Digital currencies are propelling the banking industry into a period of rapid innovation. As digital currencies continue to immerse themselves in the greater financial landscape, businesses incorporating cryptocurrencies are reaping the benefits from the forefront of this new revolution. This article addresses everything a small to mid-size business needs to know about crypto banking and how to leverage this new-age technology.
What is crypto banking?
The term "crypto banking" refers to the management of one's crypto assets by a third-party financial institution. Similar to how traditional banks manage services pertaining to fiat currency, a crypto bank would manage all services relating to cryptocurrencies.
These crypto banking services typically allow users to hold a balance, make payments with a crypto debit card and earn interest on a supported crypto asset through crypto interest accounts, also known as crypto savings accounts. Some platforms might also offer loan services and crypto interest accounts, also known as crypto savings accounts.
Due to regulatory restrictions imposed on these fintech companies and the crypto market, it is common for these types of institutions within the financial sector to operate in certain jurisdictions like the United Kingdom or the United States of America. This is not uncommon for traditional banks either.
A crypto bank is not typically a crypto exchange, instead, it is defined as a fintech platform operating in the crypto banking space. Providing services for both fiat currency and digital assets, crypto banks are revolutionizing the financial institution sector.
What are the benefits of incorporating crypto into your business?
With over 320 million customers around the world shopping with cryptocurrencies, incorporating digital assets into your payment options allows you to tap into this broad group of consumers.
Additionally, the advantages of crypto payments outweigh fiat transactions in a number of ways, providing a more secure and faster means to send money across borders (or simply next door). These include:
- More rapid transactions
- More cost-effective transactions
- No chargebacks (all transactions are final)
- Reduced fraud
Data suggests that an increasing number of businesses are starting to explore crypto payments, where employees can earn either their full salary or a part of it in digital assets in remuneration for their job. Some remote workers are even maintaining a career solely relying on crypto payments, hence the rise in crypto banks and crypto banking services.
Crypto banking, payment gateways, and businesses
Through crypto banking services or payment gateways, businesses are able to receive payments in digital assets and instantly convert them into fiat should they wish to do so. It's important to note that these services go beyond the services of that a normal crypto exchange might offer.
Some crypto service providers will allow businesses to make crypto payments directly from their account, however, until this becomes normalized business owners often chose to convert their digital assets due to concerns over volatility and cash flow.
Below we cover the most pressing questions concerning small to medium-sized businesses incorporating crypto assets into their business models and how to effectively use crypto banking services to streamline this.
Crypto Banking Services and Small Businesses
Can small businesses use cryptocurrency?
Whether you’re conducting a few transactions a week or several hundred a day, cryptocurrencies provide an ideal payment solution. With minimal fees and no foreign exchange rates, accepting crypto payments is a cost-effective solution for small businesses, especially ones operating with a global customer base.
By engaging in crypto banking services offered by a reputable crypto bank, businesses can manage cryptocurrency with the same ease as a traditional bank account.
Why do small businesses use crypto?
Small businesses will typically incorporate cryptocurrencies into their payment methods as a cost-effective solution as well as an opportunity to tap into a broader target market. With minimal transaction fees, short processing times, and heightened security, crypto transactions provide a perfect solution for small businesses. By adding crypto payments to their menu, many businesses are gaining an edge over their competition.
With the innovation that crypto banks are bringing to the forefront, small businesses can bypass the high fees associated with crypto exchanges and instead tap into crypto banking services at a more realistic price point.
Crypto as a Business Expense
Can crypto be a business expense?
For any size business, understanding the tax implications of accepting cryptocurrency payments is crucial. While it's important to understand the tax rules in your area, consulting a tax professional will likely be in your best interest.
Businesses can also opt to incorporate crypto tracking software or crypto tax software in their business models to ensure that they are compliant. Please consult your tax professional regarding any questions you might have about being taxed on crypto in your country before engaging in any crypto banking or opening a bank account with a crypto bank.
Can I buy crypto as a business expense?
As each country’s laws on taxing cryptocurrencies differ, it's best to consult a tax professional in your area who can properly advise. While you don't need a degree in tax to manage a business, gaining an education on the implications of the taxation of cryptocurrencies will do you, as a business owner accepting cryptocurrencies, a world of good. Reach out to your crypto bank or look to crypto companies for recommendations.
Crypto as Business Investment
Can businesses invest in crypto?
Yes, it has become increasingly common for businesses of all scales to invest in cryptocurrencies. Due to the high returns that Bitcoin and other cryptocurrencies have presented over the years and its strong ability to store value paired with the increasing adoption of digital currencies as payment methods, many businesses have chosen cryptocurrencies as a viable investment option.
