In the last few years, digital assets have moved from being just a niche to a major part of global finance. Several businesses, both local and international, are now adopting digital assets by accepting cryptocurrencies for payments, investing in tokens, and even building products around blockchain. As of 2024, over 15,000 small and medium businesses worldwide were reported to be holding or transacting in crypto.
However, while these assets bring new opportunities, there is also the challenge of proper accounting. Tracking transactions, recording gains and losses, understanding tax obligations, and reporting accurate values can quickly become confusing without proper accounting systems in place. Especially because cryptocurrency prices change every second.
Any small error can lead to serious tax or financial issues. This is where crypto accounting comes in. This process of managing, tracking, and reporting digital assets in a clear manner has helped businesses to understand how to record each transaction and value their holdings at the end of a financial year.
Start With a Clear Plan
Before businesses buy, accept, or hold any digital assets, they need to set a clear plan. They need to decide why they are dealing with crypto: if it is to accept payments, to invest, or to hold for growth. When they have a clear purpose, it is easier to know how to track and account for every token, every cryptocurrency in their possession.
Businesses can also add altcoins to their crypto plans. Bitcoin and Ethereum get most of the spotlight, but smaller coins with active communities or useful real-world projects can sometimes grow even faster. That’s why many experts are paying attention to the best altcoins for the next bull run, as these could help businesses build stronger and more diverse portfolios. With the total crypto market expected to reach around US$10 trillion by late 2026, there’s still a lot of room for new coins to rise alongside the big ones.
During planning, companies can include the types of coins they intend to hold, their maximum exposure, how long they plan to hold for, and how they will convert or use the profits they gain. Every business’s crypto accounting checklist should start with a clear plan. The clearer the investment plan, the less likely they are to be caught off-guard.
Secure Your Wallets and Keys
Security is one of the most important things every business holding digital assets must get right. According to a study, about 60% of crypto thefts in 2023 were because of compromised keys or insecure storage. What this means is that half of all these losses came from weak custody.
It helps to split storage into hot and cold wallets. Hot wallets are usually very good for frequent transactions, while cold wallets can work for long-term holdings. Many businesses try to keep a large number of their holdings in cold storage because they are less vulnerable to hacking. It is always advisable that companies use multi-signature. For example, a 2-of-3 scheme means that three keys exist and two must sign any transaction. This control helps to reduce the risk of a single bad actor draining funds.
Companies should also have backups of the seed phrases stored offline in safe places, either a bank safe or an off-site fireproof safe. This will help to prevent the impossible recovery of data if they lose access at a point. Understanding crypto wallets and the security they need helps to dramatically reduce risk for business owners.
Track Every Transaction Clearly
Every time businesses sell, buy, receive, or use a digital asset, they need full records. A detailed accounting helps with accounting, audit, and tax. For example, a business that receives 10 units of a token when it’s worth US$1,200 per unit must record data, quantity, asset, fiat-value ($12,000 in this case), any fees, and wallet address. Even when they dispose of it, they must note the disposal date and value then.
According to an accounting practices survey, a lot of companies handling crypto have complained that they struggle with cost-basis tracking and valuation of digital assets. This just shows how common errors are in transaction records.
A good tracking process is for businesses to reconcile their on-chain wallet balance, exchange/custodian statements, and their accounting ledger monthly. Any business that skips this is at risk of mismatches and audit or tax errors. This discipline helps businesses to build a reliable trail and ensure that statements and tax filings are ready and organized.
Value Your Assets Fairly and On Time
Digital-asset prices move fast. Just recently, the crypto market gained $53 billion within just 18 hours. Such market surges have a way of affecting price movements as well. And because values are volatile, companies must decide quickly when and how they will update values in their books. Under recent accounting guidance in the U.S., certain digital assets are to be measured at fair value after acquisition and not just at any cost. For instance, the Financial Accounting Standards Board(FASB) ASU 2023-08 requires fair value measurement for some assets.
Any business that holds digital assets as Treasury or investment instead of using them immediately might choose to update valuations quarterly or even monthly. Companies should also plan for impairments. If an asset drops significantly, that risk needs to be recognized in the accounting framework. All of these steps will ensure that businesses won’t get a surprise year-end or when auditors ask for supporting evidence.
Stay Legal And Tax-Ready
Every business must treat digital assets as part of its business accounting and tax obligations. For example, in the U.S., the Internal Revenue Service (IRS) instructs that income from digital assets must be reported. Crypto payments should be treated the same way as fiat payments.
Record the dollar equivalent on the day they are paid, and note any gain or loss when the asset has been converted or disposed of. Because the regulatory framework for digital assets changes fast, it is important to keep up with updates in whatever region they are in. Having legal and tax compliance in order helps companies to protect their business and build trust.
Final Thoughts
Managing digital assets for businesses takes patience, structure, and discipline. But with clear plans, proper records, and strong controls, companies can protect their funds while staying compliant with accounting and tax rules.
To read more content like this, explore The Brand Hopper
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