourced crypto CFOs and crypto Controllers. Contact us or visit our website to find out more about our services or schedule a consultation.