With the rising popularity of crypto lending, many businesses are using their digital currency investments to generate wealth. Operating in the same way as traditional savings accounts, businesses can store their digital currency in an interest-generating account that provides returns.
However, before investing in cryptocurrencies we encourage you to conduct thorough research on the topic and decide if it suits your business’s financial goals and business plan.
Can my LLC invest in crypto assets?
Limited Liability Companies (LLCs) provide the best of both worlds: access to the liability shield typically associated with corporations and the tax benefits found in partnerships or sole proprietorships. With this being said, it’s best to check on the cryptocurrency laws and tax implications in your area before engaging in any crypto investments.
Businesses and Crypto Wallets
Can a business hold a crypto wallet?
Yes, anyone can open a crypto wallet. When looking to incorporate cryptocurrencies or any crypto financial services in your business opening a wallet is a must. Consider what your business intends to do with the cryptocurrencies (i.e. will you be making daily transactions or storing funds long term) and choose an appropriate wallet.
Can I set up a crypto wallet for my business?
Any company can set up a business account and crypto wallet with Tap. Tap provides businesses operating within the digital asset sector with dedicated IBANs allowing for access to international payments, settlement and trading services for both stablecoins and cryptocurrencies. Businesses also gain access to dedicated account managers and support.
How do I set up a crypto wallet business account?
To set up a crypto wallet business account with Tap, anyone from the company can fill out this form and a dedicated account manager will get back to you in 1 to 2 working days.
Paying Employees with Crypto
Can I pay my employees with crypto?
Yes, cryptocurrencies can be used to pay employees’ salaries in most countries. Before going ahead with the process ensure that you have done adequate research about crypto payments in your area and are familiar with the rules and regulations. I.e. some states require employers to pay the minimum wage in USD and the remainder in cryptocurrencies.
Crypto and Business Operations
What is a crypto business account?
A crypto business account is an account from which a business can manage its cryptocurrencies. While crypto business accounts might vary from platform to platform, the basis is that the account will allow a business to buy and sell cryptocurrencies and hold a balance.
Tap’s business account also provides companies with access to trading facilities, a wide range of crypto wallets, the ability to pay external accounts, passive income generation, and a dedicated account manager.
How is crypto taxed for business?
Typically, cryptocurrency income is taxed as regular income tax, however, a business must do adequate research on the matter to determine the tax implications of accepting and investing in cryptocurrencies in your country. We always recommend contacting a tax professional that specializes in cryptocurrencies in your region.
How do I report crypto as business income?
You will need to find the relevant tax rules in your area to determine how to report crypto as a business income. Countries will typically require a specialized crypto tax form when declaring crypto income. Remember, it is a criminal offense to not declare the appropriate earnings.
Should my business start accepting cryptocurrency?
By embracing cryptocurrency as a payment option, you can lower your transaction fees, safeguard yourself from costly chargebacks and broaden your customer base to better suit their inclinations. This will not only help strengthen the security of your business but is also guaranteed to expand its reach in today's market.
Accepting cryptocurrencies might not be appropriate for every business model, so ensure that the payment option fits into your business model.
How can a business accept crypto payments?
In order to accept cryptocurrencies you will need to provide your wallet details or QR code in your payment options. Installing crypto payments into your online store is seamless and straightforward, simply find the appropriate plug-in or app compatible with your e-commerce platform. If this option isn't accessible, businesses can add the code from their wallet in HTML.
Can I buy crypto with my LLC?
LLCs are legally allowed to own and trade cryptocurrencies in most countries, however, you will need to confirm with the relevant laws in your area. Businesses can open a crypto wallet in the LLC’s name and purchase the funds directly or transfer the funds from a personal wallet. Alternatively, one can open a business account with Tap and gain access to a wide range of crypto services for your business including a dedicated account manager and support.
Businesses and Crypto Accounts
How do I buy a crypto account for my business?
Setting up a business crypto account can be done in one simple step. Simply complete the form here and a dedicated account manager will get in touch with you within 1-2 working days and personally guide you through the process. You will be required to provide proof of identity and several business documents. While gaining access to a wide range of crypto services there are no fees associated with opening the account.
Can you open a crypto bank account for a business?
Yes, absolutely. Setting up a business crypto account with Tap is simple and straightforward. All you need to do is fill out this form and a dedicated account manager will get in touch with you to guide you through the process best suited to your business needs.
Can I open a crypto account for my business?
Yes, absolutely. Opening a crypto business account with Tap is very simple. All you need to do is fill out the form and you will be contacted by one of our knowledgeable account managers who will help you find the right solution for your company's needs.
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